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# Albania cross-border tax: residence, non-residents, withholding, treaties and leaving (2026)

> **Source-cited draft.** Drafted from the consolidated texts of Law No. 29/2023, Law No. 9920/2008 and General Instruction No. 26/2023 published by the General Directorate of Taxes, and the General Directorate's treaty list, all read on 2026-10-23. No accountant has reviewed it. Do not file from it without review by a qualified Albanian professional.

This skill is the hub for cross-border questions in the Albania pack. It says who Albania taxes and on what, what a payer must withhold when money leaves Albania, how a treaty rate is applied, how a resident claims credit for foreign tax, and what happens on departure. For the rates and returns themselves, see `albania-income-tax` (individuals) and `al-corporate-tax` (companies and permanent establishments).

Tax year: the calendar year (Law 29/2023 art. 6). Currency: Albanian lek (ALL). Authority: Drejtoria e Përgjithshme e Tatimeve (General Directorate of Taxes), tatime.gov.al. Albania is not an EU member, so the EU Parent-Subsidiary and Interest-Royalties Directives do not apply.

## Who this applies to

**Scope of the law.** Residents are taxed on income from all sources, in Albania or abroad (art. 2(1)). Non-residents are taxed on worldwide income attributable to an Albanian permanent establishment, and on any other income with a source in Albania under art. 4 (art. 2(2)).

**Resident individuals** (art. 8). An individual is resident for a tax year if any one of these is met:
- (a) a permanent home (vendbanim i qëndrueshëm) in Albania during the year;
- (b) presence in Albania for 183 days or more in the year, in one or more periods; the day of leaving and the day of arriving each count as a day of presence;
- (c) an Albanian citizen working abroad as an employee or official of the Albanian government;
- (ç) a shop, professional office, factory or other place of activity in Albania, or habitual residence in Albania, unless the person has a permanent home abroad for the whole year and none in Albania;
- (d) the centre of vital interests in Albania, meaning significant personal or economic ties.

From Law 81/2025, art. 8(dh) adds an exception: artists who are not Albanian citizens are not resident for 24 months from the date they first enter Albania, whatever their days of presence.

**Resident entities** (art. 28). An entity is resident if it was established in Albania, or if at any time in the year its management and control is exercised in Albania. Management and control is in Albania if board meetings are held there, or if at least two of these are met: day-to-day management decisions are taken in Albania; at least 50% of board members or managers are Albanian residents; at least 50% of the capital or voting rights are held, directly or indirectly, by Albanian residents (art. 28(2)). An Albanian-owned foreign company with Albanian managers is therefore resident.

**Non-residents** are everyone else. The General Directorate describes a non-resident individual as one with no permanent home in Albania, fewer than 183 days there, no centre of life or economic interests there, no business or office there, and who lives and works abroad without being an Albanian state official (tatime.gov.al, Jo Rezident).

## Rates, bands and thresholds

| Item | Rate or amount | Year | Source |
|---|---|---|---|
| Residence by presence (individuals) | 183 days or more in the tax year | 2026 | Law 29/2023 art. 8(b), [consolidated text](https://tatime.gov.al/wp-content/uploads/2026/09/Ligj-Nr.-29-2023-Per-Tatimin-mbi-te-Ardhurat-i-ndryshuar.pdf) |
| Non-citizen artists | Not resident for 24 months from first entry | 2026 | Law 29/2023 art. 8(dh), added by Law 81/2025 |
| Withholding on dividends paid to non-residents | 8%, final | 2026 | Law 29/2023 arts. 58(2)(a), 59 |
| Withholding on interest and royalties paid to non-residents | 15%, final | 2026 | Law 29/2023 arts. 58(2)(a), 59 |
| Withholding on services, insurance, directors' fees, construction and installation, performers and sportspeople, paid to non-residents without an Albanian PE | 15%, final; services received physically outside Albania are excluded | 2026 | Law 29/2023 arts. 58(2)(c) to (e), 59 |
| Gambling winnings, inheritances and gifts of Albanian assets received by non-residents | 15%, no costs deducted | 2026 | Law 29/2023 art. 60(1)(b), (9) |
| Non-resident individual, Albanian employment income | 13% to ALL 2,040,000 a year, 23% above | 2026 | Law 29/2023 art. 24(1) |
| Non-resident individual, Albanian investment income not withheld | 8% dividends, 15% other | 2026 | Law 29/2023 art. 24(3) |
| Non-resident entity with an Albanian PE | 15% corporate income tax on PE profit | 2026 | Law 29/2023 arts. 2(2)(a), 41 |
| PE: building, construction or installation site; services through employees | More than 6 months in any 12-month period | 2026 | Law 29/2023 art. 5(2)(e), (f) |
| PE: exploration or exploitation of natural resources | More than 3 months in any 12-month period | 2026 | Law 29/2023 art. 5(2)(ë) |
| Real estate rich company: share disposal is Albanian-source | More than 50% of value from Albanian immovable property at any time in the 365 days before the disposal | 2026 | Law 29/2023 art. 4(e)(ii) |
| Treaties in force | 45 bilateral treaties, plus the multilateral BEPS convention | 2026 | [tatime.gov.al treaty list](https://tatime.gov.al/legjislacioni/marreveshje-nderkombetare/) |
| Example treaty caps: Italy | Dividends 10%, interest 5%, royalties 5% (in effect from 1 Jan 2000) | 2026 | [Albania-Italy convention](https://tatime.gov.al/wp-content/uploads/2026/01/Itali.pdf) arts. 10(2), 11(2), 12(2) |
| Treaty documentation filing deadline | By the end of the calendar year after the year the treaty was applied | 2026 | Law 9920/2008 art. 115/3(1), [consolidated text](https://tatime.gov.al/wp-content/uploads/2026/10/Ligj-Nr-9920-Dt-2008.05.19-perditesuar-1.pdf) |
| Foreign tax credit limit | Albanian tax on the same income, country by country; individuals also by category | 2026 | Law 29/2023 arts. 25, 42 |
| Exit tax base (business assets) | Market value less tax value at exit, at the normal rate | 2026 | Law 29/2023 arts. 13(2), 47(2); Instruction 26/2023 para. 47.1 |

