Albania taxes residents on worldwide income and non-residents on Albania-source income only. Albania operates a self-assessment system for corporate tax, with the General Directorate of Taxes conducting post-filing review.
The Albanian tax year is the calendar year.
Albania's headline corporate income tax (CIT) rate is 15%.
The headline personal income tax (PIT) rate is 23%.
The standard VAT/GST (or equivalent consumption tax) rate is 20%.
An individual is an Albanian tax resident if they have a permanent home in Albania, or if they stay in Albania (consecutively or intermittently) for more than 183 days in a calendar year, regardless of citizenship or center of interests. Non-Albanian artists are exempt from residency status for 24 months from first entry, regardless of days present. Treaty provisions prevail where a DTT applies. Residents are taxed on worldwide income; non-residents only on Albania-source income.
A non-Albanian entity has an Albania permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Albania on the entity's behalf, following the OECD Model Treaty definition as applied under Albanian domestic law and any applicable tax treaty.
Albania introduced CFC rules via Law No. 29/2023 "On Income Tax," effective January 1, 2024 - applicable only to natural persons (individuals), not corporate taxpayers. An Albanian tax resident owning or controlling a foreign company can have that company's undistributed profits attributed and taxed as if they were the individual's own income.
Albania's new Income Tax Law (effective January 1, 2024) abolished the prior thin capitalization ratio entirely - interest is now deductible regardless of debt-to-capital structure. In its place, an EBITDA-based interest limitation rule (Article 31, aligned with BEPS Action 4) caps deductible interest at 30% of taxable EBITDA, and - unlike the prior regime, which applied only to related-party debt - the new rule extends to debt from all parties, related or unrelated. A separate average-interest-rate cap disallows interest exceeding the 12-month average bank lending rate published by the Bank of Albania.
Albania does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics. As a non-EU member (EU accession frontrunner, targeting completed negotiations by 2027 per current reporting), Albania is not yet bound by ATAD2 and does not have a comprehensive anti-hybrid regime, though Albania's own CFC regime for individuals (Law No. 29/2023, effective 2024 - see CFC section above) reflects growing alignment with EU-style anti-avoidance standards.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; foreign income is reported through the standard annual tax return.
Albania does not provide a broad participation exemption for foreign dividends in the European sense; relief from double taxation is available primarily through Albania's foreign tax credit system.
Albania has a real foreign tax credit regime available to both individuals and companies for foreign tax paid on foreign-source income also taxed in Albania, capped at the Albanian tax otherwise due on that income.
Albania maintains approximately 45 double tax treaties (up from 41 in 2021, reflecting an actively expanding network as part of EU accession preparations), including with the UK (signed 2013, in force 2014) and Ireland (signed 2019, effective 2021). Separately, Albania is in the process of ratifying new treaties with France, Greece, the Netherlands, and Romania.