Published on and written by Cyril Jarnias
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The enthusiasm of the French for Albanian real estate continues to grow: still affordable prices, no surcharge for foreigners, moderate taxation, and European prospects attract both retirees and rental investors. But before buying an apartment in Tirana or a sea view in Durrës, it is essential to understand how local real estate taxation works and how it interacts with the French tax authorities.
This article deciphers Albanian real estate taxation for French investors: local taxes, capital gains taxation, and the France-Albania tax treaty. It helps calculate actual costs, avoid double taxation, and optimize choices regarding ownership, rental, resale, or inheritance.
Local Taxes and Annual Property Taxes
The first pleasant surprise for a French person discovering Albanian taxation is local taxes. Compared to France, where property tax can reach the equivalent of 1% to 3% of the cadastral rental value, Albania applies very low rates.
Base Rate and Calculation Method
For residential buildings, the annual property tax is currently set at approximately 0.05% of the cadastral value. This value is determined by the administration using reference price grids by city and zone, not the actual purchase price. This has two practical consequences: the base is often lower than the market price, and therefore the tax bill remains very modest.
In practice, Albania uses two calculation approaches that coexist under local regulations:
– either a percentage of the cadastral value (0.05% for residential, 0.2% for commercial);
– or an amount per square meter, nationally regulated but set by municipalities.
For housing, ranges are around €0.05 to €0.15 per square meter per year, depending on the city and category. For commercial premises, amounts can rise to €0.30–€0.50 per m² per year, or even higher under some older municipal regulations.
An example illustrating the order of magnitude: a 100 m² apartment in Durrës generates only €10 to €15 in property tax per year, while a villa worth €200,000 incurs about €100 in annual tax, making Albania one of the least taxed countries in Europe on this item.
The table below provides a synthetic overview of the currently observed orders of magnitude.
| Type of Property | Basis of Calculation | Rate or Indicative Amount | Illustrative Example (approx.) |
|---|---|---|---|
| Apartment / House (residential use) | Cadastral value | ≈ 0.05% per year | Villa €200,000 → ≈ €100/year |
| Apartment / House (by area) | m² | €0.05 – €0.15/m²/year | 100 m² in Durrës → €10–15/year |
| Commercial premises | Cadastral value | ≈ 0.2% per year | €200,000 → ≈ €400/year |
| Commercial premises (by area) | m² | €0.30 – €0.50/m²/year (usual range) | 100 m² → €30–50/year |
| Land (non-agricultural) | Cadastral value | 0.15% – 0.30% | €100,000 → €150–300/year |
Regional Variations and Specific Municipal Taxes
Property tax is a local tax. The law sets ceilings and ranges, but each municipality chooses its levels within this framework. Thus, there are notable differences between Tirana, coastal cities, and the rest of the country.
Several mechanisms coexist:
– an annual building tax, sometimes expressed directly in euros per m²;
– a contribution linked to local infrastructure (roads, water, etc.) for new construction;
– a waste collection fee and sometimes urban cleaning fee.
Figures help indicate the order of magnitude in some key areas.
| City / Region | Indicative building tax (€/m²/year) | Mentioned specificities |
|---|---|---|
| Tirana & Durrës | ≈ €2.10/m²/year for some buildings (local source) | Highest level in the country for this specific tax |
| Vlora, Riviera, Saranda | ≈ €0.90/m²/year | Coastal tourist areas |
| Other regions | €0.50 – €1.00/m²/year | Medium-sized towns, inland areas |
| Tirana (EDU fee) | Flat annual fee ≈ €17.50 | Contribution for education infrastructure |
| Waste fee (general) | €9.60 – €48 /year | Added to the local bill |
In practice, these amounts are low compared to what a French property owner experiences. In Tirana, a municipal tax of around €20 per year for a home is also mentioned, in addition to the main tax, which remains marginal relative to an investor’s overall budget.
Condo fees or building maintenance costs (non-tax but to be budgeted) are often around €10 to €30 per month.
Primary Residence, Secondary Residence, and Announced Tightening
Even though Albania does not apply a residence tax in the French sense, legislation is moving in a less favorable direction for multi‑property owners. A draft reform of local taxes provides for:
The base rate for housing would increase from about 0.05% to a range of 0.1% to 0.2% of the cadastral value.
