- Foreign investments in Albania are currently governed by Law No. 7764 of November 2, 1993, which guarantees equal treatment with domestic investors.
- The foreign investor has protection against unjustified expropriation and the right to transfer profits and capital out of the country.
- The law on strategic investments is valid until December 31, 2026, and will not be extended further. A new unified law is still in the consultation phase.
- Albania has around 40 double taxation avoidance agreements that can reduce the withholding tax rate on dividends and interest.
Foreign investments in Albania have been supported by the same basic law since 1993. The market reality has changed significantly since then. Law No. 7764, dated November 2, 1993, “On Foreign Investments,” was drafted under completely different conditions than those of today. Today the government is preparing a new unified law. It will also replace the law on strategic investments, which expires on December 31, 2026.
This article explains what the current legal framework guarantees. It also examines where it clashes with practice, which sectors attract the most investors, and how bilateral tax agreements help. Finally, it provides an update on the status of the new reform to date.
Legal Guarantees for Foreign Investments in Albania
Law No. 7764, dated November 2, 1993 “For foreign investments” It is short but conceptually clear. It allows foreign investment without any prior authorization. It treats the foreign investor on the same level as the domestic one.
The foreign investor is guaranteed two key rights, expressly recognized by law. The first is protection against expropriation or nationalization, direct or indirect. Only cases of a special nature in the public interest and in accordance with the law are excluded. The second is the right to transfer capital and in-kind contributions out of Albania, with any exceptions provided for by the law itself.
The law is also widely recognized as the basis for a foreign investor's access to international arbitration. In the event of a dispute with the Albanian authorities, the investor may turn to the Center. International Centre for Settlement of Investment Disputes in Washington, since Albania has been a member state of the relevant convention since 1991. This provision gives the investor real neutrality in the event of a dispute with the state, something rare in the national laws of developing countries.
The law also recognizes several other rights. The foreign investor may employ foreign nationals, own movable property, and benefit from intellectual property protection. They may carry out any economic activity permitted by Albanian legislation.
When the law meets reality
On paper, the law appears liberal and favorable. In practice, it presents a different picture. Investors encounter difficulties from the very first step of registering their business.
Bureaucratic processes are lengthy and not always standardized. State institutions do not always communicate with each other in real time. An investor applying for a building permit may encounter obstacles from the municipality, even when the QKB has already accepted the same document without issue.
Fiscal uncertainty is another significant obstacle. The investment law itself does not address tax aspects, but these directly influence the investor's decision-making. Tax incentives for sectors such as IT, tourism, or renewable energy are often granted for limited periods. They are not guaranteed over the long term, and frequent changes in tax legislation create additional uncertainty.
There is also no single functional window to track an investment project from start to finish. Investors often wander between different offices. Documents are submitted multiple times and handled differently by various municipalities.
Sectors where foreign investments are most active
Foreign investors who make Business registration in Albania They have so far focused on three main sectors.
Tourism
It remains the most prominent sector. Investments have been concentrated mainly in accommodation facilities in the south of the country, in protected areas, and in historic cities such as Gjirokastra and Berati. The advantages are the still-competitive property prices and the significant development potential. The main problem remains weak infrastructure, insecure property titles, and delays in environmental permits.
The new package of laws for mountainous areas was approved and published in the Official Gazette in 2025. It offers up to 10 years of exemptions from certain taxes for a limited number of entities investing in mountain tourism. This has opened up concrete opportunities, especially for investors with small and medium-sized projects targeting rural areas.
Renewable energy
It is the fastest-growing sector. Albania has launched competitive schemes for solar and wind parks. The interest of international investors is clear. Administrative capacity to manage strategic projects, however, remains an open question.
Technology and IT services
They are attracting increasing attention, thanks to low labor costs and tax incentives for technology companies. To turn this interest into major investments, it is necessary to expand academic capacity. Dedicated spaces for technological development are also needed.
