Inheritance Tax in Western Balkan Countries

Inheritance tax is a kind of tax that varies according to how wealth or property is transferred from a deceased person to an heir. It depends on the value of the inherited wealth, which the beneficiary pays. The specifics of inheritance tax differ and can be opposite according to the country or state.

This article aims to provide an overview of inheritance taxation in the Western Balkan region, with a focus on Albania, North Macedonia, and Montenegro. It is designed to offer readers a comprehensive understanding of the inheritance tax and benefits available in each of these countries.

Overview of the Inheritance Tax in Western Balkan Countries

Albania

Inheritance tax is applied to Residents of the Republic of Albania who receive a gift or inheritance of assets located in Albania or abroad, and non-residents of the Republic of Albania who receive a gift or inheritance of assets located in Albania.

Inheritance includes movable or immovable property or money acquired as a result of the transfer due to death from the deceased person to their heirs, after deducting the inheritable liabilities.

North Macedonia

In North Macedonia, inheritance or gift tax applies if the value of the assets (like cash, securities, or movable property) exceeds the country’s average annual salary, as determined by the State Statistics Office.

Tax Residents: People or businesses living in North Macedonia must pay this tax on inherited property, whether it’s inside or outside the country (as per Article 10 of the Property Taxes Law).

Foreign Tax Residents: Non-residents must pay this tax if they inherit or receive movable or immovable property located in North Macedonia.

Montenegro

Under Montenegro law, inheriting heirs are liable for the taxes that the deceased owed but only up to the amount of the real estate they inherit, according to the inheriting share. Furthermore, heirs are subject to a property transfer tax on inherited real estate. This tax is applied also when real estate is the object of a gift or a transfer in other ways.

Exceptions of Inheritance Tax

Albania

The following are exempt from tax:

1. Gifts and inheritance acquired by/from or between first and second-degree legal heirs, as defined, as well as gifts and inheritance within the sibling relationship (brother-sister);
2. Gifts and inheritances received, up to 5,000,000 ALL per taxpayer for immovable property and up to 1,000,000 ALL per taxpayer for movable property;
3. The transfer of ownership rights to legal heirs, through gifting and/or renunciation of property, when the property originates from compulsory co-ownership acquired under Law No. 7501, dated 19.7.1991, “On Land,” as amended.

North Macedonia

The following are exempt from tax:

1. First-order heirs (like children or spouses): Do not pay inheritance or gift tax.
2. Second-order heirs (like siblings): Do not pay tax on one apartment or family house if they lived with the deceased for at least one year before their death or the gift, and they don’t own any other homes.
3. Second-order heirs working in agriculture: Do not pay tax on inherited or gifted farmland or buildings if they also lived with the deceased for at least one year before their death or the gift.

Montenegro

The following beneficiaries are exempt from inheritance tax:

1. First-degree relatives: Children, spouses, and parents of the deceased.
2. Second-degree relatives (like siblings): Farmers can inherit farmland tax-free if they live with the deceased for the legally required period.
3. Second-degree relatives: Can inherit a home tax-free if they lived with the deceased during the last year.

Taxation Rates

Albania

The inheritance and gift tax rate is set at 15%, with no deductions for expenses.

To read more about taxes in Albania, click here.

North Macedonia

Inheritance tax rates are between 0% and 5%, depending on the order of succession, and are determined by the relevant municipality.

To read more about taxes in North Macedonia, click here.

Montenegro

The inheritance and gift tax rate is set at 3%

To read more about taxes in Montenegro, click here.

 The following table provides a summarized comparable study on inheritance taxation in Albania, North Macedonia, and Montenegro:

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, North Macedonia, or Montenegro. Please feel free to contact us.