In some official comments, there is talk of eventually raising the maximum rate to 2% of the value for certain categories, although this seems to target very specific cases (large estates, luxury properties, specific situations). At the same time, for primary residences, a base reduction (e.g., 50% of the value up to a ceiling in lek) is being considered to avoid penalizing low-income households.
To understand the effect of a rate doubling, we can take a simple example: on a property with a cadastral value of €130,000, the current tax of 0.05% amounts to €65 per year. If the rate increases to 0.2%, the bill rises to about €260. Even quadrupled, it remains far lower than the property tax in many French municipalities.
Multiple Properties, Land, and Unfinished Construction Sites
The new philosophy of local regulations is clear: make property taxes one of the major revenue sources for municipalities, while limiting the impact on households with a single home.
Several points of attention for a French investor follow from this
– the building tax is generally doubled for the second property and subsequent ones held by an individual;
– agricultural land is taxed on a different scale, based on area in hectares, with amounts in lek (700 to 5,600 ALL/ha depending on land category);
– building plots and unfinished construction sites that exceed the permit deadlines incur a surcharge: a 30% increase over the normal rate is provided for these situations, which can make holding stalled projects more expensive.
In other words, a French person accumulating several apartments or villas must factor in that the marginal tax cost of an additional property is higher than that of the first.
No Wealth Tax and No Tourist Tax
Another notable difference from France: Albania currently does not have a true wealth tax on real estate for individuals. Taxation of real estate assets passes exclusively through:
– property tax (local property tax);
– income tax on revenue from the property (rent, capital gains).
There is also no residence tax or “French-style housing tax”. For a French person accustomed to the property tax + housing tax duo (even though the latter has been largely abolished), this is a significant relief.
Capital Gains on Real Estate in Albania: Rules, Calculations, and Strategies
For an investor, the tax on resale is often more decisive than the annual property tax. In this area, Albania has chosen a simple system with a single rate.
Capital Gains Rate and General Principle
When an individual resells a real estate property in Albania at a profit, the capital gain is taxed at a flat rate of 15%. This rate applies to both residents and non‑residents, and therefore to French individuals.
The basic rule is as follows: the taxable capital gain is the net gain, i.e., the selling price minus:
– the initial acquisition price, as shown in the registered deeds;
– documented expenses directly related to the property (notary fees, legal fees, certain renovation work, transaction taxes, etc.).
The formula can be summarized as:
Taxable capital gain = Selling price – Purchase price – Deductible expenses
The tax due is then: 15% × taxable capital gain.
Payment of this tax occurs before the transfer is registered in the cadastre. The notary cannot finalize the registration of the change of ownership if the seller has not obtained a tax clearance certificate.
An investor buys an apartment for €80,000, spends €5,000 on renovations, and sells it for €110,000. The gross gain is €30,000, the work is deductible, the taxable capital gain is €25,000, and the tax due is €3,750 (15% of €25,000).
Properties Held Through Companies and Enterprises
For Albanian companies, the regime differs slightly. Real estate capital gains are not taxed via a separate tax: they are included in the taxable income and subject to the applicable corporate tax rate (generally 15% under the standard regime). Consequently, for a French investor who holds the property through an Albanian structure, the tax burden on the capital gain remains comparable to that of an individual, but the accounting management methods change.
Also note that the sale of shares of an Albanian company owning real estate is itself subject to a capital gains tax of 15%, considered as business income or investment income depending on the case.
Tax Revaluation: A Tool to Reduce Future Capital Gains
Albania has implemented a mechanism of “revaluation” of real estate, governed by Law No. 85/2025 on real estate revaluation. During a given period, owners can update their property’s value to market price by paying a reduced tax calculated on the difference between the old recorded value and the new value.
Concretely, the principle is as follows:
– the owner has an appraisal carried out by a certified independent appraiser, or uses the minimum reference value set by the administration;
– the taxable base of the revaluation is the difference between this new value and the old declared value;
– a tax of 5% is due on this difference for individuals (and also 5% for companies, calculated relative to the book value).
Once the revaluation is recorded, the new value serves as the tax acquisition price for calculating the capital gain upon a future resale. This technique often makes it possible to significantly reduce or eliminate the taxable capital gain at 15% at the time of sale.
