Nimrod Yaron Albania

Comparing Withholding Taxes in the Western Balkan

BananaBlitz — Sun, 03 Nov 2024 17:42:30 +0000

Withholding taxes in the Balkans vary significantly by country, and they typically apply to payments made to non-residents on income types like dividends, interest, royalties, and service fees. This article aims to provide an overview of withholding taxes in several Western Balkan countries, specifically in Albania, North Macedonia, Kosovo, and Montenegro. It is designed to offer readers, including those considering relocation or investment, a comprehensive and insightful understanding of withholding taxes and benefits available in each of these countries.

Overview of Withholding Taxes

Albania

Dividends

Dividends paid by an Albanian company to non-residents are subject to an 8% withholding tax, though a lower rate may apply under an applicable tax treaty.

Interests

Interest payments from Albanian residents to non-residents are subject to a 15% withholding tax, which may be reduced if an applicable tax treaty provides a lower rate.

Royalties

Royalties paid by Albanian residents to non-residents are subject to a 15% withholding tax, with the possibility of a lower rate if an applicable tax treaty allows.

To read more about Albania click here.

North Macedonia

Dividends

In North Macedonia, dividends paid to non-residents are taxed at a 10% withholding rate. Dividend income includes any profit earned from shares or similar ownership rights in a company where the profit isn’t being used to cover debts. It also includes profit from other corporate rights that are treated similarly to share income for tax purposes in the country where the distributing company is based.

If the foreign recipient of the dividend is from a country that has a double tax treaty with North Macedonia, this withholding tax rate may be reduced.

Interests

In North Macedonia, interest payments to non-residents are subject to a 10% withholding tax. This tax applies to income earned from any debt claims, which means any funds owed, whether or not they are backed by a mortgage or linked to the debtor’s profits. It covers income from bonds or other securities (including bonuses attached to them) and income from loans.

However, if the recipient is from a country that has a double tax treaty with North Macedonia, this 10% withholding tax may be reduced.

Royalties

In North Macedonia, royalties paid to non-residents are subject to a 10% withholding tax. This tax applies to payments for the use of intellectual property rights, which include things like copyrights on literature, art, or scientific works, as well as cinematography, software, patents, trademarks, designs, models, plans, trade secrets, and “know-how” (specialized knowledge or expertise).

If the recipient of the royalties’ lives in a country that has a double tax treaty with North Macedonia, this withholding tax rate may be lowered.

To read more about North Macedonia click here

Kosovo

Dividends

Dividends are exempted from withholding tax.

Interests

Interest payments to non-resident corporations are subject to a 10% withholding tax. However, interest on loans from Central Bank of Kosovo-licensed financial institutions to their clients is exempt from withholding tax.

Royalties

Royalties paid to non-resident corporations are subject to a 10% withholding tax.

To read more about Kosovo click here.

Montenegro

Dividends

Payments of dividends and profit shares to non-resident legal entities are subject to a 15% withholding tax in Montenegro unless a double tax treaty specifies a lower rate or exempts the payment from withholding tax.

Interests

Interest payments to non-resident legal entities are subject to a 15% withholding tax in Montenegro unless a double tax treaty provides for a lower rate or exempts the payment from withholding tax.

Royalties

Payments of royalties and other intellectual property rights to non-resident legal entities are subject to a 15% withholding tax in Montenegro unless a double tax treaty specifies a lower rate or exempts the payment from withholding tax.

To read more about Montenegro click here.

Summarized Comparable Study on Withholding Taxes in Albania, North Macedonia, Kosovo and Montenegro

Albania

North Macedonia

Kosovo

Montenegro

Dividends

10%

N/A

15%

Interests

15%

10%

15%

Royalties

15%

10%

15%

To read more about the above Balkan Countries click here.

Why Consider Western Balkan Countries to Invest?

The withholding tax rates of dividends, interests, and royalties in Western Balkans countries are relatively low. These can be more favorable in their rates than those in other countries; hence, western Balkan countries are a good option for investors.

