- Business management in Albania begins the day after registration with the QKB, with the payroll through the 20th of the following month and with the annual return by March 31.
- The company and the natural person in VAT open the business's bank account and declare it to the tax authorities within 20 days of registration.
- The profit tax is 15%, with a zero rate until December 31, 2029, when annual turnover does not exceed 14,000,000 lekë.
- The dividend is taxed at 81% even when the company is in the zero regime, and the decision on the allocation of profit must be filed by July 31.
- The administrator's contributions are calculated on a basis not lower than the minimum wage, 50,000 lek per month.
Business management in Albania begins the day after obtaining the NIPT, not on the date of registration. Registration with the National Business Center is completed within a few hours. Then the monthly recurring deadlines begin: payroll by the 20th, sales and purchase books by the 11th, and the VAT return by the 14th.
In new businesses, the sequence of mistakes is almost always the same. The legal form is chosen without considering the tax consequences. The administrator goes without a payroll. Profits are withdrawn without an assembly resolution and without paying the 81% tax.
This guide covers the second part of the work, what comes after registration. The legal form and its consequences, the timetable of deadlines, the administrator's salary, the dividend, the rules for the foreign investor, income sourced outside the country, and the five mistakes that cost businesses the most.
Read also: How to Start a Business in Albania: A Practical Guide for the New Entrepreneur
Legal form and its tax consequences
The legal form is chosen once and affects taxation, contributions, and liability for debts. The two most commonly used forms are the sole proprietor and the limited liability company. The first difference is liability. The sole proprietor is liable with his or her personal assets, whereas the partner in a Limited Liability Company Liable up to the amount of capital invested.
The second difference is how the owner is paid. In the case of a sole proprietorship, the profit goes directly to the owner and there are no dividends. In a corporation, the profit belongs to the company and is transferred to the owner either as salary or as dividends, each governed by its own rules.
| The issue | Merchant natural person | Limited Liability Company (LLC) |
|---|---|---|
| Responsibility for debts | With personal wealth | Up to the invested capital |
| Profit Tax | 15% up to 14,000,000 lek taxable profit, 23% on the excess. | 15% on taxable income |
| Zero regime until December 31, 2029 | 0% when the annual turnover does not exceed 14,000,000 lek | 0% under the same condition |
| Owner's contributions | As a self-employed person, 178,800 lek per year above the minimum. | As an employee, on the administrator's salary. |
| Dividend | It doesn't exist as a concept. | 8% on the distributed amount |
Be careful with the zero regime. It is measured on annual gross turnover, not on profit, and is a transitional provision of Article 69 of Law No. 29/2023, which expires on December 31, 2029. The zero tax does not eliminate the obligation to file the annual return.
Deadlines that begin the day after NIPT
Deadlines don't wait for a business to make its first sale. They begin in the month of registration and recur every month. The table below lists the deadlines that affect almost every business.
| Deadline | What is being delivered? |
|---|---|
| The 11th of the following month | Sales book and purchase book for VAT-registered entities |
| The 14th of the following month | VAT declaration and payment |
| The 20th of the following month | Payroll list, contributions, and withholding tax |
| March 31 | Annual income tax return, mandatory even with zero tax liability. |
| March 31, June 30, September 30, December 31 | Quarterly prepayment installments |
| July 31 | The financial statements and the assembly's decision at the QKB, plus the decision on the allocation of tax profits. |
Quarterly tax returns are submitted only by traders and self-employed individuals who are not VAT-registered. For everyone else, the deadline is monthly. The full calendar is published by General Directorate of Taxes.
The administrator's salary and what is deducted
The administrator's salary is a deductible expense for the company, thus reducing taxable profit. Contributions are calculated on it: 16.71% by the employer and 11.21% by the employee. The base cannot be smaller than Minimum wage, 50,000 lekë per month, and for social security it does not exceed the ceiling of 186,416 lekë.
Calculated example with a salary of 100,000 lek
An administrator receives a gross salary of 100,000 lekë per month. The employer's contribution is 16,700 lekë, so the company's monthly cost is 116,700 lekë and the annual cost is 1,400,400 lekë. The entire amount is a deductible expense.
If the company is taxed at 151 TP3T, this cost reduces profit tax by 210,060 lek per year. If the company is in the zero regime, the deduction doesn't save any profit tax, because the tax is already zero. This is the difference that determines whether a high salary makes sense or not.
Employee contributions and payroll taxes are withheld from the paycheck itself. The full breakdown of rates is on our website. Social Security.
Dividend. The 8% rate and two deadlines that are forgotten
The dividend is taxed at 81% on the distributed amount, according to Article 59 of Law No. 29/2023. The rate is the same even when the company has not paid corporate income tax, because it was under the zero regime. There are two deadlines that are most often overlooked.