The table below summarizes the typical trade-off between direct capital gains taxation at 15% and using the revaluation at 5%.
| Situation | Example Data | Tax Without Revaluation | Tax With Revaluation (5%) |
|---|---|---|---|
| Purchase then resale without revaluation | Purchase €50,000 – Resale €70,000 (gain €20,000) | 15% × €20,000 = €3,000 | n/a |
| Use of revaluation | Revalued value €70,000 (difference €20,000) | n/a | 5% × €20,000 = €1,000 |
| Potential tax impact | €3,000 | €1,000 (gross savings of €2,000) |
In cases of large unrealized gains, the revaluation can represent an even more spectacular saving, sometimes around 66% less tax compared to taxation at 15% without base adjustment. The mechanism is therefore worth close study for a French investor who bought early in a rising market or who holds a property significantly undervalued in the cadastre.
Specificities and Points of Attention
Several details should be kept in mind:
In Albania, there is no automatic exemption from real estate capital gains after a certain number of years of ownership, unlike France where a property held for more than 22 years is exempt from income tax and more than 30 years from social contributions. Occasional relief may apply for certain Albanian residents, but they do not constitute a general rule comparable to the primary residence exemption in France. For a French person, the qualification of primary residence has more effect on the French side than the Albanian side, through the mechanisms of the tax treaty.
In summary, the Albanian system is linear: net capital gain × 15%, with the possibility of reducing this base through a prior revaluation at a reduced rate.
Rental Income: Taxation of Rent in Albania and for a French Person
For a French investor, renting out the property (standard, seasonal, or commercial) is often the main source of return. Albanian taxation is relatively simple in this area.
Rate and Base of Rental Income Tax in Albania
Rents received in Albania, whether from long‑term rental, seasonal rental like Airbnb, or commercial rental, are generally taxed at the uniform rate of 15%. This rate applies to both residents and non‑residents.
For long‑term residential rentals, the tax theoretically applies to net income; expenses related to the rental (maintenance, management, minor repairs) can be deducted, provided they are documented. For short‑term rentals and platforms like Airbnb, regulations often mention a 15% tax on declared gross income, as the administration seeks to simplify and avoid a multitude of small deductions.
The following table summarizes the main situations.
| Type of Rental in Albania | Taxable Base | Local Tax Rate |
|---|---|---|
| Long‑term rental (residential) | Net rent (rent – deductible expenses) | 15% |
| Commercial rental (offices, shops) | Net or gross rental income depending on regime | 15% |
| Short‑term rental (Airbnb, etc.) | Often gross rent | 15% |
In practice, many investors, as a conservative measure, assume a 15% tax on gross rent, then adjust if they can justify sufficient expenses. This logic remains consistent with a gross rental yield generally higher than in France on coastal markets or in Tirana.
France–Albania Tax Treaty: Where Are Rents Taxed?
The tax treaty signed between France and Albania is central for a French investor. It provides that:
Rental income from real estate located in Albania is taxable in that country. France eliminates double taxation via the tax treaty.
In practical terms, available texts clearly indicate that for a French person investing in a rental property in Albania, rental income is not subject to additional taxation in France on top of the 15% paid in Albania. The investor:
The taxpayer pays 15% tax in Albania on their Albanian rents. They are not taxed a second time in France on the same income: the tax treaty provides either an exemption with progression (taking the income into account for the effective rate) or a tax credit equal to the tax paid in Albania.
This point is crucial: in practice, the net after-tax return for a French person essentially depends on the 15% Albanian tax, without the heaviness of the French system (progressive scale + social contributions on French rental income).
Case of a French Person Tax Resident in France
If the owner remains tax resident in France (within the meaning of primary residence, household, or 183 days), France generally taxes its residents on their worldwide income. But the France‑Albania treaty neutralizes double taxation:
– Albanian rents are declared in France for information purposes and, where applicable, are included in the calculation of an effective rate;
– French tax on this category of income is neutralized by a tax credit equal to the Albanian tax (limited to the theoretical French tax) or by exemption with progression.
The investor must fill out Form 2047 to declare their foreign income and report it on their main tax return, while using the tax treaty to avoid double taxation.