The role of tax treaties
The network of double taxation avoidance agreements is one of the most concrete instruments that helps foreign investors. Albania has signed and ratified around 40 such agreements with various countries. Among them are Italy, Greece, Germany, Turkey, France, Austria, and the Netherlands, along with many other countries in the European Union, Asia, and the Middle East.
These agreements can reduce withholding tax rates on dividends, interest, and royalties compared to standard Albanian rates. They also allow for a clearer allocation of the right to tax between the Albanian state and the investor's state of origin. The exact reduction rate varies from treaty to treaty. It is always verified in the text of the relevant instrument, not by assumption.
As of January 2026, application procedures are being gradually transitioned to electronic format. The regulation stems from Directive No. 15, dated July 8, 2025. Every investor must submit the supporting documentation to the General Directorate of Taxes. The deadline is within the calendar year following the year in which the transactions were carried out.
What is changing by the end of 2026?
The legal framework for foreign investments is undergoing its most significant change since 1993. As of October 5, 2026, none of the following changes have yet been approved by Parliament. They remain projects in process, not rules in force.
The new unified investment law
The current law on strategic investments is valid until December 31, 2026. According to official announcements for 2026, it will not be extended. The government is preparing a new unified law. It will cover both domestic and foreign investments under the same legal umbrella. This removes the historical special advantage of the foreign investor and aims for equal treatment for all. To date, the draft law remains in the consultation phase, with no official approval date.
The right of ownership of land
The 1993 law does not grant foreign investors the right to own land in Albania. This has been a real obstacle, especially in agriculture and tourism. The new draft law aims to address this issue, allowing purchases under certain restrictions in sensitive sectors. The final provision has not yet been made public in its approved form.
Control of investments in critical sectors
Parallel to the targeted liberalization, the new draft law provides for a control mechanism. It covers foreign investments in strategic sectors such as energy, transport, and digital networks, or dual-use technologies. These investments will be subject to a state assessment process. This is a common practice in European Union countries and aims to protect national interests without hindering valuable investments.
Why it Matters to Act Now
The period between the drafting of a new law and its entry into force is usually the one with the most uncertainty. Investors who act now have the advantage of structuring their investments under the current framework. At the same time, they can monitor ongoing changes.
For foreign investors already active in Albania, this is a good time to review the company's tax and legal structure. Legal changes can open up new opportunities. They can also create additional obligations if not planned for in advance. This is especially true when you have real estate assets, service agreements with foreign partners, or expansion plans.
Every time there is a tax or financial change that affects your business, we notify you directly by email with a practical explanation.
Send me free notificationsFrequently asked questions
What does Albanian law guarantee for foreign investors?
Law No. 7764/1993 guarantees equal treatment with domestic investors. It provides protection against unjustified expropriation and the right to freely transfer capital and profits abroad. The foreign investor also has access to international arbitration in the event of a dispute with the state.
Can a foreigner buy property in Albania?
Under current law, foreign investors do not have the right to own land. The new draft law, still in the consultation phase as of October 5, 2026, provides for changing this provision. It will come with certain restrictions in sensitive sectors, but no approval date has been made public.
Which sectors offer tax incentives for foreign investors?
The main sectors are tourism, renewable energy, and technology. The package of laws for mountain areas offers up to a 10-year exemption from certain taxes for investments in mountain tourism. The incentives vary depending on the sector and the size of the investment and are reviewed on a case-by-case basis.
Do you need a local accountant if you start a company as a foreigner?
Yes. Every company registered in Albania is legally required to maintain accounting in accordance with national standards. It is also required to file periodic tax returns, regardless of the owners' nationality. Having a local advisor helps avoid fines and misinterpretations of deadlines.
How is the tax agreement between the two countries implemented?
The taxpayer must submit the supporting documentation to the General Directorate of Taxes. The deadline is within the calendar year following the year in which the transactions were carried out. As of January 2026, the procedures are being gradually transitioned to electronic format, in accordance with Instruction No. 15, dated July 8, 2025.
