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# Albania transfer pricing, tax year 2026

> **Source-cited draft.** Drafted from Law No. 29/2023, Instruction No. 29 of 16.11.2023, the General Instruction No. 26 of 8.9.2023 (as amended to Instruction No. 9 of 12.3.2026) and Law No. 9920/2008, all read on tatime.gov.al on 2026-10-23. No accountant has reviewed it. Do not file from it without review by a qualified Albanian professional.

The rules sit in three places. Law No. 29/2023 "On income tax" sets the related-person definition (art. 3(13)), the transfer pricing regime (arts. 32 to 39) and the arm's length principle (art. 44). Instruction No. 29 of 16.11.2023 of the Minister of Finance and Economy, "On transfer pricing and advance pricing agreements", fills in the detail; it replaced Instruction No. 16 of 18.6.2014 and Instruction No. 9 of 27.2.2015 and took effect with Law 29/2023 (Instruction 29/2023, points 38 and 39). Law No. 9920/2008 "On tax procedures" sets the penalties (art. 115/1) and country-by-country reporting (arts. 63/1 to 63/6, 115/4). The instruction follows the OECD Transfer Pricing Guidelines; where they conflict with Albanian law and instructions, Albanian law wins (point 2).

Related skills: `al-corporate-tax` (the 15% rate, the taxable base, withholding, the 31 March return), `albania-income-tax` (individuals), `albania-tax-optimization` (planning). This skill does not repeat them.

## Who this applies to

**Related persons (Law 29/2023, art. 3(13)).** A related person is any person linked to another in a relationship that directly or indirectly affects the tax base through management, control or ownership. Two persons are related if one or both would act on the instructions, requests, suggestions or will of the other or of a third person. The law always treats these as related:
- spouses, cohabiting partners, and first-degree descendants and ascendants;
- an entity in which any person holds, directly or indirectly, at least 50% of the voting or management rights, dividend rights or capital rights;
- two or more entities in which another person holds at least 50% of those rights in each.

A holding attributed to a person from a related person cannot be attributed again to another related person. Being an employee or a customer does not by itself make two persons related, unless the relationship affects the tax base.

**The instruction's tests (Instruction 29/2023, points 3.2 to 3.5).** One person can act on the other's will if it: (a) holds or can control 50% or more of the other legal person's voting rights; (b) can control the composition of its board; (c) is entitled to 50% or more of its profits; (d) is a relative of the other, or related to a relative; or (e) on established facts and circumstances, controls its business decisions. "Relative" means spouse, cohabiting partner, and first-degree descendants and ascendants. The tax administration carries the burden of proving the "acting on the will of another" test. Shares held by related parties count in deciding indirect ownership. The instruction's example: A holds 60% of B and B holds 55% of C, so A is treated as holding over 50% of C indirectly. Control passes through the chain; the percentages are not multiplied.

**Controlled transactions (art. 32(2)).** The transfer pricing machinery in arts. 32 to 39 applies to:
- a transaction between related persons where one is resident and the other non-resident;
- a transaction between a non-resident's Albanian permanent establishment and another non-resident related party;
- a transaction between a resident and a related resident, where it is attributed to that resident's permanent establishment abroad;
- dealings between a non-resident and its own Albanian permanent establishment, and between a resident and its own permanent establishment abroad;
- any transaction between a resident (or an Albanian permanent establishment) and a resident of a jurisdiction listed by ministerial instruction, whether or not the parties are related.

