Albania - Y-tax Balkan

Workforce Outsourcing in Albania: Opportunities for International Businesses

BananaBlitz — Sun, 11 May 2025 16:33:00 +0000

Albania is becoming popular for skilled workforce outsourcing in Europe, especially for (Information and Technology) IT and Business Process Outsourcing (BPO). That means more and more companies, especially from Europe, are choosing to hire Albanian workers or companies to handle processes such as customer support, tech support, data management, and similar services. This article provides dedicated information on the Albanian workforce and opportunities for international business.

Why are companies choosing Albania?

Cultural and geographic closeness to Western Europe: Albania has a similar work culture and time zones; in addition, the youth and middle-aged population is highly recognized for being polyglot, as many are proficient in English, Italian, German, Greek, and other European languages.

Cost-effective labor: Salaries are comparatively on the lower spectrum, enabling companies to run cost-efficient business models.

Growing infrastructure and skilled workforce: The country is witnessing growth in its tech and education sectors, which in turn is creating more professionals for IT and support services.

Albania’s Growing Role in the European Outsourcing

Albania’s outsourcing sector has a workforce that is similar in size to that of cities such as Bratislava in Slovakia and Krakow in Poland and is larger than that of Riga in Latvia, Tallinn in Estonia, and Vilnius in Lithuania. Hence, Albania is a very competitive market in terms of the European outsourcing labor market. Also, from reports of the Albanian Investment Council, we find out that the country’s outsourced industry is valued at approximately $120-140 million and creates about 25,000-32,000 jobs, demonstrating that there is an opportunity for significant growth in the outsourcing workforce.

To read more about taxation policies in Albania, click here.

Albania’s Young and Skilled Workforce

Albania reports a very educated and skilled workforce, which includes over 160,000 annual university students and a literacy rate of 99.3% among individuals aged 15-24. Also, 27% of students are in Science, Technology, Engineering, and Mathematics (STEM) fields and 6.7% in Information and Communication Technology (ICT) programs. Also, it leads Central and Eastern European countries in IT graduate production, which is at a rate of 81 graduates for every 100,000 people. Also, we see large-scale modernization of the education system, which includes digital infrastructure improvements and the goal to expand high-speed internet access.

The official language is Albanian, which is spoken by 98% of the population and over 40% of the Albanian population is fluent in at least one foreign language which includes English, Italian, Greek, and German. English and Italian are very common among the youth. In terms of demography, the median age is 36.7 years, and the workforce in Information and Communication Technology (ICT) and Business Process Outsourcing (BPO) is very young which is 70% aged between 19 and 34.

The ICT and BPO sectors, which together employ around 40,000 people, including about 15,00 are software engineers that specialize in frontend, backend, and DevOps. The workforce is mostly located in large cities such as Tirana and Durrës and also includes other hubs like Shkodër and Vlorë, which play large roles.

To read more about Albania, click here.

If you are interested in investing in Albania, it is advisable to consult with a professional on investment opportunities that best suit your needs. 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.

הפוסט Workforce Outsourcing in Albania: Opportunities for International Businesses הופיע לראשונה ב-Y-tax Balkan.

Thinking About Investing in Albania? Here’s What You Need to Know

BananaBlitz — Sun, 27 Apr 2025 15:57:03 +0000

Albania, strategically located in Southeastern Europe’s Balkan Peninsula, is experiencing a notable rise in investments and tourism, making the country very favorable for real estate investments. Recognized for its affordability, Albania is one of Europe’s countries where living expenses, housing costs, and property prices are comparably less expensive when compared to any other European country. This article provides dedicated information on the property rights of foreign citizens in Albanian real estate investments, and other benefits as regulated by the Albanian Government.

Real Estate Market Overview

Albania is experiencing high levels of urbanization and currently, the construction industry is experiencing a booming effect, both in residential and commercial sectors. The construction projects are expanding in main cities such as the capital Tirana, and coastal ones including Vlora, Saranda, and Durres. For instance, according to the data published by the Institute of Statistics of Albania (INSTAT) between 2020 and 2024, over 6,600 permits for new buildings were issued, covering a total of approximately 10 million square meters of new construction. Moreover, the 2024 construction data indicates that in the fourth quarter of the year, the volume of new construction (measured in square meters) increased by approximately 35%.

While several factors affluence the growth of the construction industry in Albania, mainly increased foreign investments, government-backed urban development initiatives, and the growing economy, have been the key drivers in the rapid urbanization of the country.

Which Areas Are Shaping the Future of Real Estate in Albania?

Tirana. The capital of Albania, Tirana has attracted several exciting construction projects nationwide. In 2024, Tirana accounted for 77% of all new construction activity nationwide. Construction projects include new residential buildings, shopping centers, office spaces, and major infrastructure improvements. New projects are now combining living, working, and shopping spaces in one place, following modern urban trends. The focus is on using modern designs, improving energy efficiency, and making the city more connected and livable.

