Withholding agent
Every withholding agent is required:
- to withhold tax when paying any income or any payment that is subject to the article. 58 of this law;
- to transfer the exact amount of the withholding tax within the required deadline to the account of the competent tax authority, together with the withholding tax statement, as provided for in Article 57 of this law;
- to keep records of income and payments and of the tax paid, and to make them available to the competent tax authority when requested by it for the purpose of verifying the accuracy of the calculation, withholding, and/or payment of tax under this law.
The date of payment of income subject to withholding tax means the date on which the payment is made. In the case of a dividend subject to withholding tax obligation that has not been paid, the tax must be withheld and transferred by the end of the third month following the month in which the entity's statutory body decided on the distribution of the relevant profit. The entity submits to the tax authorities, no later than July 31 of each year, the decision on the allocation of profit.
Tax withholding agents are responsible for paying the tax on behalf of another taxpayer just as if it were their own tax obligation.
The tax withholding agent is required to declare and pay the withheld tax to the tax authorities' revenue account by the 20th day of the month following the month in which the tax was paid or withheld, in accordance with paragraph 2 of this article.
Statement of Withheld Tax
The withholding tax statement must include at least the following information:
- the identifying information of the withholding agent;
- the identifying information of the taxpayer from whom tax is withheld;
- the tax residence of the taxpayer from whom tax is withheld, in the case where tax is withheld at source for a non-resident taxpayer;
- the type of income or payments;
- the amount of tax withheld at source;
- the date of income or payments.
The withholding tax statement does not serve as proof of tax paid in the Republic of Albania until it is certified by the competent tax authority.
The minister responsible for finance approves by directive the form and content of the withholding tax statement.
The withholding tax statement is filed in accordance with the requirements set forth in the Law on Tax Procedures of the Republic of Albania.
Income and Payments Subject to Withholding Tax
The following income and payments are subject to withholding at source, against the final tax liability, when paid to a resident taxpayer or to a permanent establishment in the Republic of Albania of a nonresident taxpayer:
- dividends;
- interested;
- honorariums;
- revenues from gambling;
- Rental income only when it is paid to the individual.
The following payments are subject to final withholding tax when paid by a resident taxpayer or a permanent establishment in the Republic of Albania to a nonresident individual or a nonresident entity without a permanent establishment in the Republic of Albania:
- dividends, interest, and fees;
- gains from gambling;
- service fees, except for services physically received outside the territory of the Republic of Albania;
- insurance services;
- fees for participation in governing boards and councils or other steering bodies;
- payments for construction, installations, assemblies, or related supervisory work;
- payments for the performance of actors, musicians, or athletes, including such payments made to persons who employ artists or athletes or who act as intermediaries in organizing shows or performances.
The following income is not subject to withholding tax:
- income paid to persons exempt from income tax;
- dividends under the conditions specified in Article 29 of this law;
- capital gains income, as well as interest income from the issuance of the eurobond by the Republic of Albania, paid to non-resident entities without a permanent establishment in the Republic of Albania;
- Income from interest paid to banks and other financial institutions. Article 59
Withholding Tax Rates
The withholding tax rate on dividends is 81%. The withholding tax rate on income and payments under Article 58 of this law is 15%.
Source: General Directorate of Taxes.