Various Western Balkans countries have signed double taxation treaties with various countries. These can help reduce withholding tax rates on the payments made to foreign investors, and thus make it financially worth investing. Economies within the Western Balkans are growing, with tourism, energy, and agriculture being some of the sectors showing great potential for investment. It also boasts a favorable taxation environment, making prospects for returns quite good.

If you are considering Albania, North Macedonia, Kosovo, or Montenegro to live and/or conduct your business, 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 Comparing Withholding Taxes in the Western Balkan הופיע לראשונה ב-Nimrod Yaron Albania.

Real Estate Taxation in Balkan Countries

BananaBlitz — Tue, 29 Oct 2024 10:11:34 +0000

Real Estate Taxation in Balkan Countries: Comparing Albania, North Macedonia and Montenegro

Real estate taxation across the Balkan countries is diverse, reflecting each nation’s unique economic strategies and fiscal needs. These taxes are a significant revenue source for local governments and play a critical role in regulating property markets. Typically, taxation frameworks include recurrent property taxes, which are paid annually based on the property’s value, size, or type.

This article aims to provide an overview of real estate taxation in several Western Balkan countries, specifically Albania, North Macedonia, and Montenegro. It is designed to offer readers, including those considering relocation or investment, a comprehensive and insightful understanding of the personal income taxation and benefits available in each of these countries.

Overview of the Real Estate Taxation

Albania

Property Tax

Real estate tax is levied on buildings according to the type of activity of the business that owns the building and, therefore on the value of the building. It is calculated annually and expressed as a percentage of its value, adjusted by the usage of the building:

Residential properties: 0.05% of the value of the property is taxed.
Commercial Property: 0.2% of the value of the property.
Incomplete building sites: when construction has not been completed on the due date appearing in the license. Taxed at 30% of the standard rate depending on whether the plot is to be considered residential or commercial.

This structure ensures that different uses of property are adequately taxed, incentivizing the timely completion of construction projects and ensuring property owners pay their fair share based on what function their asset serves.

To learn more about Albania click here.

Transfer Tax

The transfer of ownership of real estate in Albania, whether land or buildings, is taxed at 15% on the capital gain earned from the sale. This tax applies to the profit made by the seller, calculated as the difference between the property’s sale price and its original purchase price or acquisition cost.

North Macedonia

Property Tax

There is an annual property tax on owner-occupied properties that depends on their assessed value, including buildings and land. The standard tax rate is proportional, typically ranging between 0.1% and 0.2%. Various exemptions and reliefs are available, depending on the circumstances.

Starting January 1, 2022, the tax rate increases to three times the standard rate in two cases:

Properties left unused by the owner or unleased for more than six months in a year.

Agricultural land is not utilized for farming activities.

These increased rates are intended to discourage underutilization of property and promote more effective land and building use.

To learn more about North Macedonia click here.

Transfer Tax

A property transfer tax ranging from 2% to 4% is levied upon the transfer of real estate in North Macedonia. This is normally paid by the seller, whether a natural or juridical person. However, it could be that upon agreement by the parties, another arrangement, which could be the payment of such tax by the buyer, should be resorted to, or it could also be divided between both parties. This is so that flexibility in the process of transfer would answer to the needs of both parties.

Montenegro

Property Tax

In Montenegro, real property tax is applied to immovable property (such as land, houses, or commercial buildings) based on its market value. The standard tax rate ranges from 0.25% to 1%, but it can go as high as 5% for specific types of properties, according to the Law on Real Estate Tax.

To read more about Montenegro, click here.

Transfer Tax

The real estate transfer tax is paid by the buyer upon purchasing a property. The tax is based on the market value of the property at the time of transfer, with a fixed rate of 3%.

Table: Real Estate Tax Rates

Albania

North Macedonia

Montenegro

Property Tax

0.05%

A building used for residential purposes

0.2%

A building used for Business purposes

Between 0.1% and 0.2%.