The most central areas include Blloku, Skanderbeg Square, Mother Theresa Square, Komuna e Parisit, and the Artificial Lake area. These neighborhoods each have their exceptional character and draw different types of residents, which as well, notably, have a high demand for rentals. Notwithstanding, the construction projects are now expanding to other areas, in the suburban parts of the city, or those near the Dajti mountain.

Vlora. Located in the southern part of Albania, home to the beautiful Ionian Sea, it is a beautiful coastal city along the renowned Albanian Riviera, celebrated for its stunning beaches and rich Mediterranean culture. Vlora ranks as the third-largest city for new construction, hosting some of the most prestigious and luxurious projects in the country. For instance, in 2024 alone, the total volume of new construction reached approximately 90,000 square meters.

Can Foreigners Buy Property in Albania? Here’s What You Need to Know

Foreigners possess equal rights to purchase property in Albania as locals, whether it’s in the capital or along the coast. Foreign individuals or entities engaging in or having undertaken investments in the Republic of Albania are entitled to acquire land upon successful completion of the investment in compliance with the issued construction permit. This right is granted when the value of the acquired or constructed assets exceeds three times the initial value of the land.

The transfer of ownership rights for agricultural land, forests, meadows, and pastures is not entitled to foreign individuals and entities. However, they enjoy the privilege of leasing these properties for a period of up to 99 years. The above restriction does not apply if a new Albanian company is formed, whether it’s entirely owned by a foreign investor or established by purchasing shares in existing Albanian companies.

Taxes on Property in Albania: Rates, Rules, and What to Expect

Property Taxes

The real estate tax in Albania depends on the type of activity linked to the building and is based on its value. It is calculated annually at the following rates:

Residential properties: 0.05% of the property’s value.
Commercial properties: 0.2% of the property’s value.
Construction sites where building deadlines (set by the construction permit) are missed: taxed at 30% of the above rates.

Inheritance and Gift Taxes

Inheritance and gifts are generally taxed at 15% of their value, with no deductions allowed. However, exemptions apply in these cases:

Transfers between first- and second-degree legal heirs and between siblings.
Gifts and inheritances of up to ALL 5 million for real estate and ALL 1 million for movable assets.

Transfers of ownership rights deriving from co-ownership based on Law No. 7501, dated 19 July 1991, “On Land,” as amended.

Other tax considerations:

Tax	Rate
Personal Income Tax	0% – 23%
Corporate Income Tax	15%
VAT	20%
Withholding tax on dividends to non-residents	8%
Withholding tax on interest to non-residents	15%
Withholding tax on royalties to non-residents	15%

To learn more about the taxation aspects and more about Albania, click here.

The real estate sector in Albania is an ideal space for those who want to maximize income from real estate investments. Strategic geographical position, long seashores of the Adriatic and Ionian seas, proximity to major European cities access to short flights are features that make it exceptionally attractive.

הפוסט Thinking About Investing in Albania? Here’s What You Need to Know הופיע לראשונה ב-Y-tax Balkan.

Digital Nomads Taxation in Albania

BananaBlitz — Wed, 02 Oct 2024 08:51:44 +0000

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.

הפוסט Digital Nomads Taxation in Albania הופיע לראשונה ב-Y-tax Balkan.

Constitutional Court of Albania Overturns New Personal Income Tax Brackets

BananaBlitz — Sun, 29 Sep 2024 14:33:57 +0000

On March 30, 2023, the Assembly of the Republic of Albania approved Law No. 29/2023, “On Income Tax”, as amended, effective as of January 1, 2024 (Law No. 29/2023). The purpose of the tax law is to establish the rules governing the taxation of income for natural persons and entities, as well as income derived from inheritances, donations, and gambling earnings in Albania.

The implementation of the law was facilitated by the Council of Ministers’ Decision No. 753/2023, “On the Implementing Provisions of Law No. 29/2023 ‘On Income Tax’. Among the new rules introduced, the most significant and widely opposed is the levying of a 15% personal income tax on annual incomes up to ALL 14 million, which were previously exempt from taxation. The new tax measures apply to self-employed individuals and entities offering professional services, affecting an estimated community of around 30,000 professionals.

Recognizing the significant impact the new rules would have on the majority of middle-class professionals in Albania, Articles 3§5, 12§1/ç, 24§2 and 69§1/dh of Law No. 29/2023 were challenged in the Constitutional Court by several key stakeholders. These included one-fifth of the Deputies of the Albanian Parliament, the Institute of Authorized Accounting Experts, the Institute of Certified Accountants, and the Chamber of Advocates of Albania. Each of them submitted a separate appeal, which the court later consolidated into a single proceeding.

In essence, petitioners opposed the application of a 15% tax rate on annual incomes up to 14 million ALL, arguing that the new tax rate imposed a disproportionate burden on professionals in Albania, making the chosen method harsh, unnecessary, and unsuitable.

After the case was transferred to a public plenary session by the College of the Court on April 25, 2024, the Constitutional Court delivered its judgment and final decision on the matter on June 27, 2024.

