Taxation in Albania
Albania’s taxation framework is a complex system that plays a crucial role in the country’s economic strategy, striking a balance between generating revenue and encouraging growth and investment. This framework includes various taxes, each regulated by intricate rules and rates. For businesses, investors, and individuals, having a comprehensive understanding of this environment is vital for effective financial management and adherence to regulations.
Taxation system
Albania’s taxation system aims to be in harmony with its internal fiscal policies and international responsibilities, providing a well-organized yet flexible tax approach. It may include a mix of flat rates, progressive structures, and specific exemptions that mirror the nation’s economic goals and social aims. Grasping the complexities of these tax mechanisms is crucial for maximizing financial results, ensuring legal adherence, and making the most of the opportunities within the existing legal context.
Capital gains tax
In Albania, capital gains are included in the total taxable income and are liable to corporate income tax (CIT) at a 15% rate. Individuals also face a 15% tax on capital gains derived from selling shares or real estate. The taxable amount is determined by the difference between the sale price and the purchase price of the asset.
Corporate taxation
In Albania, the typical corporate income tax rate is 15% for organizations with yearly earnings over ALL 14 million. Organizations earning up to ALL 14 million are subject to a 0% tax rate until the end of 2029. Certain sectors, like software development and agriculture, benefit from lower tax rates of 5% until 2025 and 2029, respectively. Furthermore, capital gains are taxed at the standard corporate income tax rate.
Personal income taxation
In Albania, the personal income tax system operates on a progressive basis in relation to monthly earnings. Earnings up to ALL 50,000 are not subject to tax. For income ranging from ALL 50,001 to ALL 60,000, a 13% tax is levied on the amount that exceeds ALL 35,000. Income that exceeds ALL 60,000 is taxed at 13% for the portion between ALL 30,001 and ALL 200,000, while a 23% rate applies to income over ALL 200,000. Capital gains are taxed at a uniform rate of 15%.
Dividend taxation
In Albania, dividend income is typically taxed at a flat rate of 8%. This tax applies to dividends paid to both resident and non-resident individuals and entities. However, if the participation exemption is relevant, dividends may be tax-exempt for resident companies that own at least 10% of the shares or voting rights in the company issuing the dividends for a continuous period of at least 24 months.
Property tax
In Albania, inheritances and gifts are typically subject to a flat income tax rate of 15%. The taxable value is calculated after subtracting any debts linked to the inherited property. This tax is applicable to all forms of inherited assets, such as real estate, financial assets, and movable property.
Inheritance taxation
In Albania, inheritances and gifts are typically taxed as income at a uniform rate of 15%. The taxable income is calculated after subtracting any debts linked to the inherited property. This tax is applicable to all forms of inherited assets, such as real estate, financial assets, and movable possessions.
International taxation
Albania enforces a uniform corporate income tax rate of 15% on all income, both domestic and international, earned by resident companies. Non-resident companies are taxed solely on income generated in Albania. Relief from double taxation can be obtained through Albania’s tax treaties, potentially providing tax credits or exemptions to prevent double taxation on international earnings. Additionally, capital gains are taxed at the same standard rate of 15%.
Cryptocurrency taxation
In Albania, cryptocurrency income is subject to a flat tax rate of 15% for individuals and businesses alike. Earnings from activities such as cryptocurrency trading, mining, or similar operations are regarded as taxable income. Income generated by businesses involved in cryptocurrency is taxed at the corporate income tax rate of 15%, whereas personal profits are liable for capital gains tax.
VAT system
Albania imposes a standard VAT rate of 20% on the majority of goods and services. There are reduced rates of 10% for agricultural inputs and 6% for hotel accommodation, agrotourism, and certain services. A rate of 0% applies to exports. VAT is charged on the provision of goods, services, and imports, and the legislation is consistent with the EU VAT directive. Companies are required to register for VAT if their yearly turnover exceeds ALL 10 million or if they are involved in imports.
Our taxation solutions
In a tax landscape that is always changing, expert assistance is essential. Our firm provides a range of specialized tax solutions specifically designed to address the varied requirements of individuals, corporations, and investors in Albania. Our services aim to navigate the intricacies of the tax code, reduce liabilities, and guarantee complete adherence to regulations.
- Personal tax advisory: Tailored advice to minimize tax exposure while ensuring legal compliance.
- Corporate tax strategy: Comprehensive planning to maximize tax efficiency and leverage incentives.
- Capital gains optimization: Expert guidance to manage and reduce taxes on capital gains.
- International tax planning: Advanced strategies for optimizing cross-border tax outcomes.
- Cryptocurrency advisory: Compliant tax strategies for both individual and corporate crypto activities.
- Inheritance and estate planning: Strategic planning for efficient wealth transfer and reduced inheritance taxes.
- VAT compliance: Full-service support for VAT registration, reporting, and optimization.
Book a consultation
Navigating the intricacies of taxation can be challenging, and expert guidance can be crucial. Reach out to us today to arrange a meeting with our tax specialists. We will collaborate with you to create a customized tax plan that meets your goals while ensuring complete adherence to the regulatory framework of Albania.
Disclaimer
Tax laws and regulations are continually evolving and can differ depending on personal circumstances. The information presented here is intended for general guidance and may not represent the latest updates. It is strongly advised to seek the help of a qualified tax professional for specific and current advice tailored to your situation.