As of January 1, 2025, individuals who have earned gross income exceeding 1.2 million lekë per year must file the Annual Personal Income Tax Return (DIVA) for the year 2024, by March 31, 2025. This change comes as part of new fiscal adjustments aimed at increasing transparency and formalizing the labor market. Below, we will explain the key changes and obligations for individuals so they can prepare for the legal changes.
Who is required to submit the declaration?
According to Law No. 29/2023 “For Income Tax” and the Guide No. 26, As of September 8, 2023, the annual income statement must be filed by all individuals who meet one of the following criteria:
- They have generated gross income of over 1.2 million lek per year from all possible sources such as salaries, dividends, rent, bank interest, capital gains, or gambling income.
- They are employed by more than one employer, regardless of the amount of income received.
- They have realized other income exceeding 50,000 lek that has not been subject to withholding tax at source, such as rental income when the tenant is an individual, income from abroad, or other income that was not taxed at the time of payment.
Filing the declaration is mandatory for non-resident individuals who have earned taxable income in Albanian territory.
Failure to submit the declaration by the specified deadline results in a fine of 3,000 lek. If the return results in unpaid tax liabilities, the individual may face additional penalties for late payment and interest on the unpaid amount.
Read More [Video] Instructions on how to fill out the “Individual Annual Income Statement” DIVA.
Key changes for 2024
As of January 1, 2025, several significant changes to the personal income tax reporting system will take effect. Among the most important are:
- The delivery deadline is March 31, 2025, shortening the period compared to the previous deadline of April 30.
- The mandatory declaration threshold has been lowered from 2 million lek to 1.2 million lek in year, by including more individuals in this obligation.
- The inclusion of undeclared income exceeding 50,000 lek per year, which must now be reported and taxed at the applicable rates.
- From 2025 onward, individuals will be able to claim tax deductions for dependents and for educational expenses. Specifically, the law provides:
- 48,000 lek for each child under 18 years old.
- Up to 100,000 lek for educational expenses for dependent children.
Practical example for an individual who needs to submit the DIVA.
To illustrate how tax reporting and calculation work, let's take a practical example of an individual who has multiple sources of income:
An individual is employed by two different companies. In the first job, he receives a monthly salary of 90,000 lek, which brings the annual total to 1,080,000 lek. From the second job, he earns 60,000 lekë per month, or 720,000 lekë per year. In addition to these, he owns an apartment that he rents out for 120,000 lekë per year and has income from investments abroad amounting to 30,000 lekë. No withholding tax has been applied to the rental and foreign income, so they must be declared and taxed at the applicable rates.
In this case, the tax calculation will be as follows:
| Income categories | Amount in Lek |
|---|---|
| Monthly salary from the first job | 90,000 |
| Monthly salary from a second job | 60,000 |
| Rental income | 120,000 |
| Income from abroad | 30,000 |
| Annual total income | 1,950,000 |
| Tax on the first paycheck | 93,600 |
| Tax on the second salary | 42,250 |
| Rental tax | 18,000 |
| Tax on foreign income | 4,500 |
| Total tax payable | 209,700 |
| Tax already paid | 135,850 |
| Final obligation to be paid | 73,850 |
The individual has paid during the year. 135,850 lekë Payroll tax. At the time the return is filed, due to the multi-employer employment tax scheme, the final liability is 209,700 lek, creating an additional payment of 73,850 lek which must be paid within the legal deadline.
To simplify calculations, we have prepared an Excel file that allows you to enter your data and automatically calculate the tax payable. This format has long been used by AlProfit Consult to help individuals and businesses calculate their tax liabilities. If you would like to use this file, you can find it at this link.
How is tax calculated up to 2024 and after 2025?
With the new changes that will take effect in 2025, the tax collection and payment system will become more balanced. Currently, individuals may face unpaid obligations at the end of the year, which can create a financial burden. Under the new scheme, tax will be paid more evenly throughout the year, continuously withheld from an individual's income.
Another significant change is the introduction of the Payroll Agent, who will play a key role in withholding and remitting taxes for employees. This system will ensure that taxes are calculated and paid more fairly and accurately.
To take advantage of the new tax deductions, every individual must complete the Personal Status Declaration. This declaration will help determine the reduced tax rates for individuals who meet the criteria for tax relief.
Read More The Payroll Agent and the Statement of Personal Status: What you need to know?
Conclusion
Filing the annual declaration is a legal obligation that helps individuals ensure compliance with tax regulations and avoid penalties. Any individual with income above 100,000 lek per month or income from more than one source must file their return to avoid fines and to benefit from tax deductions that will take effect from 2025 onward.
The deadline for submitting the tax return is March 31, 2025. To ensure a smooth and error-free process, individuals are advised to begin preparations as early as possible and use the appropriate tools to calculate their taxes.
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