Court Ruling and Its Implications for Taxation Law in Albania

The Court ruled that the change and implementation of a tax scheme on income up to 14 million ALL per year constitute a legal obligation of a financial nature, which interferes with the constitutional rights and freedoms of taxpayers. The Court determined that Article 69, Point 1, Letter “dh,” of the tax law, which establishes a different timeline for the entry into force of the new tax liability for self-employed individuals, violates the principles of proportionality and legal certainty.

The application of the new 15% tax rate without an appropriate transitional period and sufficient notice to the affected entities was deemed inappropriate and unfair.

The Court emphasized that the implementation of tax laws should be accompanied by transitional measures to allow taxpayers time to adapt. Hence, it concluded that Article 69, Point 1, Letter “dh,” of the tax law violates the freedom of economic activity and legal certainty, and therefore it should be abolished.

In conclusion, the Court decided to partially accept the request and abolished Article 69, Point 1, Letter “dh,” second and third sentences, of Law No. 29/2023, due to its incompatibility with the Constitution, as well as Article 4 of Decision No. 753, dated December 20, 2023, of the Council of Ministers, “On the Implementing Provisions of Law No. 29/2023, ‘On Income Tax,’ as Amended,” due to its incompatibility with the Constitution.

As a result, the new 15% income tax levy was repealed effective immediately from the date of the Court’s judgment, and personal income tax on annual incomes up to ALL 14 million will be taxed, as before, at 0%.

If you’re interested in learning more about the personal income taxation rules in Albania and their implications for those considering a move to the country, seeking professional advice is highly recommended. 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.

הפוסט Constitutional Court of Albania Overturns New Personal Income Tax Brackets הופיע לראשונה ב-Y-tax Balkan.

Why Invest in Albania: Strategic Opportunities in Tourism

BananaBlitz — Wed, 25 Sep 2024 18:47:51 +0000

Albania is known for its beautiful landscape and diverse cultural heritage which are recognized as gems of European tourism. Strategically positioned in the Western Balkans, the country has seen remarkable growth in tourism in recent years, with an estimated increase of 163% over the past four years. Furthermore, according to the UN Tourism Barometer, Albania has been recognized as the top-performing destination in Europe for 2023 and the fourth top-performing destination in the world.

With the promising projections for tourism, in addition to the boost in the local economy, the country has recently become a potential and attractive hub for foreign investments. The government is working continuously to provide sustainable and growth-driven policies, especially in the tourism sector, playing a key role in fostering an attractive investment climate.

This article will navigate through Albania’s tourism investment opportunities and will provide information about the country’s economy, the government’s efforts to create a favorable investment climate, incentive policies, and the potential of the tourism industry to attract foreign direct investments (FDI).

Why Invest in Albania?

When assessing Albania’s potential as a reliable investment partner, the following key aspects should be considered:

The country’s vision – Albania’s government is currently focused on economic growth, stability, and regional influence, as it works toward creating a positive environment for foreign investments. The country has a clear strategy to attract investors, demonstrated by the establishment of the Albanian Investment Development Agency (AIDA). AIDA’s mission, primarily, is to advance the competitiveness of the private sector and promote foreign direct investment in the country.

Legislation Framework – Albania’s foreign investment regulations assist in creating a liberal and reformist investment climate. Albania encourages FDIs through a legal framework that allows 100% foreign ownership and offers specific investor protections under the Law “On Foreign Investment.” Ongoing reforms, fiscal consolidation, infrastructure investments, and educational improvements are some of the policies currently under governmental care. Additionally, the “Strategic Investment Law” offers strong legal safeguards for international investors who wish to do business in the country.

Growing Economy – Albania’s diverse economy relies on substantial sectors such as manufacturing, agriculture, and recently tourism. It is characterized by accelerated economic growth rates, proving resilience and adaptability. In the 2024 Report delivered by the International Monetary Fund (IMF), in the context of emerging markets and developing economies, where Albania is categorized, growth is expected to remain at 4.1% in 2024 and rise to 4.2% in 2025.

A closer examination of GDP levels reveals that in 2023, the GDP reached approximately USD 23 billion, and the growth projections for 2024 and 2025 remain optimistic, with an expected increase of 3.2%. While the agriculture and industry sectors’ overall contribution to the GDP are respectively 19% and 21%, the largest contributor remains the service industry at 47%. Notably, tourism expenditure alone accounted for 17.2% of the country’s GDP in 2022.

Young and Educated Population– The population’s average age currently stands at 38.8 years, while 46% of the population is under 35 years old. Albanian people, highly educated and skilled, remain a stronghold toward fostering business. Currently, the business activity data provided by SME Policy Index Western Balkans and Turkey 2022 indicates that the number of SMEs per 1,000 inhabitants in Albania has increased by 12.3%. In addition, the research study European Innovation Scoreboard 2023 , that which provides with a comparative assessment of the research and innovation (R&I) performance of countries, qualified Albania as an Emerging Innovator with a performance of 41.1%. Albanian people are known, among others, for their foreign language skills, with English, Italian, and Greek being widely spoken nationally.