Case of a French Person Who Becomes Tax Resident in Albania
If a French person moves permanently to Albania and becomes a tax resident (permanent home, stay of more than 183 days in any 12-month period), the logic is reversed:
– Albania generally taxes its residents on their worldwide income, including potentially French rents;
– France retains the right to tax rents from properties located in France, but the treaty allocates taxing rights and provides for a tax credit mechanism.
For Albanian rents, nothing changes: they are taxed at 15% in Albania, which is both the source country and the residence country. This scenario is somewhat outside the core of our topic, but it illustrates how resident or non‑resident status weighs on the overall tax planning of an investor.
France–Albania Tax Treaty: Capital Gains and Allocation of Taxing Rights
The France‑Albania tax treaty is not limited to rents. It also governs the taxation of real estate capital gains (and gains from shares in real estate companies), inspired by OECD standards.
Right to Tax Real Estate Capital Gains
For capital gains from the sale of real estate located in Albania by a French resident, the treaty is very clear:
– the country where the property is located (therefore Albania) has the right to tax the capital gain;
– France, the seller’s state of residence, must then avoid double taxation, generally via a tax credit equal to the tax paid in Albania, or an equivalent exemption with progression mechanism.
In other words, a French person who sells an apartment in Tirana with a large capital gain:
– pays 15% on the net gain in Albania;
– declares this capital gain to the French tax authorities, but the treaty prevents them from being penalized a second time on the same base.
If a French person sells shares of an Albanian company whose assets consist mainly of real estate located in Albania, the tax treaty allows taxation of the gains in the state where those properties are located, i.e., in Albania.
Treatment on the French Side: Tax Credit and Domestic Rules
On the French side, residents are generally taxed on their capital gains from property sales, with:
– an income tax rate of 19%;
– social contributions of 17.2%;
– a possible surtax of 2% to 6% on large gains (over €50,000), and progressive allowances for holding period (exemption from income tax after 22 years, from social contributions after 30 years).
But when the capital gain comes from a property located in Albania, the application of these rules combines with the treaty. The treaty text essentially provides that for certain categories of income, including real estate capital gains, France must grant a tax credit corresponding to the amount of tax definitively paid in Albania, with this credit not exceeding the French tax normally due on the same income.
Let’s take a simplified example to understand the interaction
– a French person sells a property in Albania with a €40,000 capital gain;
– they pay €6,000 in tax in Albania (15%);
– applying the French real estate capital gains regime (19% + 17.2%, before holding period allowances), the theoretical French tax, without considering the treaty, would be €14,880;
– thanks to the treaty, a tax credit of €6,000 is applied against this theoretical tax.
Depending on how the treaty is interpreted and applied (exemption with progression or exact tax credit), the concrete effect can range from a complete neutralization of French tax to a simple reduction. But in any case, the taxpayer does not pay 100% of the tax burden twice on the same capital gain.
Allocation of Taxable Base for Real Estate Companies
The treaty also addresses the case of companies whose value derives predominantly from real estate located in one of the two countries. It provides that:
Gains from the sale of shares in companies holding real estate may be taxed in the state where those properties are located. For a diversified international group, only the fraction of the gain corresponding to the real estate assets located in that state may be taxed there.
For a French individual investor, this aspect mainly matters if they hold their Albanian property through an intermediary structure (holding company, trust, etc.) rather than directly.
Anti-Abuse Clauses and International Framework
The France‑Albania treaty has been updated by the multilateral instrument resulting from the BEPS project of the OECD, which means it now includes:
– a “principal purpose” clause: a treaty benefit may be denied if an arrangement has as its main purpose to obtain it in an artificial manner;
– special rules for hybrid structures and interposed entities.
For an individual investor acting openly, these clauses remain in the background. They become sensitive for those who intend to complicate their structuring (shell companies in third jurisdictions, chains of ownership, etc.), and who will then need to ensure they do not cross the red line of treaty abuse.
Other Aspects to Know: Inheritance, VAT, Acquisition Costs, and Foreign Ownership
Even though the article focuses on local taxes, capital gains, and the tax treaty, a few additional elements weigh on the investment decision.