**Treaties in force** (tatime.gov.al list, read 2026-10-23): Austria, Belgium, Bosnia and Herzegovina, Bulgaria, China, Croatia, Czech Republic, Egypt, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Ireland, Israel, Italy, Kosovo, Kuwait, Latvia, Luxembourg, Malaysia, Malta, Moldova, Netherlands, North Macedonia, Norway, Poland, Qatar, Romania, Russia, Saudi Arabia, Serbia and Montenegro, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, United Arab Emirates, United Kingdom. The list gives an effective date for each except India. Read the treaty text itself for the rate; this skill does not tabulate treaty rates beyond the Italy example.

## The taxable base

**Albanian-source income** (art. 4) includes, without limit: employment income and fees for services performed in Albania; cultural, artistic and sporting activity in Albania; income payable by a resident employer even when the work is done abroad; business income for activity or services supplied in Albania; income attributable to an Albanian PE; income from immovable property, mineral and hydrocarbon rights in Albania; gains on such property and on shares deriving more than 50% of their value from it; dividends from resident persons; gains on shares of resident entities and on Albanian securities; interest paid by Albanian government bodies, residents or PEs; rents, licence fees, technical and automated digital service fees and royalties paid by residents or PEs; and any other activity carried out physically in Albania.

**Permanent establishment** (art. 5). A fixed place of business through which a non-resident's business is wholly or partly carried on: a place of management, branch, office, factory, workshop, mine or quarry. Sites and service activity count only above the time limits in the table. Preparatory or auxiliary activity is not a PE (art. 5(3)), but that exception is lost where the non-resident or a closely related person (50% or more) runs complementary activities in Albania that together are not preparatory or auxiliary (art. 5(4)). A dependent agent who habitually concludes contracts, or plays the principal role in concluding them, creates a PE; an independent agent does not, unless it acts exclusively for closely related persons (art. 5(5), (7)). A foreign insurer collecting premiums or insuring risks in Albania through another person has a PE, reinsurance aside (art. 5(6)). Owning or being owned by an Albanian company is not by itself a PE (art. 5(8)).

**Withholding as final tax** (arts. 58, 59). A resident payer or Albanian PE paying a non-resident individual, or a non-resident entity without an Albanian PE, withholds 8% on dividends and 15% on the other items in art. 58(2). That withholding is the final Albanian tax. No withholding applies to persons exempt from income tax, to dividends meeting the art. 29 participation conditions, to capital gains and interest on Albanian government eurobonds paid to non-resident entities without a PE, or to interest paid to banks and financial institutions (art. 58(3)). Interest and gains on Albanian government eurobonds received by non-resident individuals are exempt investment income (art. 15(2)(c)).