The listed jurisdictions are in Annex 1 to Instruction 29/2023 (point 3.6), printed as a table on page 22 of the tatime.gov.al PDF. It names 65: Andorra, Antigua & Bermuda, Antigua, Aruba, Bahamas, Bahrain, Barbados, Belize, Bermuda, Brunei, Costa Rica, Dominica, Fiji, Gibraltar, Grenada, Guadeloupe, Guam, Guatemala, Guernsey, Guyana, Haiti, Hong Kong, British Virgin Islands, Cook Islands, Falkland Islands, Channel Islands ("Ishujt Normand"), Solomon Islands, Turks and Caicos, Christmas Island, Mariana Islands, Marshall Islands, US Virgin Islands, Isle of Man, Jamaica, Jersey, Liberia, Liechtenstein, Macao, Madeira, Maldives, Martinique, Mauritius, Micronesia, Monaco, Montserrat, Nauru, Netherlands Antilles, Niue, Oman, Palau, Panama, Philippines, Dominican Republic, Samoa, San Marino, Seychelles, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Suriname, Tanzania, Tonga, "Trinidad Tobacco" (as printed; read as Trinidad and Tobago) and Vanuatu. Any transaction with a resident of one of these is a controlled transaction, related or not.

**Purely domestic transactions.** A sale between two Albanian resident related companies, with no foreign permanent establishment involved, is not a "controlled transaction" under art. 32(2). Art. 44(1) still says transactions between related parties must follow the arm's length principle, and art. 10(4) applies the same rule to personal income tax. So domestic related-party pricing must be at arm's length, but the notice, documentation and median-adjustment rules are written for controlled transactions.

**What a controlled transaction covers (point 3.1).** Goods (raw materials, finished products); services; intangibles (copyright, licences, patents, trademarks, know-how); financial transactions (rents, interest, guarantee fees); and capital transactions (buying or selling shares, investments, and long-term tangible and intangible assets).

## Rates, bands and thresholds

| Item | Rate or amount | Year | Source URL |
|---|---|---|---|
| Related person: ownership test | At least 50% of voting or management, dividend or capital rights, direct or indirect | 2026 | Law 29/2023 art. 3(13)(b), (c): https://tatime.gov.al/wp-content/uploads/2026/09/Ligj-Nr.-29-2023-Per-Tatimin-mbi-te-Ardhurat-i-ndryshuar.pdf |
| Annual controlled transactions notice | Required when controlled transactions, including loan balances, exceed ALL 50,000,000 in total in the reporting period | 2026 | Instruction 29/2023 point 14.1: https://tatime.gov.al/wp-content/uploads/2026/09/UDHEZIM-Nr.29-DT.-16.11.2023-PER-TRANSFERIMIN-E-CMIMIT-DHE-MARREVESHJET-E-CMIMIT-NE-AVANCE.pdf |
| Notice deadline | The filing date of the corporate income tax return: 31 March 2027 for tax year 2026 | 2026 | Instruction 29/2023 point 14.3; Law 29/2023 art. 61 |
| Documentation produced on request | Within 45 days of the tax administration's request | 2026 | Law 29/2023 art. 37(1); Instruction 29/2023 point 15.2 |
| Comparables refresh relief | Below ALL 50,000,000 of controlled transactions, external comparables may be updated once every three reporting periods if nothing material changed | 2026 | Instruction 29/2023 point 15.5 |
| Adjustment point when outside the range | Median (50th percentile) of the arm's length range | 2026 | Law 29/2023 art. 36(3); Instruction 29/2023 points 12.2, 12.3 |
| APA admission test | Controlled transactions over the whole APA period above EUR 30,000,000 (lower accepted if complex or of high importance for Albania) | 2026 | Instruction 29/2023 points 19.1, 19.2 |
| APA application fee | ALL 50,000, non-refundable | 2026 | Instruction 29/2023 point 20.1 |
| APA administrative fee | ALL 300,000 unilateral; ALL 1,200,000 bilateral or multilateral; 90% refunded if the application is rejected after phases 2 and 3 | 2026 | Instruction 29/2023 points 20.2, 20.3 |
| APA maximum term | 5 years | 2026 | Instruction 29/2023 point 21.2 |
| Country-by-country report: group in scope | Multinational group with consolidated revenue of ALL 105,000,000,000 or more in the preceding fiscal year | 2026 | Law 9920/2008 art. 63/1(c): https://tatime.gov.al/wp-content/uploads/2026/10/Ligj-Nr-9920-Dt-2008.05.19-perditesuar-1.pdf |
| Country-by-country report deadline | 12 months after the last day of the group's reporting fiscal year | 2026 | Law 9920/2008 art. 63/5 |
| Penalty: late controlled transactions notice | ALL 10,000 per month late | 2026 | Law 9920/2008 art. 115/1(1) |
| Penalty on a transfer pricing adjustment | 0.06% of the unpaid tax per day, for at most 365 days; none if documentation was prepared and submitted | 2026 | Law 9920/2008 arts. 114(1), 115/1(2), (3) |
| Late payment interest | 120% of the Bank of Albania interbank rate; published rate 7.8% from 08.10.2026 | 2026 | Law 9920/2008 art. 76; https://tatime.gov.al/institucioni/publikime/normat-e-interesit/ |
| Interest deduction cap (sits beside transfer pricing) | 30% of EBITDA; excess carried forward 5 years | 2026 | Law 29/2023 art. 30 |
| Corporate income tax on an adjustment | 15% | 2026 | Law 29/2023 art. 41; see `al-corporate-tax` |

