Tax on dividends. Key points
- The dividend tax is 81% and is borne by the company at the time of distribution, not the partner.
- The profit is allocated by a shareholders' assembly resolution, which is filed with the tax authorities by July 31.
- Tax is paid by the 20th of the month following the month in which the dividend is paid, and by the end of the third month after the decision when it is not paid.
- Of the 1,000,000 lek net profit distributed, the partner is left with 920,000 lek.
- Cash withdrawals without a resolution and without documentation are reclassified as a hidden dividend.
Published on May 16, 2025 · Rewritten on August 15, 2026 · Verified on September 16, 2026, including the sequence of actions and both deadlines for tax payment under Article 56 of Law No. 29/2023. Source page for profit distribution
The dividend tax in Albania is 81% and applies when a company's profit is distributed to its partners. Until 2019, the rate was 15%, a rule that no longer applies.
The real question for the owner isn't the rate, but the sequence of actions. How is the decision made, when is the tax paid, how much does the partner end up with in hand, and when is reinvestment most worthwhile. This guide answers them in order.
Read also: How is the profit distributed and how much tax is levied on the dividend?
How does the dividend tax work?
Tax is withheld at source by the company itself. The company calculates 8% on the gross dividend amount, deducts it from the partner's share, and reports it as withholding tax on Electronic filing. The partner receives the net amount and pays nothing out of pocket.
The payment deadline depends on what happens with the funds, and this is precisely where mistakes are most often made. When the dividend is paid, the tax is declared and paid by the 20th of the month following the month of payment. When the dividend is declared but not paid, the tax is withheld and transferred to the end of the third month following the month in which the assembly decided the distribution.
Both deadlines are in Law No. 29/2023, Article 56, paragraphs 2 and 4. The practical consequence is simple. The assembly's decision starts the clock even when not a single lek has left the account.
The dividend received is also reported on the individual DIVA return as income, but without additional tax. The 8% tax withheld at source is final.
The sequence of actions, from the reports to the partner's account
Most of the problems with the dividend don't come from the rate, they come from the sequence. This is the complete path, with what is known for certain at each step.
| Step | When |
|---|---|
| The Assembly approves financial statements of the previous year | Before the decision on profit |
| The assembly decides on the allocation of profit, distribution or reinvestment. | The decision must be filed with the tax authorities no later than July 31 of each year. |
| The company withholds 81% of the gross dividend. | At the time of distribution |
| The dividend is paid. The tax is declared and paid to Withholding tax | By the 20th of the month following the pay month. |
| The dividend is declared but not paid. Tax is withheld and transferred in the same way. | At the end of the third month after the month of the decision. |
| The net payment is transferred to the partner from the company's bank account. | According to the date specified in the decision |
| The partner declares the dividend to Individual DIVA statement, no additional tax | Until March 31 of the following year |
The ready-made format of the assembly resolution, with placeholders for amounts and dates, is located at Profit distribution page. It also provides the list of documents that remain in the year's file.
Assembly decision and documentation
Profit is not distributed through withdrawals from the account; it is distributed by resolution. After the approval of the financial statements, the shareholders' assembly decides on the allocation of profit—distribution, reinvestment, or both in part. The decision must be submitted to the tax administration by July 31.
This document is your primary defense. Funds withdrawn from the company's account without a resolution and proper documentation are the favorite finding of any audit, because they are reclassified as hidden dividends, subject to 81% tax, plus fines and interest.
Read also: How is taxable income calculated?
Calculated example
A small company with revenues under 14,000,000 lek closes the year with a net profit of 1,000,000 lek. The profit tax is 0% until 2029, Therefore, the profit remains intact.
The assembly decides to distribute the entire amount. The company retains 8%, i.e., 80,000 lekë, and pays it to the administration. The partner takes 920,000 lekë into account. The entire tax burden on the distributed profit today is 81%, and that is why the years through 2029 are the most favorable period ever for profit distribution in small business.
For a company with over 14,000,000 lek in turnover, a 15% corporate income tax applies before the dividend. Of the 1,176,000 lek profit before tax, 176,000 lek goes to income tax, 80,000 lek to dividend tax, and the partner is left with 920,000 lek.
Distribution, reinvestment, or nothing. Three cases
First case. Profit is distributed.
Pay 8% today and the money goes to the partners. It makes sense when the owners want their personal income now and the business doesn't need any investment.
Second case. Profit is reinvested.
Zero tax today. The profit goes into equity growth or remains undistributed for investments. The 81% tax is deferred until the next distribution, while the company's value increases. It makes sense when the business is growing and the money works better within it.
Read also: Rental income and investments on the individual tax return
Case three. No decision, withdrawal as needed.
The most common and most dangerous case. The profit remains undistributed on paper, while the money is withdrawn during the year without documentation. During an audit, these withdrawals are reclassified as hidden dividends or as unsecured loans, subject to tax, fines, and interest penalties. The annual assembly resolution, whatever it decides, is more flexible than any form of silence.
Frequently asked questions
What is the tax on dividends?
8%. Until 2019 it was 15%, a rate that no longer applies.
Read also: Dividend and withholding tax
Who pays the tax, the company or the partner?
The partnership. It withholds 81 TP3T at source at the time of distribution and reports it as withholding tax. The partner receives the net amount and pays nothing separately.
When is the assembly's decision on the profit submitted?
Until July 31, after the approval of the previous year's financial statements.
Is the reinvested profit taxed?
No. The 8% tax applies only when the profit is distributed. Reinvestment defers the tax and increases the company's capital.
We approved the dividend, but the money didn't come out. When is the tax paid?
The tax is withheld and transferred at the end of the third month following the month in which the assembly decided on the distribution, even if the funds have not yet been disbursed. This is in Law No. 29/2023, Article 56, paragraph 2. Therefore, a decision made without liquidity creates an premature tax obligation. Before the assembly makes a decision, three things are always checked: the approved net profit, the carried-forward loss, and the actual cash in the account.
The partner withdrew money during the year without authorization. What risk is there?
Reclassification as a hidden dividend or unsecured loan, subject to 81% tax, fines, and interest penalties. The solution is documentation, an assembly resolution, or a loan agreement with a real rate of return.
Is the dividend declared in DIVA?
Yes, as income for the year. But with no additional tax, because the 81 TP3T withheld at source is the final tax.
Read also: Withholding tax after the January 2024 legal changes