From 0.25% to 1%

Transfer Tax

15%

From 2% to 4%

Why Consider Western Balkan Countries to Invest in Real Estate?

Albania

Foreign individuals or companies that invest in Albania can purchase land after completing their investment according to the construction permit. The investment must be worth at least three times the value of the land, or they should have bought or built properties worth more than three times the land’s price.

State properties larger than 500 m² can be leased to third parties for a symbolic fee of 1 euro per contract. This is done by the Council of Ministers when the winning bidder from a competition proposes activities on the property from a list of approved activities deemed strategic for the country’s development.

North Macedonia

In the Republic of North Macedonia, land within free zones can be leased long-term for up to 99 years at discounted rates. Investors enjoy exemptions from local municipal utility taxes and fees associated with land building permits. Additionally, there is free access to the natural gas, water, and sewage networks. The government also offers potential support for capital investments by providing a 10% return on investment costs for new machinery, equipment, or investments in buildings and land.

Montenegro

Montenegro’s tourism sector is growing, driven by its beautiful landscapes and historical sites, as well as its emerging status as a luxury travel destination. This creates investment opportunities in hospitality and real estate development. The real estate market is also growing, offering chances to invest in properties and development projects.

If you want to read more about investment opportunities in Montenegro, click here.

If you are considering Albania, North Macedonia, or Montenegro to live and/or conduct your business, 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 Real Estate Taxation in Balkan Countries הופיע לראשונה ב-Nimrod Yaron Albania.

Corporate Income Tax in the Western Balkans

BananaBlitz — Sun, 27 Oct 2024 13:11:58 +0000

Corporate Income Tax in the Western Balkans: Comparing Albania, Kosovo and Montenegro Tax Policies

Corporate Income Tax (hereinafter referred to as CIT) is a tax on the profits that businesses earn. It’s based on a company’s taxable income, calculated by subtracting expenses (like salaries, rent, and other operating costs) from total revenue. This profit is then taxed at rates set by each country or region. Tax rates and rules vary widely, with some countries offering different rates or incentives for certain industries or locations. Corporate income tax helps fund government services and ensures that businesses contribute to public revenue, similar to how individuals pay income tax.

This article aims to provide an overview of corporate income taxation in the Western Balkan region, specifically comparing Albania, Kosovo, and Montenegro. It is designed to offer readers, including those considering investing, a comprehensive and insightful understanding of the corporate income taxation and benefits available in each of these countries.

Overview of the Corporate Income Taxation

Albania

Albania’s corporate income tax system, with a base rate of 15% on profits after allowable expense deductions, makes it a competitive investment destination in Europe. The tax applies to various entities, including collective societies, limited partnerships, limited liability companies, joint stock companies, and other entities, including non-residents. A company is tax-resident if established or managed in Albania, especially if board meetings are held there or specific local criteria are met, such as local ownership or resident board members. A Permanent Establishment includes any fixed business location or service provision in Albania for six months or more.

To learn more about taxation in Albania, click here.

Kosovo

Kosovo’s corporate tax framework, characterized by low tax rates, is designed to attract investment. Corporate tax residency applies to entities with their main office or effective management in Kosovo, with a 10% corporate income tax rate. A Permanent Establishment is created if a business has a fixed location in Kosovo for more than six months within a 12-month period, including offices, factories, or natural resource sites. Kosovo follows worldwide taxation, taxing residents on both foreign and domestic income, while non-residents are taxed only on income generated within Kosovo. Taxable entities include corporations, public/state-owned businesses, and non-residents with a Permanent Establishment in Kosovo.

To learn more about taxation in Kosovo, click here.

