On July 15, 2026, the Ministry of Finance issued for public consultation a draft law that few businesses have noticed. However, it directly affects anyone who trades with or has ties to companies within the European Union. Its title is long and technical, “On Tax Dispute Resolution Mechanisms with the Member States of the European Union,” but the idea behind it is simple.
When the same profit is taxed twice, once in Albania and once in an EU country, this law establishes a guaranteed way to resolve the issue. The consultation deadline is August 12, 2026. The draft law also transposes the Council Directive. (EU) 2017/1852.
Double taxation sounds like something that only happens to large corporations. In practice, we encounter it much closer to home. All it takes is for a client to open a branch abroad, start billing a related company in Italy or Germany, or receive income from an EU country, and two tax authorities can claim the same base.
The most typical case is the adjustment of transaction prices between related companies. The other country's administration says that profit there should have been higher, increasing the taxable base. As a result, the same profit that Albania has already taxed is taxed again abroad.
Read also: Late Payments 2026: The New Bill and What Businesses Need to Do Today
Why today's tools are not enough
Albania has a wide network. bilateral agreements for the avoidance of double taxation with EU countries. When a case like the one above arises, the only route today is what is called the mutual agreement procedure. The two states sit down and try to agree on who taxes what.
The key word here is “attempt.” The agreements only require the authorities to make an effort, not necessarily to achieve a result. There is no deadline forcing them to close the case. Thus, a business can wait for years, with money tied up in a tax it shouldn't have paid twice, with no guarantee that an answer will ever come. This uncertainty is the problem itself. It discourages investment and leaves the taxpayer hostage to a conversation that may never end.
The new mechanism changes precisely that. If the two states do not find a solution within two years, the issue does not remain in limbo. An independent advisory commission steps in to issue an opinion, and afterward the authorities are legally required to adopt a final decision that eliminates double taxation. The effort becomes a binding outcome. That is the real change.
Who is affected and who benefits?
The law covers all disputes arising from the interpretation and application of agreements for the avoidance of double taxation of income and capital. It makes no distinction between large companies and individuals. If you have transactions, a branch, or an affiliated company in an EU country, or receive cross-border income from there, you are within its scope.
There is also a relief you should know about now. Individuals and small businesses are not required to deal with multiple foreign administrations at once. They submit their complaints and communications only to the competent Albanian authority, which in this case is the General Directorate of Taxes. The latter takes it upon itself to notify the other states. This removes the cost of foreign lawyers and the language barrier from the small business's shoulders.
Read also: Eliminating Double Taxation in Albania, Agreements, and How to Proceed.
Procedure
The procedure has a clear logic. Everything begins with the complaint, which the taxpayer must file within three years of the first notice of the action that gives rise to double taxation. This must be done simultaneously in both states. The Albanian administration has six months to say whether it accepts or rejects it. Here is a detail in favor of the taxpayer. If the administration remains silent for more than six months, the appeal is deemed accepted by silence.
Once both states agree, the mutual agreement phase opens, which lasts up to two years, with the possibility of a one-year extension. If they reach an agreement, the case is closed and the decision is implemented. Otherwise, if they do not reach an agreement, or if one state rejects the request, the taxpayer has the right to request, within fifty days, the convening of the advisory commission.
The Commission convenes within one hundred twenty days and issues its written opinion within six months, or nine months for complex cases. After the opinion, the authorities have another six months to reach an agreement. If they still fail, the commission's opinion automatically becomes the final and binding decision.
It is also important that the taxpayer is not left unprotected if the administration drags its feet. When the authorities unjustly refuse or block the process by failing to appoint their members to the commission, the taxpayer can turn to the Administrative Court of First Instance in Tirana to unblock it. For the first time, businesses have a key to open the door when the administration keeps it closed.
Read also: EU reforms regarding the statutory audit market
An example that makes it tangible
Let's take a company registered in Albania that sells services to an affiliated company in an EU country. The foreign administration makes a price adjustment and increases the taxable base there by 5,000,000 lekë. The same 5,000,000 lek have already been taxed in Albania at 15% VAT, i.e. 750,000 lek. Now the other country taxes them again at its own rate, say 22%, meaning 1,100,000 lek.
Without a mechanism, the same 5,000,000-lek base is taxed in two places, totaling 1,850,000 lek, almost as if the profit had been doubled without ever actually doubling. However, with the new mechanism, the two states are required to resolve the overlap and eliminate double taxation. Thus, the business does not pay twice on the same profit. The figures are rounded and for illustrative purposes only, but the logic is exactly this.
When it takes effect, and why it's important to know exactly.
Clarity is needed here, because this is the point most easily confused. This is still a draft law in public consultation, not yet in force. Even after it is adopted, it will enter into force fifteen days after publication in the Official Gazette. Its binding effects begin only on the date of Albania's accession to the European Union. Furthermore, it will apply only to tax years beginning after that date.
So we don't have an imminent deadline today, and that's good news. The value for business now isn't rushing, but preparing. If you operate in the EU market, this is a quiet time to see which bilateral agreement you're subject to. Likewise, you need to look at how you structure transactions with related companies and how you document their pricing. The cleaner the documentation today, the easier any defense will be tomorrow.
This draft law does not require any urgent action from you today. But it is one of those changes that show where Albania's tax relationship with the EU is headed, and businesses that understand it early negotiate and plan better. We closely monitor both the draft law and the structuring of cross-border transactions as part of our daily work with clients. If you trade with the EU market and want to understand today what this specifically means for you, let's talk at your convenience.
Read also: The meaning of double taxation for individuals.
Frequently asked questions
Is it law in effect now?
No. It is a draft law in public consultation until August 12, 2026. Even after approval, its binding effects begin on the date of Albania's accession to the EU.
Does it apply to disputes with any country in the world?
No. The mechanism applies to disputes with European Union member states over double taxation treaties on income and capital.
Who is the competent Albanian authority?
The General Directorate of Taxation, under the ministry responsible for finance.
What if the business has been convicted of tax evasion?
Access to the mechanism may be denied to taxpayers who have been sanctioned for intentional evasion or gross negligence. This is not a tool to cover up violations, but to protect legitimate business.
Read also: Limited Liability Company (LLC)