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Doing business in Albania

How quickly can I set up a business?

2 days

What is the minimum investment needed?

There is no minimum investment required.

The minimum social capital should be 100 Albanian Lek, equal approximately to $1 USD, to register a business.

How can I raise finance?

The investor must contribute the entire capital.

What are the legal requirements for setting up my business?

For setting up in Albania, the options are Limited Liability Company (LLC)-SHPK, Joint Stock Company (JSC)-SHA, branch or representative office. The Entrepreneurs & Company Law offers 100% foreign ownership in many sectors.

What structure should I consider?

There are advantages and disadvantages to all of them, and there is no one correct answer, it is all dependent on your specific business circumstances and needs. A brief overview of the main structures is below:

Establishment (a branch of your overseas business):

• Not a separate legal entity but an extension of the overseas parent company.
• No limited liability or ring-fencing of the (country) operations.
• Must file branch office balance sheet, prepared under Albanian company law, at the Tax Regional Directorate, the National Center of Business, and at the Ministry of Finance and Economy.
• Must file periodical VAT return and Profit tax return, under Albanian Tax Procedure Law.

Limited Liability Company:

• Members (partners) have limited liability to their equity.
• Corporation tax must be paid on the company’s profits.
• Profits are allocated to members.
• Must file periodical VAT return and Profit tax return, under Albanian Tax Procedure Law.
• Only one person can set up an LLC.
• Must adhere to the Law no 9901 of 2008 “On entrepreneurs and companies”, as amended.

Joint-Stock Company:

• Shareholders’ liability is limited to their shares’ nominal value.
• The basic capital of a Joint Stock Company with public offer shall not be less than 3.500.000 Albanian Lek.
• The basic capital is divided into shares and subscribed by founders.
• Corporation tax must be paid on the company’s profits.
• Profits are allocated to members who then pay Income Tax on these profits personally.
• Must file periodical VAT return and Profit tax return, under Albanian Tax Procedure Law, if applicable.
• Must adhere to the Law no 9901 of 2008 “On entrepreneurs and companies”, as amended.

What advice can you give me in regards to payroll and taxation requirements?

• Employers and employees also must pay Albanian social and health insurance contribution. Social security and health insurance contributions are compulsory payments, for all economically active persons, including the self-employed. Paying social security and health insurances contributions makes it possible to benefit from The Social Security Law (Law no. 7703, dated 11.05.1993), as amended and the Health Insurance Law (Law no. 7870, dated 13.10.1994) as amended Contributions are collected by the tax authorities on behalf of the Social Insurance Institute and the Institute of Health Insurance.

• The contribution for the Social Insurance Contribution is 24.5% in Albania, while Health Insurance Contribution in Albania is 3.4%. The employer pays 16.7% of contributions, while the employee pays 11.2% of contributions.

• The minimum salary considered for calculating social security contributions in the employment relationship, the employer is obligated to implement minimum monthly basis salary which is 30,000 Albanian Lek and the maximum is 132,312 Albanian Lek.

Current Personal Income Tax on wages rates in Albania are:

Band of income (CU) Tax rate (%)
0 – 30,000 ALL 0
30,001 – 150,000 ALL 13
Over 150,001 ALL 23

• Social security contributions are taxed on employment income.
• Social security and health contribution are calculated, withheld, and paid by employer.
• The monthly payroll is considered as a tax file declaration form and is declared electronically on the tax administrations’ system within the 20 days of the next month.
• Albania has a very comprehensive range of compensation and benefit options available for companies to offer their employees.
• Pensions, private medical insurance, life, and disability cover are now commonplace benefits provided by many Albanian businesses to their workforce.
• Flexible benefit packages are also gaining popularity, giving employees options regarding how they wish to “spend” their benefits allowance, which can range from “purchasing” additional holiday entitlement to obtaining full family medical cover.

Is there anything else that I should know?

• There is corporate taxation in Albania 15 % for the threshold of up to 14.000.000 Albanian Lek.
• Accommodation structures “Four-star and five-star hotels, special status”, according to the new regulations on tourism law are exempted from this tax which actually is rated 15 %. The exemption from corporate tax provided for in this paragraph shall be applied for a 10-year period for those structures benefiting from special status until December 2024. The effects of the exemption shall start up at the time of commencement of the economic activity of the accommodation structure but no longer later than 3 years after receiving special status.
• Corporate tax is 5% for legal persons who exercise activity on the production / development of software. The activities included in the field of software production / development, as well as the procedures for implementing this paragraph, are determined by the Council of Ministers.
• VAT is a tax on consumption of goods and services, the standard rate of which is 20%. If a business makes taxable supplies more than 10,000,000 ALL (Albanian Lek) in any 12 months of the fiscal year, then it MUST be registered for VAT.
• A reduced rate on VAT of 6% is applied on the services regarding the hotel sector or in sectors with a similar function, such as holiday camps or on sites developed for use as camping sites. The categories within the accommodation sector are provided in tourism law.
• There is also withholding tax in Albania on dividends and distribution on profits of 8%, as well as on interest, rents, royalties. The tax rate is 15%.
• Accounts require auditing if the group receives revenue of 50 million Albanian Lek or more, or Gross Assets of 100 million Albanian Lek or more.
• The tax residence of the member and where the profits in the LLP and Joint Stock Company originated will determine the jurisdiction and how these profits are taxed.
• All sectors are open to foreign investors.
• No limitation or restrictions for foreign companies – 100% foreign ownership possible.
• Albania is the gateway to the Balkans.
• Free Trade Area.
• Total labor costs are lower than comparable countries.
• Extensive language skills, most of the younger generation are college graduates.

Furthermore, Albania has:

• Online tax system
• Business legal framework in line with EU legislation
• Tax benefits and incentives in investment strategic sectors
• Favorable tax system
• Corporate tax rate 15%
• Personal tax rate until 23%
• Treaties for the avoidance of double taxation with over 40 countries

Investment opportunities in:

Renewable energy, tourism, agriculture, manufacturing, transport and logistics, mining industry, ICT services, etc.

Our firms in Albania
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