Montenegro

Montenegro, an attractive investment hub with a low corporate income tax rate of 9-15%, has streamlined its tax framework to meet EU standards, including recent amendments aligning with the EU’s Directive 2009/133/EC. Corporate tax residency is based on business establishment and profit generation within the country, with taxes filed annually by March. Taxable income includes profits from regular operations, property transfers, dividends, interest, and royalties. New changes affect CIT base calculations, capital gains valuation, and withholding tax expansion. Non-residents may benefit from reduced withholding tax on dividends, interest, and royalties through double-taxation treaties.

To learn more about taxation in Montenegro, click here.

The following table provides a summarized comparable study on income taxation in Albania, Kosovo and Montenegro:

	Albania	Kosovo	Montenegro
*Tax Base for Residents*	A resident company pays tax on their worldwide income.	A resident company in Kosovo is subject to corporate income tax on Kosovo-source and foreign-source income.	A resident company is taxed on its worldwide income.
*Tax Base for* *Non-Residents*	The income tax base for nonresident corporations is Albanian-sourced income.	A non-resident company in Kosovo is subject to corporate income tax on Kosovo-source income.	Nonresident companies are taxed on their Montenegrin source income.
*Taxable Profit*	Taxable profit for Albanian corporate tax purposes is based on income as reported in the corporation’s financial statements (prepared in accordance with accounting regulations), taking into account deductions and corrections required by the tax laws.	In Kosovo, corporate income tax is generally measured by net profit, which is the difference between the gross income received or generated and allowable deducted expenses.	The taxable base is determined from the company’s profit and loss statement, and generally, business expenses are deductible if they are aimed at earning or maintaining taxable income, directly related to the business activity, are incurred or accrued during the taxable period, and are properly documented. Deductible operating expenses typically include the normal day-to-day costs of running the business.

Taxation Rates

While the three countries share similarities in the regulation of corporate taxation, they differ in certain aspects, such as tax rates. In Albania, business income is taxed at 15%, in Kosovo at 10%, and in Montenegro CIT is levied progressively, ranging from 9 percent to 15 percent.

In the following graphic, a comparative view of taxation is presented for each of the countries:

Incentives and Exemptions

Albanian Legislator exempts certain entities from corporate income tax, including government bodies, financial institutions like the Bank of Albania, and foundations or non-banking financial institutions that support government policies through loans. Additionally, organizations engaged in religious, humanitarian, charitable, scientific, or educational activities, as well as labor organizations and chambers of commerce, are exempt. Tax periods align with calendar years, requiring corporate income tax returns to be filed by March 31 of the following year. Corporations with annual turnover under 14 million Albanian lek (ALL) are exempt, while software production and agro-tourism companies benefit from a reduced tax rate of 5%.

To learn more about tax incentives in Albania, click here.

Kosovo Legislator offers a range of tax incentives and credits to stimulate economic activity and investment. Dividends for both residents and non-residents are exempt from taxation, allowing investors to keep more earnings. Companies investing in new heavy machinery receive a 10% deduction on corporate income tax for these assets, although this benefit does not apply to those already utilizing other tax incentives. The country promotes social development by providing corporate income tax credits of up to 30% for sports sponsorships and 20% for contributions to youth and culture. Additionally, Kosovo offers a foreign tax credit to mitigate double taxation on income earned abroad.

To learn more about tax incentives in Kosovo, click here.

Montenegro Legislator offers various corporate tax deductions, including tax depreciation, business-related interest, and bad debts over 365 days with legal action. Charitable donations are deductible up to 3.5% of revenue, and salary and termination bonuses are also deductible, though entertainment and membership fees have limitations. Tax losses can be carried forward for up to five years. Corporate tax incentives include an eight-year exemption for new production businesses in underdeveloped areas, with exceptions for certain sectors. NGOs can reduce their tax base by €4,000 if profits support their objectives. The country’s strategic location and Euro currency enhance its appeal for foreign investments.

To learn more about tax incentives in Montenegro, click here.

Why Consider Western Balkan Countries?