Increasing Foreign Investments Flow – In the first quarter of 2024, FDIs in Albania reached €354 million, representing a 15.3% increase from the previous year, adding €47 million in investments. The main sources of these investments are from Italy, Austria, Turkey, Switzerland, the Netherlands, Germany, and Kosovo, spanning sectors such as real estate, electricity, and industries such as mining, insurance, and scientific activities.

Tourism Investment in Albania

An Overview of Tourism Data

Tourism in Albania has undergone a remarkable transformation in recent years. The country welcomed a record 5.9 million international tourists in 2018, marking its first major milestone. After the COVID-19 pandemic, tourism recovered quickly, and in 2023, Albania experienced an unprecedented surge, attracting 10.1 million visitors for the first time in its history.

According to the data provided by the Airports Council International, Albania led the world in passenger number growth during April-June 2024, with a remarkable increase of 259.4% in the second quarter of 2024.

Regarding tourism spending, the country’s data show growth and a positive rate, with visitor spending increasing from USD 1.2 billion in 2020 to USD 2.5 billion in 2021. In 2022 it reached a record USD 3.3 billion, highlighting the resilience of Albania’s tourism sector and its contribution to economic growth. Tourism has become a key pillar of Albania’s economy and steadily has become more relevant over the years. For example, in 2014, tourism directly contributed 2% to the GDP, and by September 2023, this figure rose to 3.8%.

Investments in the Tourism Industry

Tourism investment in Albania is of considerable relevance due to the country’s strategic location, richness of nature, and growing tourism sector. Albania’s diverse landscapes and rich cultural heritage have allowed for the development of various types of tourism spanning from the Adriatic and Ionian coastlines to alpine adventures in the north, as well as the exploration of historic castles and religious monuments from Orthodox, Catholic, and Islamic traditions.

Albania’s successful experience with both local and international tourists has led the country to carefully consider the future of tourism and develop strategies to further grow the sector. The Strategic Investment Law specifically highlights tourism as a key area for foreign investment, with Article 8 emphasizing its importance. Between 2016 and 2023 the pipeline of strategic investment projects amounted to 21 projects, totaling EUR 3,090 million and generating approximately 16,900 new jobs.

To learn more about the specifics of each of the twenty-one projects click here.

Investment in Albania’s tourism sector is strongly focused on developing high-end resorts and luxury accommodations. Recognizing this potential, the Albanian government is actively promoting the establishment of five-star resorts and boutique hotels serving upscale clients. Today, Albania hosts 17 global hotel brands, including Melia, Marriott, Movenpick-Accor, Mercure-Accor, Maritim, Radisson, Hyatt, Hilton, Pullman-Accor, and others. Remarkably, none of these brands were present in the country just five years ago.

Of particular relevance to Albania’s tourism, is the emergence of the recent eco-tourism projects, due to Albania’s rich natural environment. Albania is home to several UNESCO World Heritage Sites, including the ancient city of Butrint and the medieval towns of Gjirokastër and Berat, attracting travelers culturally and environmentally conscious travelers.

The Albanian government has made eco-tourism a key part of its tourism strategy, focusing on protecting natural and cultural heritage while encouraging sustainable growth. The creation of protected areas like the Vjosa Wild River National Park shows Albania’s commitment to preserving its natural resources while building responsible tourism infrastructure.

Incentives Policies Available

Currently, accommodation facilities such as “Four and five-star hotels, with special status” and the holders of an internationally recognized and registered trademark are exempted from tax on impact on infrastructure and tax on buildings, which you can learn more by clicking here. Additionally, they benefit from a reduced VAT rate of 6%, while structures that receive special statutes are exempted from corporate income tax for 10 years.

Other incentives include the disposal of state immovable property, the availability of state real estate (also through a symbolic EUR 1 contract) for a period of up to 99 years, and the establishment of touristic ports or permanent pits serving as supporting infrastructure for tourist structures.

The government’s focus on sustainability, improved infrastructure, and reducing seasonality makes Albania ideal for year-round tourism investments.

If you’re interested in learning more about legal and financial implications when considering investing in the country, seeking professional advice is highly recommended. Our firm specializes in international taxation, and our team is ready to assist with any related matters. We can connect you with top professionals to support your business activities in Albania, if necessary. Please feel free to contact us.

הפוסט Why Invest in Albania: Strategic Opportunities in Tourism הופיע לראשונה ב-Y-tax Balkan.

Strategic Investment Incentives in Albania: Energy Sector Opportunities

BananaBlitz — Wed, 25 Sep 2024 18:33:10 +0000

Albania has managed to strengthen its business climate over the past few years through various legal benefits and incentives aimed at attracting foreign and local investments. Hence, law 55/2015 “On Strategic Investments in the Republic of Albania” is the main legal instrument that has driven continuous positive changes in the Albanian business climate.

Encouraging Strategic Investments

Law no. 55/2015 aims to encourage and attract strategic investments, domestic and foreign, in certain sectors of the economy, recognized as strategic sectors. The law provides preferential terms for investments that are deemed to be in the public interest.