**Treaty override.** General Instruction No. 26/2023 para. 58.7 says that where the recipient is resident in a country with a treaty in force, the treaty's allocation of taxing rights applies to dividends, interest, royalties, PE services and construction work; with no treaty, domestic law applies and Albanian tax is withheld. Insurance services, gambling winnings and payments to performers and sportspeople are withheld in Albania regardless (para. 58.7(b), (d), (g)). Board fees are Albanian-source wherever the meeting is held (para. 58.7(e)). A treaty can only reduce Albanian tax: where the treaty cap is above the domestic rate (for example Italy's 10% on dividends against the domestic 8%), the domestic rate applies.

**Royalties versus services.** For payments for software and similar items, the Instruction tells taxpayers to separate licence payments (royalties, withheld) from ordinary service or purchase invoices (not withheld unless art. 58(2)(c) applies), and to follow the treaty and the OECD and UN commentaries where a treaty exists (para. 3.5).

**Foreign tax credit for residents** (arts. 25, 42). A resident individual or entity deducts foreign tax paid on foreign-source income from the Albanian tax on that income. The credit cannot exceed the Albanian tax that would have been due had the income arisen in Albania; it is computed separately for each country. Individuals also compute it separately for the annual tax base (employment and business) and for investment income (art. 25(4)). The foreign tax must be evidenced by a document issued by the foreign country, under the Minister of Finance's instruction (art. 25(1), 42(1)). The General Directorate asks for an official certificate from the foreign tax authority showing the income, the tax paid, and the date and place of payment. There is no carry-forward of unused credit in the law.

**CFC rule for individuals** (art. 19). An Albanian resident individual who, with related persons, controls more than 50% of a foreign entity taxed at less than 50% of the Albanian tax must include its undistributed passive profits (interest, royalties, dividends, gains on securities, finance lease income) in investment income, unless passive income is 30% or less of the entity's profit. Foreign tax paid by the entity is creditable under art. 25.

**Indirect transfers.** An Albanian entity must notify the tax authority within 45 days of a direct or indirect ownership change of 10% or more where the shares derive more than 50% of their value from Albanian immovable property (art. 55(5)). The gain is taxable in Albania as Albanian-source income (art. 4(e)(ii)) unless a treaty allocates it elsewhere (art. 55(7)).

## Deadlines and filing

| Obligation | When | Source |
|---|---|---|
| Withholding tax return and payment | By the 20th of the month after the payment or withholding | Law 29/2023 art. 56(4) |
| Withholding on declared but unpaid dividends | End of the third month after the month of the distribution decision; profit allocation decision filed by 31 July | Law 29/2023 art. 56(2) |
| Treaty application documentation | By 31 December of the year after the year the treaty rate was applied (by 31 December 2027 for payments in 2026) | Law 9920/2008 art. 115/3(1) |
| Residence certificate of the recipient | Requested and kept by the payer whenever a rate other than the standard domestic rate is applied | General Instruction 26/2023 para. 56.1(e) |
| Annual return of a non-resident entity (PE, or Albanian income not finally withheld) | By 31 March of the following year; tax paid on filing; no advance instalments | Law 29/2023 arts. 61(2), 68 |
| Annual personal income tax return | By 31 March of the following year, if income over ALL 1,200,000, more than one employer, or over ALL 50,000 of income not finally withheld | Law 29/2023 arts. 61(2), 67(1) |
| Return on change of residence | Must cover all income up to the date residence changes | Law 29/2023 art. 61(4); Instruction 26/2023 para. 61.5 |
| Notification of indirect ownership change (real estate rich entity) | Within 45 days | Law 29/2023 art. 55(5) |
| Registration of a tax representative | Within 5 days of appointment and before the non-resident's obligation starts | [tatime.gov.al: Përfaqësuesi tatimor](https://tatime.gov.al/entitete/?artikull=perfaqesuesi-tatimor) |

**Tax representative** (Law 9920/2008 art. 9). A non-resident appoints a resident tax representative and registers with the regional tax directorate when the legislation requires it. No representative is needed if all the non-resident's Albanian income is subject to final withholding, or if the non-resident files its own return. The representative must register for VAT and, where relevant, for withholding tax, social and health contributions. Registration needs the appointment decision or power of attorney, the representation agreement, and a tax registration certificate from the country of residence issued no more than three months earlier.

**Non-resident tax number.** Non-residents receive a tax identification number under the Minister of Finance's instruction (art. 67(3)).

**How treaty relief is claimed in practice.** Instruction para. 2.3 says treaties remove double tax either by exempting or reducing the Albanian withholding or by credit. At source, the payer applies the treaty rate, keeps the recipient's residence certificate (para. 56.1(e)) and files the treaty documentation by the art. 115/3 deadline. Where tax was withheld at the domestic rate, a treaty may provide for a refund on request: the Italy treaty does, with an official residence certificate from Italy, within the time Albanian law allows (art. 29(1), (2)). The form for the treaty documentation is set by the Minister's instruction; see "Not yet confirmed".