Investors can consider Albania, Kosovo, and Montenegro for establishing a business due to their favorable tax regimes and investment incentives. Albania offers a corporate income tax rate of 15% and exemptions for small businesses and certain sectors, along with tax-deductible operating expenses. Kosovo stands out with its zero taxation on dividends and a 10% deduction on new heavy machinery investments, alongside credits for cultural contributions, making it attractive for socially responsible investors. Montenegro features one of Europe’s lowest tax rates at 9%, with additional incentives for new production businesses in underdeveloped areas and reduced rates for agriculture and software companies. Each country has unique exemptions and credits that support different sectors, making the region appealing for diverse investment strategies. The strategic locations of these countries, coupled with their efforts toward EU integration, enhance their potential as business hubs in Southeast Europe.

If you are considering Albania, Kosovo, or Montenegro to live and/or conduct your business, 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 Corporate Income Tax in the Western Balkans הופיע לראשונה ב-Nimrod Yaron Albania.

Supporting Strategic Investments in Bosnia and Herzegovina

BananaBlitz — Wed, 23 Oct 2024 10:45:02 +0000

Supporting Strategic Investments in Bosnia and Herzegovina: Incentive Policies Overview

Strategic investment incentives in Bosnia and Herzegovina aim to attract foreign and domestic investors through financial benefits in reliefs, providing regulatory support for various industries such as manufacturing, energy, information technology, tourism, and agriculture. These industries have the potential to encourage economic growth and job opening. The government of Bosnia and Herzegovina, hence, has developed a tax framework involving custom duties exemptions, reduced corporate income tax, and grants for capital investments in underdeveloped areas. This is further supported by Bosnia’s favorable trade agreements, skilled workforce, and proximity to the European Union.

Numbers to Look At

Bosnia and Herzegovina offers a liberal trade regime and boasts one of the lowest and most simplified tax structures in the region, with a 17 percent VAT and a 10 percent flat income tax. From 2010 to 2023, the country attracted approximately $7.38 billion in foreign direct investment (FDI), with Austria, Croatia, Serbia, Slovenia, and Germany ranking as the top investors. The following table provides a comparative overview of the FDIs in the last decade, in USD value:

Source: World Bank

Encouraging Investments in Bosnia and Herzegovina

The Law on the Policy of Foreign Direct Investments of Bosnia and Herzegovina ensures equal treatment for foreign investors, granting them the same rights and obligations as residents. It allows investors to open bank accounts in any commercial bank using domestic or convertible currencies and to hire foreign nationals, following local labor and immigration laws. Investors can freely transfer profits abroad without restrictions and own real estate with the same property rights as local entities. The law protects foreign investors from nationalization or expropriation, allowing such actions only in the public interest with prompt and fair compensation. Furthermore, investor rights cannot be overridden by future regulations, and if new laws offer more favorable conditions, investors can choose which legal framework will govern their investments.

The Foreign Investment Promotion Agency of Bosnia and Herzegovina (FIPA), an ad-hoc agency established to promote foreign investments in the country, serves as a bridge facilitating the connection between public and private sectors, providing customized and thorough information on the potential investment policies.

Free Trade Zones in Bosnia and Herzegovina

Free trade zones in Bosnia and Herzegovina are part of the customs territory, and at the same time, they are legal entities. According to the Law on Free Trade Zones, these may be founded by one or more domestic or foreign legal entities or individuals. Businesses within the zones have tax exemptions on VAT and import duties on equipment used for production.

Investment, profit repatriation, and the mobility of capital are free in the zones. The setting up of a Free trade zone is approved provided a feasibility study shows that at least 50% of the goods produced within the zone will be exported within 12 months.

To read more about taxation in Bosnia and Herzegovina, click here.

Tax Incentives for Foreign Investors in the Federation of Bosnia and Herzegovina

There are several incentives in the Federation of Bosnia and Herzegovina aimed at foreign investors. Under the Law on Corporate Income Tax, for instance, companies that invest over 50% of their annual profit in the purchase of equipment for production are allowed a 30% reduction in income tax in the year they made such an investment. In addition, every company that invests at least €10 million within five successive years, with a minimum investment of €2 million for the first year, receives a deduction of 50% of their income tax for the year such investment is made.