For instance, administrative procedures related to the preparation, implementation, development, and execution of strategic investment projects, as well as the issuance of licenses, permits, and authorizations, will be prioritized and expedited by all public and state authorities involved, whether directly or indirectly, in these processes.

In addition, approved investments can benefit from several other advantages, including the provision of auxiliary infrastructure and access to state-owned real estate for the realization of strategic investments.

To further support these investments, a Real Estate Fund has been established, utilizing state-owned properties to facilitate strategic projects.

The evaluation of strategic investments is subjected to multiple criteria, including, but not limited to; the value of the investment, time of investing, productivity and added value of the investment, opening of new jobs, increasing the general level of security and quality of life of citizens and environmental and/or consumer protection.

Strategic Sectors and Criteria to Obtain the Status of Strategic Investor

According to Law 55/2015 the following sectors are considered strategic investments:

Energy and mining sector.
Transport, electronic communications infrastructure, and urban waste.
Tourism (tourist structures).
Agriculture (large agricultural farm) and fishing.
Technology and economic development area.
Priority development areas.

Minimum Value of Investment Required for Strategic Investments

Energy and Mining Sector

Equal to or greater than 30 million euros per assisted procedure.
Equal to or greater than 50 million euros for a special procedure.

Tourism Sector

Equal to or greater than five million euros and that at the same time creates, at least, 80 new jobs for an assisted procedure.
Equal to or greater than 50 million euros for a special procedure.

Technology and Economic Development Area Sector

Equal to or greater than five million euros, for assisted procedure.
Equal to or greater than 50 million euros, for special procedures.
Investments with a value of 100 million euros or more, regardless of not being in the strategic sector, benefit from the special procedure strategic investment status.

Strategic Investor Benefits under Law 55/2015

The status of a strategic investor in Albania is divided into two categories: Investment/Strategic Investor ‘’Assisted Procedure’’ and Investment/Strategic Investor, ‘’Special Procedure’’. The main benefits that each group can receive under this law can be categorized as follows:

From an Administrative Perspective:

Expert Assistance – The Albanian Investment Development Agency (AIDA) provides direct support through its team of experts, helping investors prepare the necessary documentation and complete administrative applications.
Support Program Development – AIDA also offers guidance in the creation and implementation of support programs tailored to the needs of strategic investments.
Project Facilitation – For projects granted the status of ‘Strategic Investment/Investor, Assisted/Special Procedure,’ AIDA acts as a mediator, coordinating with relevant state bodies to ensure the smooth acquisition of permits, licenses, and authorizations.
Strategic Investment Contracts – After thorough evaluation by the Council of Ministers, the Assembly (Parliament) is responsible for approving strategic investment contracts.

From a Material and Economic Perspective:

Allocation of State Resources – Strategic investments may be granted access to state-owned assets, such as land, machinery, or other facilities, to support their development.
Use of Natural Resources – The Council of Ministers, following a proposal by the Strategic Investments Commission (part of AIDA), can approve the use of natural resources like seas, lakes, and rivers for strategic investment projects.
Expropriation for Development – In certain cases, the government may expropriate real estate or private property to facilitate the successful execution of strategic investment projects, ensuring they have the necessary space and resources.
State Partnership – The government may choose to partner with investors in strategic projects, either through financial contributions or by providing in-kind resources. This partnership could include developing infrastructure, constructing new facilities, or making other necessary enhancements to support the investment.

Why to Invest in the Energy Sector (Renewable Energy)

Albania has significant potential in the Renewable Energy Sources (RES) sector. This is because the country is currently focused on implementing a sustainable economy based on green energy, with renewable energy being identified as a current priority in Albania’s 2030 Plan.

Albania’s strategic location offers short routes from the Western Mediterranean to the Balkans and Asia Minor, making it easy to access its rich renewable energy sources like solar, wind, water, biomass, and geothermal resources. This gives Albania a strong advantage in developing renewable energy projects.

With considerable potential in RES, Albania’s long-term energy strategy focuses on three key objectives: promoting overall economic growth, enhancing energy supply security, and protecting the environment. For instance, 2020 Eurostat Data indicates that Albania had the highest share of renewable sources in the gross final energy consumption among the Western Balkans (45.0%), an increase of 13.1 percentage points compared to 2010. Additionally, the Albanian National Statistics Institute (INSTAT) states that during the first quarter of 2024, the net domestic production of electric power reached the value of 2,478 GWh. This was achieved by (i) public hydro plants, which contributed 46.9% of net domestic production, (ii) independent power producers, which contributed 50.3%, and (iii) other producers (photovoltaics), which generated 2.8% of net domestic electricity production.

Recognizing Albania’s great potential for renewable energy and its importance for sustainable growth, banks in Albania have introduced a new lending product – Investment in the Energy sector called Green for Growth Fund (Green Loan) up to the value of EUR 1,000,000.00.

Furthermore…

In addition to the promising data outlined above, the following aspects underline Albania’s attractiveness for investments in the Energy Sector:

The Government in its General National Plan “Albania 2030” has set Renewable Energy as the key priority, for developing a “Green Energy”- driven economy.
Incentives, governmental support, and facilitation of investments.
High-quality experienced engineering and technical workforce, particularly in the hydropower sector.
Proven record of successful foreign investments in the sector.