## Penalties and interest

All under Law No. 9920/2008, consolidated to Law No. 79/2025.

| Failure | Penalty | Source |
|---|---|---|
| Treaty documentation not filed on time | ALL 10,000 per month late, for up to 24 months | Law 9920/2008 art. 115/3(2) |
| Treaty documentation still not filed after 24 months | Treaty benefit lost: the tax reduced under the treaty becomes payable with penalties and late interest | Law 9920/2008 art. 115/3(3) |
| Withholding agent withheld and declared but did not transfer | 0.06% of the tax per day, for at most 365 days | Law 9920/2008 art. 117(a) |
| Withholding agent did not withhold | 50% of the tax | Law 9920/2008 art. 117(b) |
| Withholding agent withheld but did not declare and pay | 100% of the tax | Law 9920/2008 art. 117(c) |
| Late return | ALL 10,000 (corporate income taxpayers), ALL 5,000 (other non-individuals), ALL 3,000 (individuals), per return | Law 9920/2008 art. 113 |
| Late payment | 0.06% of the unpaid tax per day, for at most 365 days | Law 9920/2008 art. 114(1) |
| Late payment interest | 120% of the Bank of Albania interbank rate, set quarterly from the previous quarter's average; cannot be waived | Law 9920/2008 art. 76(1), (3), (4) |

A withholding agent is liable for the tax it should have withheld as if it were its own debt (Law 29/2023 art. 56(3)).

## Cross-border points

- **Arriving.** Residence follows the art. 8 tests for the tax year. The law states the part-year rule only for a change of residence (art. 61(4)); it gives no separate arrival date rule. A resident individual reports worldwide income. Foreign artists who are not Albanian citizens have 24 months of non-residence from first entry.
- **Leaving: individuals.** A taxpayer who changes tax residence files a return for all income up to the date of the change (art. 61(4)). The Instruction's example: a resident who leaves on 31 July 2024 declares income for January to July 2024 (para. 61.5). The law has no exit tax on an individual's private shares or other private assets. After leaving, Albanian-source income stays taxable: dividends and interest are withheld at 8% and 15% (art. 58(2)), rent from Albanian immovable property stays Albanian-source (art. 4(dh)), gains on Albanian immovable property are paid by the seller before the transfer is registered (art. 17(7)), and gains on shares of Albanian companies remain Albanian-source (art. 4(f)).
- **Leaving: business assets** (art. 47). A resident taxpayer that moves business assets from its Albanian head office to a foreign PE, where Albania loses the right to tax them, or that moves its tax residence abroad, is taxed on market value less tax value of the assets at exit. Assets that remain effectively connected with an Albanian PE are excluded. Assets moving into Albania take market value as their opening tax value (art. 47(3)). The law has no deferral or instalment option. Art. 47 sits in Chapter IV of the law, which art. 13(2) applies to the business income of individual traders and the self-employed, so it reaches their business assets as well as entities'. For a company, the Instruction taxes the gain at the normal 15% rate (para. 47.1).
- **Employees sent abroad.** A resident employer keeps withholding payroll tax on an employee working abroad (income is Albanian-source under art. 4(c)); if a treaty gives the taxing right only to the other country, the employer shows the pay on the payroll but computes no tax (Instruction para. 4.9).
- **Foreign employer, work in Albania.** A resident employee paid by a non-resident employer for work in Albania declares the income and pays the tax himself, subject to any treaty (Instruction para. 4.8).
- **Self-employed with foreign clients only.** The rule that reclassifies a self-employed person's income as employment income (80% from one client, or 90% from fewer than three) does not apply if the person supplies services only to non-residents or to entities without an Albanian PE (art. 12(1)(ç)).
- **Transfer pricing.** Transactions with related non-residents follow the arm's length rules in arts. 32 to 39 and 44, summarised in `al-corporate-tax`.

## Worked examples

### Example 1: royalty and portfolio dividend paid to an Italian company

Drini SHPK, an Albanian resident company, pays in 2026 a royalty of ALL 2,000,000 for a trademark licence to Lombardo Srl, an Italian resident company that is the beneficial owner. It also pays Lombardo a dividend of ALL 1,000,000 on a 5% shareholding, so the art. 29 participation conditions (10%, 24 months) are not met.

From openaccountants/openaccountants, AGPL-3.0.

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