- The 5% income tax rate for software production and development expired on December 31, 2025.
- As of January 1, 2026, the general regime applies, namely a 15.1% rate on taxable profit.
- Businesses with annual gross revenue of up to 14,000,000 lek pay 0.3% until December 31, 2029.
- For self-employed IT professionals, the requalification rule also applies when clients are concentrated.
- The service for non-resident clients without a permanent establishment in Albania is exempt from that rule.
For years, software production and development had a 5% reduced rate on corporate income tax. It expired on December 31, 2025, and was not extended.
Therefore, today's question is no longer whether your activity falls under the list of IT activities, but which regime your business falls into based on its turnover.
Read also: Regime and rates for the self-employed
What is worth today for an IT business?
| Case | The |
|---|---|
| Annual gross turnover up to 14,000,000 lek | 0% income tax, until December 31, 2029 |
| Company with revenue above the threshold | 15% on taxable income |
| Natural person with turnover above the threshold | 15% up to 14,000,000 lek profit, 23% on the excess. |
| Distributed dividend | 8% |
So most small studios and independent developers remain on 0%, but not because of the sector. They're there because of turnover, and that regime's deadline is December 31, 2029.
The risk of requalification for independent developers
This is the most important point for the sector. When 80% or more of the income comes from a single client, or 90% from fewer than three clients, the income may be treated as employment income.
The exception that saves most Albanian developers lies in the law itself. The rule does not apply when services are provided exclusively to non-resident individuals or to entities without a permanent establishment in Albania.
When clients are local and focused, the case is verified beforehand, not after inspection. The comparison between wages and self-employment is on our page. Wage or self-employment.
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
Is there still a 5% rate for the software?
No. It expires on December 31, 2025.
How much do I pay if my turnover is under 14 million lek?
0% income tax until December 31, 2029. The annual return must be filed in any event.
I work only for a client abroad. Do I qualify again?
No. The law explicitly excludes cases where the services are provided exclusively to non-residents without a permanent establishment in Albania.
Previous text and list of activities
The General Directorate of Taxes informs all taxpayers engaged in software production/development that the Council of Ministers approved decision no. 730, date 12.12.2018, “For the determination of activities included in the field of software production/development, as well as the procedures for applying the corporate income tax for legal entities engaged in these activities,” this decision was published in the Official Gazette No. 176, dated December 13, 2018.
The activities carried out by legal entities in the field of software production/development, for which the 51% corporate income tax rate applies, are as follows:
- Software design
- Software system development and maintenance
- Software testing
- Design and development of communication systems
- Design and development of security systems
- Development of migration systems
- Improvement/upgrade of information systems
- Operations, management, usage support, and technical/informatics auditing for software systems.
Legal entities must have these activities defined in their company's bylaws as the scope of operations in order to apply the 5% rate of income tax.
Other activities and sharing with NIPT
In addition to these, any other activities the company may undertake must be in the field of information technology. When other activities, if any, do not fall within this field, they must be carried out through separate NPIs in order to apply the 51% corporate tax rate.
Also, the legal entity must submit to the relevant Regional Tax Directorate a declaration stating the activity or activities of its business operations for which it is applying this tax rate.
It should be borne in mind that for the economic activities in the information technology field carried out by the legal entity, the standard 15% rate of Corporate Income Tax will apply.
In order to apply the reduced rate, entities must clearly reflect in the explanatory notes to the financial statements the revenues derived from the activity/activities for which the 5% tax rate applies, as well as the expenses incurred.
Source: General Directorate of Taxes.
