- After the November 26, 2019 earthquake, the government approved two regulatory acts granting tax relief for the period declared a “state of natural disaster.”.
- Normative Act No. 5/2019 allowed donations (in cash or real estate) up to 51% of pre-tax profit as a deductible expense, provided they were transferred to treasury accounts within the specified deadline.
- Normative Act No. 4/2019 exempted from VAT the materials and equipment imported by state authorities for the reconstruction of the affected areas.
- The basic income tax law (No. 8438/1998), to which the first relief was added, is no longer in force, having been replaced by Law No. 29/2023; therefore, the existence of a similar provision today must be verified separately.
On November 30, 2019, four days after the devastating earthquake that struck Albania, the government approved two normative acts with tax relief measures directly related to the declaration of a “state of natural disaster,” Normative Act No. 5/2019 (amendment to the then-current income tax law) and Normative Act No. 4/2019 (amendment to the VAT law).
From our daily work, we see businesses that want to contribute in cases of misfortune but don't realize that Albanian law provides a specific tax relief mechanism precisely for these situations, not just charity without fiscal benefit.
What did the 2019 normative acts provide?
Donations up to 5% of profit as a deductible expense.
Normative Act No. 5, dated November 30, 2019, added a new letter to the article on unrecognized expenses of the then-current income tax law. Under this addition, cash or real estate donations made during the period declared a “natural disaster” and transferred to treasury accounts within the deadline were recognized as a deductible expense up to 51% of pre-tax profit. Any amount above this limit was treated as an unrecognized expense.
VAT exemption on imports for reconstruction
Normative Act No. 4, dated November 30, 2019, added to Article 56 of Law No. 92/2014 “For the Law No. 92/2014 on Value Added Tax,” an import VAT exemption for materials and equipment imported by state bodies, for the purpose of rebuilding areas affected by natural disasters or wars, within the declared period.
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Send me free notificationsWhy does it matter today?
The mechanism as a precedent for future cases
The declaration of a “state of natural disaster” is not limited to the 2019 earthquake; it is a legal status that can be declared again in other disaster cases (floods, major fires, etc.). The 2019 case shows that whenever this status is declared, it is worth checking whether the government has adopted similar relief measures. The basic income tax law to which the first relief was added (Law No. 8438/1998) is no longer in effect today, having been replaced by Law No. 29/2023, therefore we cannot confirm here whether a similar provision currently exists, without verifying it directly in the text of the new law. The VAT Law (No. 92/2014) remains the legally effective basis, but it has been amended many times since 2019, so the exact wording of the exemption must be checked in the current version.
How we handle this with our clients
When a client wants to make a donation in the event of a disaster and asks about the tax implications, we first verify whether a “natural disaster” has been officially declared and whether any specific regulations are in effect before confirming any right to a deduction.
Frequently asked questions
Is the 5% profit relief still valid today?
We cannot confirm it without verification. It was added to Law No. 8438/1998, which is no longer in effect. We need to check whether Law No. 29/2023 contains a similar provision.
When are these relief measures applied?
Only when a “natural disaster” has been officially declared and there is a specific regulatory or legal act providing relief for that period.
Where can I verify if a “state of natural disaster” has been declared?
In the decisions of the Council of Ministers and in the official notices of the General Directorate of Taxes, which are published immediately after each such announcement.
