The development of Communication and Technology, characterized by connectivity, mobility, and the digitization of the global workforce, has brought forth significant innovation to the job market but not only. Since the early 2000s, and especially following the Covid-19 pandemic, a new category of professionals has emerged: Digital Nomads. They have revolutionized the traditional concept of office setup, by choosing instead to travel around the world and of course, bring the work with them. Equipped with a reliable laptop, and good internet connection, digital nomads are defining the work-life balance concept vis-à-vis modern working methods.

Several countries across the globe, acknowledging the rise of digital nomadism, have introduced new visa regimes and implemented legislation specifically addressing the taxation of digital nomads. Albania is among these nations, and this article will analyze the country’s taxation structure concerning digital nomads.

Tax Resident in Albania

To be considered a tax resident in Albania, the law mandates the condition of spending more than 183 days in the country. However, having a permanent home in Albania, even with less time spent, can also lead to tax residency.

By means of Law 25/2022, as amended, individuals who work remotely in the territory of the Republic of Albania using digital devices will not be classified as tax residents in the Republic of Albania for 12 months. This implies that such employees will be exempted from taxes for a year.

Furthermore, to ensure a cohesive experience for all parties, Albania has established a State Agency for the Support and Development of Startups and Facilitators, tasked with managing the implementation of financial support measures for startups.

 Digital Nomad Tax Rates

According to the taxation law, small businesses, including here freelancers, with an annual turnover of less than ALL 14 million are currently exempt from income taxes. However, Albanian law provides specific rules when it comes to freelancing; currently, if 80% of the income comes from one client or 90% comes from two clients, the person will not qualify as a freelancer and instead will be treated as an employee and taxed accordingly. However, this provision does not apply if the digital nomad is employed or offering services to a non-resident legal entity or an entity that does not have a permanent establishment in Albania. Dividends are subject to an 8% tax rate, while other investment income is taxed at a rate of 15%.

To learn more about the taxation policies and related matters in Albania, click here.

How to Apply for the Digital Nomad Visa in Albania?

The Digital Nomad Visa for Albania is applied under the D Visa Type, also known as the Long-Stay Visa. It is issued either as a stamp or electronically for foreign citizens planning to stay in Albania for over 90 days within 180 days. This visa is necessary when a residence permit requires a visa and applies to various categories of applicants.

This type of visa is issued online, and it is a condition for the applicant to be outside of the territory of the Republic of Albania after payment of the visa fee. The online application for the visa can be done at the following link.

The applicant is expected to provide the following set of documents, and upload them into the system:

• A visa application form that can be filled out online for free. Once completed, the system will generate and download it.
• A recent photo of the applicant, measuring 47 mm x 36 mm.
• A photocopy of a valid passport.
• A valid employment or service contract with a foreign employer or client, allowing the applicant to work remotely using information technology equipment.
• Proof of accommodation in Albania.
• A document proving the applicant’s professional or business activity related to the visa application.
• A residence permit from home country that is valid for at least 15 months, with at least 3 months remaining beyond the visa period that is being applied for.
• A full bank statement showing the applicant’s account transactions over the past 12 months.

Additional Relevant Information

An important consideration for digital nomads residing in Albania is health insurance coverage during their stay. In addition to private insurance options, self-employed individuals in Albania can contribute to social and health insurance at a rate of 27.9%. This allows them to access public healthcare services in the country free of charge. Social and health insurance contributions are paid quarterly, by the 20th of the first month following the end of each calendar quarter.

 Also, as a resident of Albania, the digital nomad will be subjected to the standard Value Added Tax (VAT). Currently, VAT is levied at 20%, and covers all domestic goods, services, and imported goods by taxable persons. If a resident engages in economic activity independently, will be considered a taxable person, regardless of the location or purpose. The taxable value includes everything that constitutes the corresponding value that the supplier of the good or service receives or will receive from the buyer, customer, or a third party, in exchange for the supply, including subsidies directly related to the price of these supplies, except VAT. If the rules governing the regime of the digital nomads in Albania allow, certain expenses related to the VAT can be recognized for tax credit purposes.

If you are considering residing in Albania as a digital nomad, it is recommended to evaluate all the legal and financial aspects with legal and/or financial advisors. Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Albania. Please feel free to contact us.