Employers may also deduct the doubling of gross wages for new employees if the employee agreement was for at least 12 months full-time and the employee has not worked for them or affiliated companies during the previous five years.

To read more about Bosnia and Herzegovina click here.

Tax Incentives for Investment in the Republic of Srpska

In the Republic of Srpska, several tax incentives are available to encourage investment. Companies that invest in property, plant, or equipment for registered manufacturing activities can reduce their tax base by the amount of the investment. Employees in the textile, clothing, and leather sectors earning below the previous year’s average gross salary benefit from a reduced contribution base, calculated as 25% of the average gross salary from the previous year. Additionally, the region has abolished the dividend tax and introduced favorable rules for taxing income from foreign sources. Qualified investors can also receive tax benefits on their annual income under specific conditions.

If you are interested in investing in Bosnia and Herzegovina, 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 Bosnia and Herzegovina. Please feel free to contact us.

הפוסט Supporting Strategic Investments in Bosnia and Herzegovina הופיע לראשונה ב-Nimrod Yaron Albania.

Strategic Investments in Montenegro

BananaBlitz — Sun, 20 Oct 2024 15:30:06 +0000

Montenegro, strategically located in the Western Balkans, provides advantageous investment opportunities for foreign investors. The development strategy, a key policy of the country, aims to attract foreign direct investments through a competitive and business-friendly environment. Accordingly, Montenegro aims to position itself as a major business hub in Southeast Europe, drawing companies and investors worldwide.

No Restrictions for Foreign Investments

Montenegro has been attracting many foreign investors in several promising sectors likewise tourism, energy, real estate, and infrastructure. Important to note, that Montenegro works on providing a business environment characterized by favorable regulations and financial incentives. Its business-friendly environment is supported by competitive tax rates and legal reforms that allow for smoother processes when opening and running a business. For instance, setting up a business in Montenegro is quite straightforward.

Foreign investors enjoy the same rights and conditions as local investors when establishing a company or making investments. For all foreign natural and legal entities, the state allows investments into the country without restrictions.

Numbers to Look At

Within the timeframe December 2006 to December 2023, the country received a total of €13.8 billion in Foreign Direct Investments, according to the Central Bank of Montenegro. From 2019 to 2023, Foreign Direct Investment (FDI) inflows reached €4.38 billion. Of this total, €859.9 million was directed toward domestic companies and banks, €1.7 billion represented intercompany debt inflows, €1.48 billion was invested in the real estate sector, and €296.9 million was allocated to other sectors.

The Montenegrin Investment Agency (MIA) noted that the primary investors came from Switzerland, Russia, Serbia, Germany, Italy, the USA, and other countries.

Reasons to Invest in Montenegro

Montenegro has great potential in renewable energy, offering opportunities for investors to develop green energy projects. Infrastructure development also occupies an important place in the country’s focus, offering new perspectives for investment in construction and transport.

Investing in Montenegro can therefore provide diversification in an investment portfolio. There is also a chance for strong returns, due to its growing economy and multiple sectors offering opportunities. Montenegro provides easier access to investments and simplified business registration, making it more attractive for entrepreneurs. It offers entry into a market of over 20 million consumers and greater integration into EU and global trade networks. Additionally, the country promotes the use of innovation and digital technologies, fostering a modern and competitive business environment.

To read more about Montenegro click here.

Investment Incentives in Montenegro

New businesses operating in economically underdeveloped areas are exempt from paying corporate income tax for their first eight years.

The Value Added Tax (VAT) law allows for a VAT exemption on products and services used for building and equipping catering facilities that are rated five stars or higher.