First, the decision on the allocation of profit must be filed with the tax authorities no later than July 31 of each year. Second, when a distribution is declared but not paid, the tax is due at the end of the third month following the month of the decision.
A widespread misunderstanding deserves clarification. Undistributed profit is not automatically considered distributed and is not taxed for that reason. The 8% liability arises when the statutory body decides on distribution. Thus, the profit may remain as a reserve for investment, provided that the decision on its allocation is filed within the deadline.
| Case | Profit Tax | Dividend Tax | Remain with the owner |
|---|---|---|---|
| Company with a 15% profit tax | fifteen lek | 6.8 lek | 78.2 lek |
| Society in the zero regime | zero lek | Eight lek | 92 lekë |
The table shows over 100 lek profit before tax. The figures are rounded for illustrative purposes and do not replace the calculation on the year-end statements.
Read also: Tax on dividends. Distribution of profits in Albania
Foreign Businesses and Investments in Albania
What does the law guarantee to the foreign investor?
Foreign investment is not subject to prior authorization. This is explicitly stated in Article 2 of Law No. 7764, dated November 2, 1993, which remains the basic act governing foreign investments. The same article grants treatment no less favorable than that accorded to domestic investments under similar conditions, except for land ownership, which is regulated by a separate law.
Article 4 prohibits expropriation and nationalization, direct or indirect, except in cases of public interest provided by law, without discrimination and with immediate compensation. Article 7 allows the transfer abroad of profits, proceeds from sale or liquidation, and invested capital.
Foreign worker and unique permit
Contributions for foreign employees are calculated the same as for domestic employees, regardless of nationality. If you intend to employ foreign nationals, they must have a unique permit or a residence permit. The procedure, fees, and deadlines are on our website. Application for a single permit.
Incomes sourced from outside Albania
An individual is considered a fiscal resident if they stay 183 days or more within the tax year, or if they have their center of vital interests in Albania. A resident is taxed on income from all sources, both within and outside the country. A non-resident is taxed only on income sourced in Albania. The full rules are on our website for foreigners and double taxation.
Tax paid abroad is credited up to the amount of Albanian tax on the same income. Any excess is not refunded. Albania has over 40 double taxation avoidance treaties in force, but their implementation requires documentation submitted within the following calendar year.
The Five Most Common Mistakes After Registration
The following mistakes are repeated in new businesses, and each has a measurable cost.
Keeping business funds in a personal account
The company and the natural person in VAT open the business's bank account in its name and declare it to the tax authorities within 20 calendar days of registration. The deadline comes from Article 59 of Law No. 9920/2008, and a natural person outside VAT does not have this obligation. Mixing personal and business finances also makes it impossible to close the year accurately.
Failure to declare the administrator on the payroll list
The administrator in charge is listed on the payroll like any other employee. An undeclared employee incurs a 200,000-lek fine for VAT and corporate income tax payers, and 50,000 lek for others. Saving on contributions for a few months does not cover this amount.
Deferral of the electronic fiscalization certificate
Without an electronic certificate, an invoice cannot be issued. Without an invoice, there is no proper sale and no recognized expense for the buyer. The certificate is obtained before the first transaction, not after the customer has waited.
Forgetting the prepayment installment
The prepayment of the profit tax is paid in four quarterly installments. Failure to pay on time incurs late‐payment interest of 0.061% per day on the outstanding amount, for up to 365 days. Installments are especially often missed in the second year, when the business transitions from the zero rate to the standard rate.
Lack of a monthly review of the figures
Without a monthly close, the January error is uncovered in March of the following year. Then the correction costs more than the error itself, because a fine and late interest are calculated on the difference.
Read also: 10 mistakes after registering a business and how to avoid them
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
Should the administrator of an LLC draw a salary?
The administrator in office must be declared on the payroll, and contributions are calculated on a basis no lower than the minimum wage of 50,000 lek per month. Failure to declare is treated as undeclared employment.
Can a dividend be paid when the business has zero income tax?
Yes. Norm 8% applies to the distributed amount, even though the profit itself was not taxed, because the company was within the 14,000,000 lek threshold.
Is undistributed profit taxed?
No. The obligation of 8% arises upon the decision of the statutory body to distribute. The profit may be held in reserve, but the decision on its allocation must be filed by July 31.
When must the business bank account be declared?
Within 20 calendar days of registration with the tax authorities, if you are a company or an individual registered for VAT. The deadline does not depend on when the business begins operations.
How are the income a resident receives from abroad taxed?
They are included in taxable income in Albania. Tax paid abroad is credited up to the amount of the Albanian tax on the same income.
Do the contributions change for a foreign employee?
No. The rates and base are the same as for a local employee. Only the work permit and residence parts differ.
Monthly deadlines don't wait for your business to get started and they don't expire at the end of the month. Regular checks of payroll, VAT, and prepayments keep your business out of fines and make year-end closing a routine process.