Transfer and Inheritance Taxes
Regarding inheritance, Albania has opted for a very favorable regime within the close family circle. There is no inheritance tax between:
– spouses;
– parents and children.
For other beneficiaries (friends, collateral relatives, etc.), costs are generally limited to a low transfer fee (notary fees, possibly a fixed or moderate proportional duty, often below 2% of the property value).
A French person planning to transfer an Albanian property to their children will therefore not face, on the Albanian side, the heavy inheritance taxation sometimes found in France. However, they must consider:
– the treatment of the inheritance under French law, if the heirs or the deceased remain domiciled in France;
– the existence of the tax treaty to avoid certain cumulative taxation on the same assets.
VAT, New Buildings, and Commercial Premises
VAT mainly affects the purchase of new properties or acquisitions from developers and taxable entities:
The standard VAT rate in Albania is 20% and applies to sales of new homes by developers, while resales between individuals are exempt.
For a French investor buying a new apartment, they must therefore check whether the listed price is VAT inclusive or not, even though in the majority of cases, the market price already includes the tax.
Commercial premises and offices sold by a VAT‑liable entity are also taxed at 20%. Again, the investor must factor this element into their profitability calculation, especially if they plan to rent to businesses that may or may not recover VAT depending on their own regime.
Acquisition Costs: Notary, Transfer, Registration
Real estate transaction costs remain reasonable in Albania compared to other European countries. The typical structure is as follows:
Summary of the main costs associated with buying a property: taxes, fees, and commissions to anticipate.
About 2% of the contract price or reference value, payable by the buyer.
Between 0.23% and 0.35% of the price, with a minimum of €150 and a cap of €450.
€80 to €100 for basic registration and cadastre procedures.
€300 to €700 for full assistance if needed.
2% to 3% of the price, depending on whether it is paid by the seller or buyer.
Overall, most standard transactions fall within a range of 4% to 5.5% of the purchase price for all closing costs (excluding agency commission sometimes paid by the seller). Including ancillary services (translations, apostilles, reinforced legal support), the total can rise to around 7%.
For new constructions, one must add:
– a municipal registration fee, generally between €3 and €10 per m²;
– a “title” tax of about €6 per m²;
– mandatory insurance if buying with a mortgage (about 1% of the price).
Notary fees in France for existing properties are around 7 to 8%.
Foreign Ownership: Rights and Limits
Albania stands out with a regime of total openness to residential real estate ownership:
– foreigners, including the French, can buy apartments, houses, villas, and commercial properties in full ownership, without quotas or special authorization;
– they have the same property rights as Albanian citizens;
– no visa or resident status is required to buy; signing before a notary is possible during a simple tourist stay (90 days within any 180-day period).
The only notable restrictions concern:
– agricultural land, meadows, pastures, and certain bare plots, which foreign individuals cannot acquire directly; to bypass this limit, the classic route is to create an Albanian company, which can buy such land;
– certain sensitive coastal areas (immediate proximity to the shoreline) where specific limitations may exist.
For a French person targeting only a vacation apartment, a urban rental property, or a small villa, these restrictions only marginally come into play.
Conclusion: An Attractive Tax Environment, But One to Master
Real estate in Albania offers a French investor a rare combination in Europe: local taxes insignificant compared to France, no wealth tax, a 15% rate on rents and capital gains, and a bilateral tax treaty that prevents double taxation of income and real estate gains.
The main points to remember are as follows:
Property tax is low (a few dozen euros/year), capital gains are taxed at 15% on the net gain (revaluable at 5%), rents are subject to 15% taxation in Albania with a tax credit in France, capital gains on resale are first taxed in Albania then in France with a tax credit, and transfers between close relatives are exempt from inheritance tax.
To fully benefit from these advantages, a French person must, however:
First distinguish your residency status (resident or non‑resident) in France and Albania, as it determines your reporting obligations. Keep all records of work, transaction costs, and appraisals to document the capital gain. Finally, for each operation (new purchase, resale, rental), verify the concrete interaction of Albanian and French rules in light of the tax treaty.
By proceeding this way, taxation ceases to be an obstacle and becomes a lever: Albania then positions itself as a real estate destination not only appealing from a tourist perspective, but also competitive from a tax standpoint for French savers willing to venture off the beaten path.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