Important to note, that Albania has started the EU integration process and the compliance of Albanian legislation with that of the EU. The main instruments of Albanian energy policies include the harmonization of the legal framework of the energy sector with European directives, consumer protection, promotion of energy efficiency, and increased use of renewable resources.

Click here for further information about the additional benefits of investing in renewable energy in Albania.

If you are interested in investing in Albania, it is advisable to consult with the relevant professionals. 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.

הפוסט Strategic Investment Incentives in Albania: Energy Sector Opportunities הופיע לראשונה ב-Y-tax Balkan.

Foreign Direct Investments in Albania

BananaBlitz — Sun, 22 Sep 2024 09:48:35 +0000

In 1993, the Republic of Albania adopted Law No.7764/1993 “On Foreign Investments”, aiming to regulate the protection, promotion, and encouragement of foreign investments in the country. In addition, the law provides foreign investors with rights and guarantees, while safeguarding their assets and ensuring they are treated fairly per the adopted international standards and practices.

Foreign Investment Rights and Protections in Albania

According to the law, foreigners who want to set up a business in Albania should not have to get permission from the Government. While there are no restrictions on the share of foreign participation in Albanian companies, 100% foreign ownership is allowed. Additionally, foreign investors have the right to expatriate all funds and contributions related to their investment, whether in kind or otherwise.

Foreign investors are entitled to the same favorable treatment as domestic investors, except for land ownership, which is governed by a special law. Albanian law provides that foreign investments are never governed by terms that are less favorable than the generally accepted norms of international law. Furthermore, investments are treated equally and impartially, ensuring complete protection and security.

Foreign Investments Sectors and Countries in Albania for 2024

In the early 2000s, Albania began attracting foreign investments, and since then, both the amount and the number of partners have grown. Data on the FDI flows in Albania between January and March 2024, confirm that foreign investments in the country reached €354 million, the highest ever for this period. A year earlier, the total was €307 million, showing an increase of 15.3%, or €47 million, in just one year.

In 2024, Turkey led foreign investments in Albania, contributing around 19.5% of the total. Italy and Austria followed with 11.6% and 9.6%, respectively. Other key contributors included the Netherlands at 7%, Kosovo at 5.6%, and Germany at 5%.

Main contributor sources of the FDI inflows in 2024 included the real estate sector with 23.7% of the total, followed by financial and insurance activities (20.9%), extractive industry (14.4%), processing industry (11.8%), and professional, scientific, and technical activities (7.3%).

Laws Implemented to Support Foreign Investments in Albania

The framework of foreign investments in Albania, in addition to the above mentioned cornerstone Law No.7764/1993 “On Foreign Investments”, has been contemplated with additional legal instruments. Notably, Law No. 55/2015 aims to attract strategic domestic and foreign investments in key sectors of the economy by offering preferential terms for projects deemed in the public interest. It expedites administrative procedures for strategic investment projects, such as permits and licenses, and provides customized benefits like access to state-owned real estate and infrastructure support; for instance, a Real Estate Fund has also been created to facilitate these projects. Strategic investments are evaluated based on criteria such as investment value, job creation, economic impact, and contributions to security, quality of life, and environmental protection.

Furthermore, the Albanian Investment Development Agency is an ad-hoc institution that has been established to inform, overview, and provide all the relevant data on foreign investments.

Why Invest in Albania?

Albania’s economy grew by 2.24% in 2019. Thanks to its strategic location, with ports on both the Adriatic and Ionian seas, and natural resources like oil, chromium, copper, and coal, the country has an advantage in the region and is more prone to attract investments in sectors related to these resources.

Important to mention, that Albania benefits from a young, skilled, and low-cost workforce providing companies and investments with sustainability and efficiency. Its currency, the lek, currently remains stable and strong against the euro, providing further economic confidence. The country also has a competitive tax system.

In addition, as a member of the General System of Preferences (GSP) and in connection with its participation in free trade agreements, Albania has free access to major markets. Being a forward-looking country Albania has created a supportive legal and institutional environment for foreign investments. As a result, it has become a reliable partner for investors, with strong potential remaining in priority sectors like mining and infrastructure.

If you are interested in investing in Albania, it is advisable to consult with a professional on investment opportunities that best suit your needs. 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.

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Real Estate in Albania

BananaBlitz — Mon, 22 Jul 2024 10:50:36 +0000

Albania, an attractive country located on Southeastern Europe’s Balkan Peninsula, has undergone a series of reforms to enhance its business climate and consolidate its institutions, leading to a more stable and prosperous country. Presently, Albania is experiencing a notable rise in investments and tourism, making the country very favorable for real estate investments.

A notable benefit of investing in property in Albania is its affordability. Albania is one of Europe’s countries where living expenses, housing costs, and property prices are comparably less expensive when compared to any other European country. This article provides comprehensive information on the property rights of foreign citizens in Albanian real estate investments, and other benefits as regulated by the Albanian Government.

