Albania has remained for years a country with great potential for foreign investment, but with only partial exploitation. In this article, we will take a closer look at the main trends in foreign investment in Albania. The law of 1993, which remains the primary legal document in this field, was drafted under circumstances entirely different from today's. Many foreign investors find themselves in a system that offers guarantees on paper but concrete obstacles on the ground.
By 2026, the picture is changing. The Albanian government has begun drafting a new unified investment law, which is expected to replace both the 1993 law and the strategic investments law, the term of which expires on December 31, 2026. The proposed changes include allowing foreigners to purchase land, equal treatment between domestic and foreign investors, and oversight mechanisms for investments in critical sectors.
This article explains what the current legal framework guarantees, where it clashes with reality, which sectors are most attractive to investors, the role of tax treaties, and specifically what is changing with the new reform.
The guarantees provided by the current law
Law No. 7764, dated November 2, 1993 “On Foreign Investments” It is short but conceptually clear. It allows foreign investment without any prior authorization and treats the foreign investor on the same level as the domestic one.
The foreign investor is guaranteed three key rights. The first is protection against expropriation without fair and immediate compensation, calculated at market value and transferable in convertible currency. The second is the right to transfer abroad all profits and invested capital. The third is the right to resort to international arbitration in the event of a dispute with Albanian authorities, including the Center. International Centre for Settlement of Investment Disputes in Washington.
The law also recognizes the foreign investor's right to employ foreign nationals, to own movable property, to benefit from intellectual property protection, and to carry out any economic activity permitted by Albanian legislation.
The strongest point of the law remains the provision on international arbitration. This gives the investor real neutrality in the event of a dispute with the state, which is rare in the domestic laws of developing countries and is one of the main reasons why many investors still enjoy formal protection even under the old law.
When the law meets reality
Although on paper the law appears liberal and favorable, practice shows a different picture. Investors encounter difficulties from the very first moment of registration.
Bureaucratic processes are lengthy and not standardized. State institutions do not communicate with each other in real time. An investor applying for a building permit may encounter obstacles from the municipality because of a document that the QKB accepted without issue.
Fiscal uncertainty is another significant obstacle. The investment law 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 and are not guaranteed in the long term. Frequent changes in tax legislation and contradictory interpretations by the tax administration create real uncertainty.
There is also no dedicated structure for monitoring and facilitating investments. Albania does not have a functional one-stop shop for foreign investors, and no institution takes responsibility for overseeing an investment project from start to finish. Investors wander among different offices, submitting documents multiple times and facing varying treatment from municipality to municipality.
If you are a foreign investor or are considering establishing operations in Albania, we can help you navigate the procedures from registration to filings. The first consultation is free.
Sectors where investors are most active
Tourism
It remains the most prominent sector. Foreign investments have been concentrated mainly in accommodation facilities in the south of the country, protected areas, and historic cities such as Gjirokastra and Berati. The advantages are the still-competitive property prices and the significant development potential. The main problem lies in the weak infrastructure, insecure property titles, and delays in environmental permits.
The New Mountain Law, which takes effect in the 2025–2026 period, offers 10 years of tax-free treatment for mountain tourism investments. 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, while the administrative capacity to manage strategic projects remains an open issue.
Technology and IT services
They are attracting increasing attention thanks to low labor costs and tax incentives for tech companies. To turn this interest into major investments, it is necessary to expand academic capacity and create dedicated spaces for technological development.
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 them. over 43 such agreements with various countries, including Italy, Greece, Germany, Turkey, France, Austria, the Netherlands, and many other countries in the EU, Asia, and the Middle East.
These agreements reduce withholding tax rates on dividends, interest, and services, and allow for a fairer allocation of taxation between the Albanian state and the investor's country of origin.
For example, an Italian company with a branch in Albania that distributes profits to its parent company, under the bilateral agreement, pays 51% withholding tax instead of the standard 81%. This directly affects the investment's profitability.
From January 2026, the procedures for applying agreements are being gradually transitioned to an electronic format in accordance with Instruction No. 15, dated July 8, 2025. Every investor must submit the supporting documentation to the General Directorate of Taxes within the calendar year following the year in which the transactions were carried out.
What's changing in 2026?
This is the most important section of this article. The legal framework for foreign investments is undergoing the biggest change since 1993.
The new unified investment law
The current law on strategic investments, adopted in 2015 for a three-year term and repeatedly extended, will definitively expire on December 31, 2026. The government has chosen not to extend it once again, but to draft a new unified law. This law will cover both domestic and foreign investments under the same legal umbrella, removing the historical special advantage of the foreign investor and ensuring equal treatment for all.
The right of ownership of land
The new draft law provides for a change with significant practical impact. The 1993 law does not grant foreign investors the right to own land within the territory of Albania. This has been a real obstacle, especially in agriculture and tourism. The new law is expected to resolve this issue by allowing foreigners to purchase land, subject to certain restrictions in sensitive sectors.
Control of investments in critical sectors
Parallel to liberalization, the new law provides for a control mechanism for foreign investments in strategic sectors. Investments affecting critical public infrastructure such as energy, transportation, and digital networks, or dual-use technologies, will be subject to a state review process. This is standard EU practice 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 full entry into force is usually the most uncertain. Investors acting now have the advantage of structuring their investments under the current framework while monitoring the changes.
For foreign investors already active in Albania, this is a good time to review the company's tax and legal structure. If you own real estate, have service agreements with foreign partners, or are planning expansion, the legal changes could open up new opportunities but also create additional obligations if not planned for in advance.
Frequently Asked Questions
What does Albanian law guarantee for foreign investors?
Law No. 7764/1993 guarantees equal treatment with domestic investors, protection against unjustified expropriation, the right to freely transfer profits abroad, and 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, which is expected to take effect after December 2026, provides for changing this provision and allowing purchases with certain restrictions in sensitive sectors.
Which sectors offer tax incentives for foreign investors?
The main sectors are IT and technology, renewable energy, and tourism. The New Mountain Law Offers 10 years of tax-free investments in mountain tourism. The incentives vary depending on the sector and the size of the investment.
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 and file periodic tax returns, regardless of the owners' nationality. The presence of a local advisor is essential to avoid fines and misinterpretations.
How is the tax agreement between the two countries implemented?
The taxpayer must submit the supporting documentation to the General Directorate of Taxes within the calendar year following the year in which the transactions were carried out. From January 2026, procedures are being gradually transitioned to electronic format in accordance with Instruction No. 15, dated July 8, 2025.