## The taxable base

**The adjustment (art. 32(1)).** An entity in a controlled transaction must check that its terms meet the arm's length principle. Where they do not, the entity's taxable profit may be increased to the arm's length level. The law allows an increase; it gives no power to reduce the entity's own profit, except through a corresponding adjustment (art. 38). An adjustment is made only with the written approval of the director of the Regional Tax Directorate (Instruction 29/2023 point 12.1).

**Comparability (art. 33).** Five factors: the characteristics of the goods or services; functions performed, assets used and risks assumed; contractual terms; economic circumstances; and business strategies. Where there is no written contract, the terms can be inferred from correspondence, conduct and the economics (point 5.4). Foreign comparables are accepted where no internal comparable exists, provided geographic differences are analysed and adjusted for (point 7.3). If same-year comparables are not available when the file is prepared, the latest available year may be used (point 7.4).

**Methods (art. 34).** The most appropriate of five: comparable uncontrolled price, resale price, cost plus, transactional net margin, and transactional profit split. A different method is allowed if none of the five can reasonably be used and the taxpayer proves the result is arm's length; the burden is on the taxpayer (art. 34(2)). One method is enough (art. 34(3)). An audit starts from the taxpayer's method, unless the administration proves it is not the most appropriate (art. 34(4); point 9.3). Under the net margin method the instruction names net profit (before interest and tax) to sales, to total costs, to equity and to assets (point 8.4).

**Range and median (art. 36; points 12.2 to 12.4).** A result inside the arm's length range is not adjusted. A result outside it may be adjusted to the median, unless the administration or the taxpayer proves that another point fits the facts better; whoever seeks the other point carries the burden. The median is the 50th percentile: with an odd number of results, the middle one; with an even number, the average of the two middle results (point 12.3, examples 1 and 2). The administration should not disregard or restructure the actual transaction except where its substance differs from its form, or where the arrangements as a whole differ from what independent parties acting rationally would agree and block pricing (point 12.5).

**Aggregation (art. 35).** Closely linked transactions that cannot be priced separately may be combined.

**Services (point 11.1).** An intra-group service charge is arm's length only if the service was actually provided, gives the recipient economic or commercial value, is something an independent party would pay for or do itself, and is priced as independent parties would agree. Specific services are tested one by one; where they cannot be identified, costs are allocated with reasonable allocation keys (points 11.2, 11.3).

**Corresponding adjustments (art. 38; points 13.1 to 13.5).** Where a treaty partner adjusts a related party's profit and the same profit was taxed in Albania, the Albanian taxpayer can apply in writing to the Regional Tax Directorate. The application lists the related party, the years, the amounts, a residence certificate, proof of the foreign adjustment and its basis, the comparability analysis and method, and confirmation that the related party will not pursue further recourse abroad. The director answers within three months. The request does not take away the right to a treaty mutual agreement procedure.