The Eligibility of Foreign Citizens to Acquire Real Estate

However, exception to the leasing policy applies for the agricultural land exceeding 1000 square meters, which requires the establishment of a local legal entity for purchase by a foreigner. Otherwise, a foreigner can buy any type of property without any limitations. It should be noted that when it comes to obtaining a residence permit through property purchase, a foreigner must own at least half of the property and at least 20 square meters per person. The value of the property does not affect the eligibility for a residence permit. In addition, the buyer must be aware of various taxes and fees associated with the purchase of real property, including registration and notary fees, as well as possible municipal fees and property insurance for new buildings.

High Areas for Real Estate Investment, Prices, and Return on Investments

Tirana, the capital city of Albania, has experienced significant economic and social development, attracting both tourists and business professionals.

When looking to buy property in Tirana, these areas are the most popular choices: Blloku, City Center, Komuna e Parisit, and the Artificial Lake area. These neighborhoods each have their exceptional character and draw different types of residents, which as well, notably, have high demand for rentals.

The sale price ranges vary from €1,300 to €2,000 per square meter, while as rentals start at €400 for rented apartments, depending on the quality and location.

Coastline Cities: Durres, Vlorë and Sarandë

Durres: Durrës is the second most populous city of the Republic of Albania. It is a vibrant coastal city in Albania, with an intriguing mix of history, culture, and the exquisite beauty of the Mediterranean. Buying a property in Durrës as well is subject to different price ranges, typically starting at €700 Euro per square meter in the city center. The value of a square meter for an apartment in Durrës city center might differ from a beachfront property. Landlords can expect to earn a monthly rental income of approximately €200-€800, depending on the quality and location of the property.

Vlorë: Vlorë stands as a beautiful coastal city along the renowned Albanian Riviera, celebrated for its stunning beaches and diverse dining options notable for the rich mediterranean cuisine. Property sale prices in Vlorë start at €600 Euro, depending on the location. Landlords can expect a monthly rental income of approximately €250-€700, depending on the quality and location of the property.Top of Form

Sarandë: The city of Sarandë is one of the most desirable markets for international purchasers, who upon visiting the city over the summer, return in the fall to purchase a home. Due to its closeness to the airport on Corfu Island, Sarandë continues to be the city of choice for purchasers from northern Europe and Scandinavia. Property sale prices in Sarandë start at €700 Euro, but the price may be lower or higher depending on the area. Landlords can expect a monthly rental income of approximately €300-€700, depending on the quality and exact location of the property.

Incentives for Ownership of Real estate for Foreign Citizens

The Albanian government has implemented a range of incentives, designed to safeguard and enhance the prosperity of foreign investors. The Law on “Foreign Investments” aims to create a favorable investment climate and provides the guarantees for protection to all foreigners willing to invest in Albania, as follows:

No limitation on the percentage share of foreign participation in companies. A 100% foreign ownership is possible; Albania’s tax system does not differentiate between foreign and domestic investors; foreign investments enjoy equal and unbiased treatment as the domestic investments and have complete protection.

Financial Incentives

Albania applies foreign tax credits rights even in case there is no double tax treaty in place with the country where the tax is paid. If a Double Taxation Treaty is in force, double taxation is avoided either through an exemption or by granting tax credit up to the amount of the applicable Albanian corporate income tax rate.

Dividends and profit share paid by a resident or non-resident company to a resident taxpayer will not be subject to corporate income tax for the resident taxpayer.

Accommodation facilities “Five stars hotels, with special status” as per the definition provided in the legislation on tourism, holders of an internationally recognized and registered trademark are exempt of tax buildings

Residential buildings of heads of households, who benefit retirement or social pensions, who live in city or villages, when the family consists of only pensioners are exempt of tax buildings.

Other Incentives

Through the purchase of real estate, foreign citizens can get a residence permit in Albania to maintain their property. The application for the residence permit is online and quite simple to complete. It is important to note that foreign nationals who buy real estate in Albania are eligible for a residence permit for up to one year, with the possibility of renewal for another year. Applicants must evidence ownership of at least half of the property, maintained throughout the residence permit validity.

The government allows the leasing of public properties larger than 500 square meters or grants a concession for just € if the purpose is to use them for manufacturing with an investment of over 10 million euros or for inward processing activities.

The state could provide assistance in the form of auxiliary infrastructures for the recognized strategic investments, facilitating project preparation, implementation, and investment realization. This included such as roads as well as water supply lines, sewage systems, electric lines, and communication services. In accordance with Albanian law, lands, forests, agricultural lands, and other immovable assets belonging to the Albanian state can used for the development and execution of strategic investment projects.

The real estate sector Albania is an ideal space for those who want to maximize income from real estate investments. Strategic geographical position, long seashores of the Adriatic and Ionian seas, and close proximity to major European cities access to short flights are features that make it exceptionally attractive.

If you are interested to invest in Albania, it is advisable to consult with a professional on investment opportunities that best suit your needs. 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.