A taxpayer starting a business in an economically underdeveloped area who hires someone for an indefinite period or at least five years will not have to pay income tax for that employee for four years from the hiring date. This exemption is subject to the conditions outlined in the Law on Income Tax of Natural Persons.

The Law of Value Added Tax prescribes VAT exemption on the supply of products and services for the construction and equipping of an energy facility for the production of electricity with an installed capacity exceeding 10 MW.

Startups and spinoffs do not have to pay employer contributions for their employees. This exemption applies to workers in scientific research institutions, those involved in scientific research or innovation activities, and freelancers doing innovative work for foreign companies.

If you want to read more about incentives in Montenegro click here.

If you are interested in investing in Montenegro, 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 Montenegro. Please feel free to contact us.

הפוסט Strategic Investments in Montenegro הופיע לראשונה ב-Nimrod Yaron Albania.

Personal Income Tax in the Western Balkans

BananaBlitz — Sun, 06 Oct 2024 14:47:15 +0000

Personal Income Tax in the Western Balkans: Comparing Albania, Kosovo and Montenegro Tax Policies

Personal Income Tax (hereinafter referred to as PIT) is a tax that governments impose on individuals’ incomes, which include wages, salaries, and all other types of income generated from investments and other sources. Tax rates vary by country and reflect each nation’s unique economic and financial policies.

This article aims to provide an overview of personal income taxation in several Western Balkan countries, specifically Albania, Kosovo, and Montenegro. It is designed to offer readers, including those considering relocation or investment, a comprehensive and insightful understanding of the personal income taxation and benefits available in each of these countries.

Overview of the Personal Income Taxation

Albania

The country uses a comprehensive approach to personal income tax, designed to address the tax obligations of both resident and non-resident individuals effectively. Resident individuals in the Republic of Albania are taxed on all income, regardless of where it is earned, both within and outside Albania. Non-resident individuals, however, are taxed only on income earned within Albania. Taxable income in Albania includes a variety of sources, including, but not limited to, wages and labor-related compensations, profits from corporate shares or partnerships, earnings from bank interests or bonds, revenues from copyright or intellectual property, and incomes derived from leases, loans, or similar agreements. Additional sources include income from real estate sales, gambling, and casinos, and profits from share or stock sales.

To learn more about taxation in Albania, click here.

Kosovo

The tax system in Kosovo is designed to be straightforward, aiming to cover a broad tax base and offer low taxes that attract foreign investors seeking tax advantages. Personal income taxation applies to several types of income, such as wages, rental income, earnings from intangible assets, specific interest types (like loans, savings accounts, and bonds), replacement income, capital gains, lottery winnings, and pensions. Employment income includes not just wages but also bonuses, per-diems, insurance premiums, debt forgiveness, payment of personal expenses by the employer, and benefits in kind over a certain threshold.

To learn more about taxation in Kosovo, click here.

Montenegro

The taxation of individual income in Montenegro depends on residency status. Residents are responsible for taxes on their global income from any source, while non-residents are taxed on income linked to a fixed base/permanent establishment in Montenegro. In Montenegro, there is an additional tax called a local surtax that you pay on top of your regular income tax. This surtax goes to the municipality where you live in Montenegro. Most municipalities charge a 13% surtax rate, but in Podgorica and Cetinje, it is set at 15%. The surtax amount is calculated based on your income tax.

To learn more about taxation in Montenegro, click here.

The following table provides a summarized comparable study on income taxation in Albania, Kosovo and Montenegro:

	Albania	Kosovo	Montenegro
*Tax Base for Residents*	Residents pay tax on their worldwide income.	A resident individual is subject to tax on his or her Kosovo-source and foreign-source taxable income.	Residents are subject to tax on their worldwide income.
*Tax Base for* *Non-Residents*	Nonresidents pay tax only on Albanian-sourced income.	A nonresident individual is subject to tax on his or her Kosovo-source taxable income.	Non-residents are subject to Montenegrin tax on income sourced in Montenegro.
*Income Sources*	Income derived from employment is subject to a progressive rate structure, while other income is subject to tax at a flat rate (either by self-assessment or through withholding).	Taxable income for a tax period is the difference between *(a)* gross income received or accrued during the tax period; and *(b)* the deductions allowable under the LPIT with respect to such gross income.	Resident individuals are subject to tax on their worldwide income, including capital gain.
*Tax Rates*	Click here to learn more about how PIT is levied in Albania.	Click here to learn more about how PIT is levied in Kosovo.	Click here to learn more about how PIT is levied in Montenegro.