**Interest: how the limits stack.** Financing is a controlled transaction (point 3.1), so the interest rate on a related-party loan must be arm's length. Two further limits apply to all interest, related or not:
1. Interest above the Bank of Albania's published average annual 12-month lending rate of commercial banks is not deductible (art. 50(1)(dh)); microcredit loans are excepted. Each entity uses the rate published on the Bank of Albania website for the month in which the loan was taken (General Instruction 26/2023 point 50.1(f)).
2. Net interest expense is deductible only up to 30% of EBITDA; the disallowed amount carries forward five years, oldest first (art. 30; General Instruction 26/2023 points 30.1 to 30.8). Under the General Instruction as amended by Instruction 9/2026, EBITDA starts from profit before tax (point 30.2) and adds back interest expense and depreciation and amortisation as adjusted for tax (point 30.4: profit + taxes + interest + depreciation). Law 29/2023 art. 30(2) still words the starting point as taxable income; where the two give different numbers, ask before relying on the instruction's figure. Exempt income is left out of EBITDA (art. 30(2)).

The General Instruction says the art. 50(1)(dh) rate cap is taken into account when measuring deductible interest for the EBITDA test (point 30.4). Law 29/2023 has no debt-to-equity ratio. Banks, non-bank lenders, insurers and leasing companies are outside the EBITDA rule (art. 30(5)).

## Deadlines and filing

| Obligation | When and how | Source |
|---|---|---|
| Annual controlled transactions notice ("Njoftim vjetor për transaksionet e kontrolluara") | By the corporate income tax return date, 31 March 2027 for tax year 2026. Filed with the regional tax directorate where the taxpayer is registered, on paper with the balance sheet and financial statements or electronically as the administration requires. Form in Annex 2 to the instruction | Instruction 29/2023 points 14.1 to 14.3, Annex 2; Law 29/2023 art. 61 |
| Counting the ALL 50 million | All controlled transactions in the period, including loan balances. Income and expenses are both counted at absolute values; they cannot be left out or offset | Instruction 29/2023 point 14.1; Annex 2 note |
| Transfer pricing documentation | Prepared by the taxpayer; produced within 45 days of a request | Law 29/2023 art. 37(1); Instruction 29/2023 point 15.2 |
| Language | Albanian or English. If filed in English, a legalised Albanian translation within 45 days of a request, at the taxpayer's cost | Instruction 29/2023 point 15.6 |
| Format | Electronic or paper | Instruction 29/2023 point 15.7 |
| Country-by-country notification | Each Albanian resident constituent entity tells the administration, by the last day of the group's reporting year, whether it is the ultimate parent or, if not, the identity and residence of the reporting entity | Law 9920/2008 art. 63/3 |
| Country-by-country report | Filed by an Albanian resident ultimate parent of an in-scope group within 12 months of the end of the reporting fiscal year | Law 9920/2008 arts. 63/2, 63/5 |
| APA annual compliance report | Each year covered by an APA, by the corporate income tax return date | Instruction 29/2023 points 29.2, 29.3 |

**What the annual notice asks for (Annex 2).** Part I: taxpayer name, NIPT, address, contact, a short business description, and the non-resident company that controls the taxpayer (name, country of incorporation, tax residence, % held). Part II: each controlled transaction with the counterparty's name, whether related, tax residence, transaction code, allowable deductions and assessable income in ALL (same code and same party aggregated, never offset), the method (CUP, RS, CP, TNMM, CPM or OM) and whether documentation has been prepared; opening and closing balances of loans received from and given to related parties and persons in listed jurisdictions, and whether interest-free; changes in group structure, functions, assets or risks; capital transactions (sale proceeds and purchase price); and whether goods or services were supplied to related parties for no or non-monetary consideration.