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Inheritance, Estate and Gift tax in Albania

BananaBlitz — Mon, 01 Jul 2024 09:29:52 +0000

Albanian tax legislation governs the taxation framework concerning inheritances, gifts, and gambling profits, including regulations applicable to both residents and non-residents. This article aims to provide information about inheritance, estate, and gift tax in Albania.

The application of Inheritance, Estate and Gift Tax in Albania

The Republic of Albania imposes taxes on its residents who receive gifts, inheritances of assets from within or outside Albania, or profits from gambling within or outside the country. Non-residents in Albania are also taxed if they receive gifts or inheritances from within Albania or if they earn profits from gambling within the country.

Albanian law defines gifts as movable or immovable property, or money received without any payment in return; while as inheritance is defined as movable or immovable property or money received through the transfer of assets from a deceased person to their heirs, excluding any debts. Assets from gifts and inheritances are valued at their nominal value or market value, whichever is greater.

Estate taxes in Albania are applied to immovable property. Before the registration of such property, individuals transferring or donating ownership must pay these taxes in accordance with relevant laws. These taxes are treated as income and are levied at a flat rate of 15%.

Tax Rates and Exemptions

Exemptions:

Donations and inheritance received from or between first and second-degree legal heirs, as well as donations and inheritance within sibling relationships.
Donations and inheritances up to 5,000,000 ALL per taxpayer for immovable assets and up to 1,000,000 ALL for movable assets per taxpayer.
The transfer of ownership rights to legal heirs through donation or relinquishment of property when the property derives from co-ownership.

Tax Rates:

The tax rate for inheritances, gifts, and gambling income is 15%, without deducting any costs.

To read more about taxation in Albania, click here.

The law on personal income tax in Albania ensures that the tax system is fair and consistent, maintaining clarity and compliance for all subjects involved. For more information on personal income tax and other tax categories applied in Albania, click here to visit the official page of the Albanian Tax Authority.

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.

הפוסט Inheritance, Estate and Gift tax in Albania הופיע לראשונה ב-Y-tax Balkan.

Tax Benefits in Albania

BananaBlitz — Mon, 01 Jul 2024 09:24:10 +0000

Tax reliefs and exemptions are essential to the fiscal strategy in Albania, aiming to encourage investment and improve economic growth. In this article, we will explore different tax benefits in the country.

Entities Exempt from Taxation in Albania

According to the rules, the following entities are exempted from the corporate income tax in Albania:

Entities carrying out religious, humanitarian, charitable, scientific, or educational activities.
Government foundations or non-banking financial institutions financing the government development strategy by way of loans.
Trade unions and chambers of commerce that do not serve the profit of individuals or their members.
Entities currently effective on international contracts that are ratified by the Parliament.
Cinematographic production sets that are licensed and subsidized.

Business Tax Benefits

In Albania, businesses benefit from a range of fiscal incentives designed to stimulate investments in important sectors such as tourism and hospitality. Notably, accommodation and restaurant services in certified agrotourism establishments or within recognized 4/5-star hotels enjoy a reduced VAT rate of 6%.

For the legal activities involved in software production/development specified below, a tax rate of 5% on profit tax will be applied, as opposed to the standard 15% applied to other types of businesses.

Type of business who benefit from the 5% tax rate:

Software design.
Development and maintenance of software systems.
Software testing.
Design and development of communication systems.
Design and development of security systems.
Development of migration systems.
Improvement/upgrade of IT systems.
Operation, management, user support, and technical/informatics audit for software systems.

Fiscal incentives are also applied to entities engaged in hydrocarbon production/development sectors. In the hydrocarbon domain, taxable profits are determined by deducting allowable expenses and losses, limited to 85% of the income. Various expenses, like budget payments, employment costs, material purchases, transportation, and third-party services, are deductible. Certain income types, such as interest and financial gains, are tax-exempt as well.

To read more about incentives and taxation in Albania click here.

Application of Deductions

Albanian legislation provides different fiscal incentives in the form of deductions for different types of taxpayers. For commercial and self-employed individuals with an annual turnover of up to ALL 10,000,000 there is the option to choose a special regime for deductible expenses, either based on specified percentages or actual documentation. Contributions to private pension funds are deductible from personal income, and returns from these funds are not taxable.

Moreover, individuals can benefit from deductions like a fixed amount based on their income, allowances for dependent children, and deductions for educational expenses related to their children.

Tax deductions vary by income levels:

For incomes up to 600,000 ALL (or 50,000 ALL monthly), the deduction is 600,000 ALL annually (that means that they are exempt from the tax)
For annual incomes between 600,000 and 720,000 ALL, the deduction is 420,000 annually or 35,000 ALL monthly.
For incomes above 720,000 annually, the deduction is 360,000 ALL annually or 30,000 ALL monthly:
For each dependent child under 18 years old, there is a tax deduction of 48,000 ALL available.

For those with taxable earnings from employment/business less than 1,200,000 ALL annually, additional to the above deductions, educational expenses for dependent children can be deducted up to 100,000 ALL/year.

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