Change in ownership of 20%. Tax on mines, telecommunications, and financial institutions.

This is one of the least known provisions of the income tax law and it affects only a few subjects, but it hits those it does affect hard. It is not a general rule for every share sale. It applies only to the three categories listed below and only above the turnover threshold.

In plain terms, when the ownership of such an entity changes substantially, the law treats the situation as if the entity sold a proportionate share of its assets at market value and immediately repurchased them at the same value. From this arises a taxable gain, even though no assets have changed hands. The taxable basis and how it is calculated are on our website. taxable base.

Element	Rule
Who is it applied to?	Users of mineral, hydrocarbon, and natural resources, telecommunications, and financial institutions
The threshold of change	Over 20% of capital, shares, or voting rights
Threshold of circulation	The average of the previous three years is at least 500,000,000 lek.
Notice	Within 45 days of the change, even for changes of 10% or more.
Exclusion	When a ratified double taxation avoidance agreement applies

Be careful with the 45-day deadline. It does not start from the date of registration at the QKB, but from the moment the change of ownership occurred. Failure to notify is punishable under Law No. 9920/2008 on tax procedures. For transactions with related parties, see also transfer of price.

This article applies to entities that:

a) hold rights for the exploitation of mineral resources, rights to exploit hydrocarbon resources or other rights to exploit terrestrial and aquatic natural resources, including the sea in the Republic of Albania, as well as information pertaining to these rights, which for the purposes of this law are treated as real estate;

b) engage in activities in the field of telecommunications;

c) carry out activities as financial institutions.

If during a tax period the direct and/or indirect ownership of the share capital, quotas, or voting rights of an entity specified in point 1 of this article changes by more than 20% in value or number of shares or quotas, the entity is treated as if it were selling a proportionate share of all its assets immediately before the change.

The entity is treated as:

a) the recipient of the proceeds from the sale, which is equal to the proportional share of the asset's market value at that time; and

b) reseller of the asset for the same value.

This provision applies in cases where the entity has achieved an average turnover of 500,000,000 (five hundred million) lek for the preceding three years.

When an entity is subject to corporate income tax under this law, based on paragraph 2 of this article, any change in ownership of shares or similar interests that gave rise to the change is exempt from income tax.

The administration's notice within 45 days

An entity that is subject to a change specified in paragraph 2 of this article shall notify the tax authorities of the details of the change within 45 days from the time the change occurred.

The entity notifies the tax administration of a direct or indirect change in ownership of 10% or more of its capital or voting rights. The change in ownership must be subject to subparagraph (ii) of paragraph (e) of Article 4 of this law. The notification must be made within 45 days of the change of ownership. This provision does not apply in cases where paragraph 4 of this article applies.

In the event of failure to notify the tax authorities, the entity is subject to the penalties set forth in the applicable law on tax procedures in the Republic of Albania.

The provisions of this article apply in all cases, except when a change in the ownership of the share capital, quotas, or voting rights of an entity is subject to the provisions of ratified double taxation avoidance treaties in force.

Source: General Directorate of Taxes.