Personal Income Tax Rates

While the three countries share similarities in the regulation of personal taxation, they differ in certain aspects, such as tax rates. In Albania, personal income is taxed up to 23%, in Kosovo up to 10%, and in Montenegro up to 15%.

In the following graphic, a comparative view of taxation is presented for each of the countries:

Incentives and Exemptions

Albanian Legislator provides several tax exemption policies for the subjects. The following are some of the main exemption policies provided in Albania:

Donations and inheritances received between legal heirs in the first and second degrees, as well as donations and inheritances between siblings.
Donations and inheritances not covered under point (a) are exempt up to 5,000,000 ALL per taxpayer for immovable property and up to 1,000,000 ALL for movable property.
The transfer of ownership rights to legal heirs, whether through donation or relinquishment, is exempt when the property originates from co-ownership.

To learn more about tax incentives in Albania, click here.

Kosovo Legislator provides several tax exemption policies for the subjects. The following are some of the main exemption policies provided in Kosovo:

Wages of foreign diplomats, consular representatives, and embassy staff; wages of employees in international governmental and non-governmental organizations registered in Kosovo; wages of foreign workers in donor agencies, humanitarian aid providers, KFOR, and EULEX;
Compensation for property damage;
Life insurance payouts after death; wages of individuals with special needs as per relevant laws;
Rewards for achievements in science, sports, and culture; and income from grants, subsidies, and donations earned under specific conditions.

To learn more about tax incentives in Kosovo, click here.

Montenegro Legislator provides several tax exemption policies for the subjects. The following are some of the main exemption policies provided in Montenegro:

A self-employed individual starting a business in an underdeveloped region is exempt from taxes for eight years from the date of establishment. However, this tax exemption is limited to EUR 200,000 over the eight years.
Certain compensation receipts are not subject to taxation, such as daily allowances, severance payments, scholarships, compensations for damages, jubilee awards, etc.

To learn more about tax incentives in Montenegro, click here.

Why Consider Western Balkan Countries?

Each of these Balkan countries has its own distinct economic and financial system, contributing to a growing business environment. To attract investments, they offer different investment incentives, benefits, and regulatory advantages for both local and foreign investors. Kosovo has relatively lower personal income tax rates compared to neighboring countries, making it a more attractive destination for individuals and businesses seeking favorable tax conditions.

On the other hand, Albania’s strategic location and legal and administrative reforms have been key factors driving significant transformations in its business in recent years. Its proximity to major European markets, coupled with economic reforms, has attracted a growing number of foreign investors and expatriates. Many are choosing Albania not only for its advantageous geographic position but also for its favorable business environment conditions, including a low tax rate, diverse investment opportunities across various sectors, and a streamlined process for obtaining residence permits. These factors have made Albania an increasingly appealing destination for those looking to live and invest in a dynamic, evolving market.

Montenegro offers low personal income tax rates, as highlighted above. Similar to Kosovo and Albania, Montenegro is actively working towards improving its investment climate and encouraging a favorable environment for business growth. The country is making steady progress in enhancing its economic policies and infrastructure, aiming to attract foreign investments and drive sustainable development.

הפוסט Personal Income Tax in the Western Balkans הופיע לראשונה ב-Nimrod Yaron Albania.

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-Nimrod Yaron Albania.

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-Nimrod Yaron Albania.

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-Nimrod Yaron Albania.

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-Nimrod Yaron Albania.