**What the documentation contains (point 15.3).** (a) An overview of the business, its markets, the group structure with every member's legal form and shareholding, and each member's role; (b) the controlled transactions with the five comparability factors and the pricing policy; (c) why the method and financial indicator were chosen; (d) the comparability analysis: the search process, why any internal comparable was rejected, the comparables, and every comparability adjustment; (e) any supporting economic analysis and projections; (f) any APA or similar ruling abroad covering the transactions; (g) the conclusion on arm's length, with any adjustment made; (h) anything else material.

**Master file and local file.** Albania does not use the OECD "master file / local file" names in the instruction. It accepts documentation prepared under the EU Code of Conduct on transfer pricing documentation (Council resolution 2006/C 176/01): a "masterfile" plus Albanian country-specific documentation meets art. 37 if produced within 45 days of the request (point 15.4). Documentation that is incomplete, contains false or inaccurate facts, or leaves out relevant facts does not meet art. 37 (point 15.8).

**Advance pricing agreements (art. 39; points 16 to 37).**
- Types: unilateral (with the General Directorate of Taxes), bilateral and multilateral (with treaty partners). Where a treaty covers the transactions, the application should be bilateral or multilateral; a unilateral APA is then accepted only in special cases, such as a partner unwilling to negotiate (point 22.2).
- Six phases: pre-filing meeting, formal application, evaluation, negotiation, drafting and signature, annual compliance report (point 23.1). The pre-filing meeting is held within 60 days of the request (point 24.4).
- Term: up to 5 years, starting with the fiscal year after signature; longer only where the APA implements a reciprocal intergovernmental agreement ratified by law (point 21.2). No rollback to earlier years, but if the APA is signed after the first proposed fiscal year, the year in which it was proposed is covered (points 21.1 to 21.3).
- Effect: no art. 32 adjustment to covered transactions while the terms and critical assumptions hold. A breached critical assumption must be reported within 30 days (point 28.5). The APA can be revised, cancelled (from the date of the event) or revoked (as if it never existed, for negligent misstatement) (points 32 to 34).

## Penalties and interest

| Failure | Consequence | Source |
|---|---|---|
| Annual controlled transactions notice filed late | ALL 10,000 for each month of delay | Law 9920/2008 art. 115/1(1) |
| Transfer pricing adjustment, no compliant documentation | Extra tax at 15%, plus the late payment penalty of 0.06% of the unpaid tax per day for at most 365 days, plus late payment interest | Law 9920/2008 arts. 114(1), 115/1(2), 76 |
| Transfer pricing adjustment, documentation prepared and submitted (within 45 days of the request) | Extra tax and interest only; no penalty | Law 9920/2008 art. 115/1(3); Instruction 29/2023 point 15.2 |
| Country-by-country report late | ALL 10,000 per month late, for up to 12 months | Law 9920/2008 art. 115/4(1) |
| Country-by-country report not filed after that | ALL 200,000 | Law 9920/2008 art. 115/4(2) |
| Country-by-country report inaccurate or incomplete | ALL 50,000 | Law 9920/2008 art. 115/4(3) |
| APA annual compliance report missing or wrong | Treated as non-compliance with the APA, which allows revision, cancellation or revocation | Instruction 29/2023 points 29.4, 31 |

**Late payment interest** (kamatëvonesë) runs from the original due date to the payment date at 120% of the Bank of Albania interbank rate, reset each quarter (Law 9920/2008 art. 76(1), (3)). The General Directorate of Taxes publishes the rate: 7.8% from 08.10.2026. Interest cannot be waived (art. 76(4)).

Concealment or false documents fall under the tax evasion penalty in art. 116 of Law 9920/2008; see `al-corporate-tax`.

## Cross-border points

From openaccountants/openaccountants, AGPL-3.0.

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