Taxation in Albania: Income Tax and Property Tax

Published on October 1, 2025 and written by Cyril Jarnias

Albania, a Balkan country experiencing economic growth, is attracting more and more expatriates drawn by its affordable cost of living and breathtaking landscapes. However, as in any host country, it’s crucial to understand the local tax system to avoid unpleasant surprises. Let’s dive into the intricacies of Albanian taxation for expatriates.

The Albanian Tax System: A Labyrinth to Demystify

The Albanian tax system has undergone numerous reforms in recent years, aiming to simplify it and make it more attractive to foreign investors. Today, Albania has a relatively competitive tax regime compared to its European neighbors, with moderate tax rates and increasingly digitized administrative procedures.

The main taxes that expatriates need to pay attention to are:

• Personal income tax
• Value Added Tax (VAT in Albanian)
• Corporate tax
• Local taxes, particularly property tax

The Albanian tax administration, although perfectible, has made considerable progress in terms of transparency and efficiency. Expatriates can now handle most of their procedures online, via the e-Albania portal, which greatly facilitates the management of their tax obligations.

Income Tax: Moderate Progressivity

Personal income tax in Albania follows a progressive scale, with relatively advantageous rates compared to many European countries. Income is taxed according to three brackets:

• 0% for monthly income up to 30,000 leks (approximately 250 euros)
• 13% for monthly income between 30,001 and 150,000 leks
• 23% for monthly income above 150,000 leks

It’s important to note that expatriates are considered tax residents in Albania if they stay there for more than 183 days per year. In this case, they are taxable on their worldwide income. Conversely, non-residents are only taxed on their Albanian-source income.

Income subject to tax includes salaries, rental income, dividends, interest, and capital gains. Some income benefits from special tax treatment, such as dividends which are taxed at a flat rate of 8%.

Albanian VAT: A Competitive Standard Rate

Value Added Tax, called TVSH in Albania, applies to most goods and services. The standard rate is 20%, which remains competitive compared to many European countries. Some products and services benefit from reduced rates:

• 6% for accommodation services in the tourism sector
• 0% for certain medicines and medical services

For expatriate entrepreneurs, it’s important to note that VAT registration is mandatory as soon as annual turnover exceeds 10 million leks (approximately 82,000 euros). Below this threshold, registration is voluntary.

VAT declaration and payment are done monthly for most businesses, via the tax administration’s electronic system.

Corporate Tax: An Asset for Entrepreneurs

For expatriates considering starting or running a business in Albania, corporate tax is a key element to consider. The standard corporate tax rate is 15%, placing Albania among the most competitive European countries in this area.

However, there are reduced rates for certain categories of businesses:

• 5% for small businesses with annual turnover between 5 and 14 million leks
• 0% for businesses with annual turnover below 5 million leks

Albania also offers attractive tax incentives for foreign investors, particularly in special economic zones and for priority sectors such as information technology or agriculture.

Companies must submit their corporate tax returns by March 31st of the year following the fiscal year. Quarterly advance payments are generally required.

Property Tax: An Evolving System

Property tax in Albania, called “taksa mbi pasurinë e paluajtshme”, is a local tax that applies to real estate owners. The rate varies depending on location and property type, with significant differences between urban and rural areas.

Since 2018, the calculation of property tax has been reformed to be based on the market value of properties, rather than their surface area. This reform aims to make the system fairer and increase local government revenues.

Current rates are generally between:

• 0.05% and 0.2% of the property value for residential buildings
• 0.2% and 0.5% for commercial buildings

Expatriates who own real estate in Albania must pay this tax annually, generally before April 30th. Payment can be made in one lump sum or in several installments, depending on the municipality.

Tax Returns: An Increasingly Digitized Process

Albania has made significant progress in digitizing its tax administration. Most tax returns can now be filed online, via the e-Albania portal or the tax administration website (www.tatime.gov.al).

For expatriate employees, the employer is generally responsible for withholding income tax and social security contributions at source. However, an annual return remains mandatory for all tax residents, even if their income has already been taxed at source.

The key steps for tax returns in Albania are:

• Register with the tax administration to obtain a tax identification number (NIPT)
• Collect all necessary supporting documents (bank statements, invoices, etc.)
• Complete the online return before the deadline (generally April 30th)
• Pay any taxes due, if applicable

It’s highly recommended for expatriates to seek assistance from a local accountant or tax advisor, at least for their first return, to ensure compliance with all legal obligations.

Practical Tips for Expatriates

Navigating the tax system of a new country can be intimidating. Here are some tips for expatriates in Albania:

1. Anticipate your tax status: Determine in advance whether you will be considered a tax resident in Albania. This will greatly influence your tax obligations.

2. Familiarize yourself with tax treaties: Check if there is a tax treaty between Albania and your country of origin to avoid double taxation.

3. Keep detailed records: Keep all your financial documents, including bank statements, invoices, and contracts. This will greatly facilitate your tax returns.

4. Use online services: Take advantage of the digital tools provided by the Albanian tax administration to simplify your procedures.

5. Consult a local expert: Don’t hesitate to enlist the help of an Albanian accountant or tax lawyer to guide you, especially if your situation is complex.

6. Stay informed about changes: Albanian tax legislation evolves regularly. Keep up to date with changes that might affect you.

7. Plan your investments: If you’re considering investing in Albania, research the tax incentives available in different sectors.

In conclusion, although the Albanian tax system may seem complex at first glance, it offers many advantages for expatriates, including competitive tax rates and an increasingly modern administration. With proper preparation and appropriate advice, expatriates can effectively navigate this system and fully enjoy their experience in Albania.