Personal income tax is calculated on the income of individuals.
- Resident individuals are subject to the obligation for personal income tax during the tax period, for all sources of income.
- Non-residents are subject to the personal income tax obligation during the tax period, for income sources realized within the territory of the Republic of Albania.
Taxable income:
- salary and other benefits, in relation to current employment relationships;
- income from the profit of a partner or shareholder in a commercial company;
- income from bank interest or that earned from securities;
- Revenue from copyright and intellectual property rights;
- income from emphyteusis, loans, and rents;
- income from the transfer of real estate ownership rights;
- income from gambling and casinos;
- income realized from the difference between the selling price and the purchase price of quotas or shares, which a partner or shareholder owns and sells to another person;
- Monetary income for capital increases from sources outside the company, which have not been previously taxed, while having been subject to taxation and are not accompanied by official documents proving the origin of this income. Procedures are determined by instruction from the Minister of Finance.;
- other income, not identified in the presented formats.
Withholding Tax on Income
Income from employment relationships is taxed according to the table below:
Wage tax rate
| Salary | Tax |
| 0 - 30,000 | 0 |
| 30,001-150,000 | 13%over 30,000 lek |
| 150,001 | 15,600 lek + 23% of the amount over 150,000 lek. |
Every employer, who pays wages or remuneration to an employee, withholds personal income tax, and pays the withheld tax to the tax authorities no later than the 20th of the month following the payment.
Individuals residing in Albania, central and local government bodies, non-profit organizations, and any other entity recognized by current legislation are obliged to withhold tax at source at a rate of 15% from the gross amount of the following payments, arising from a source in the Republic of Albania. Specifically:
- dividends;
- profit sharing;
- interested;
- copyright and intellectual property rights;
- paid for technical services, management services, financial services, and insurance services;
- paid for management and participation in steering committees;
- paid for construction, installation, assembly, or supervision work related to them;
- rent payments;
- paid for the performances of actors, musicians, or athletes, for their performances;
- income of individuals from gambling and casinos.
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The payer of sums is obliged to keep records for the calculation and withholding of income tax at source for each income recipient and to make them available to the tax authorities and to the income recipient for whom the payment was made.
A tax-resident person who makes the payments provided for in Article 33 of Law no. 8438, dated 28.12.1998, “On Income Tax,” as amended, declares and pays the tax withheld at source, at a rate of 15% of the gross payment amounts, by the 20th of the month following the payment month.
Exception to this rule is made for the declaration and payment of withholding tax for:
- dividends, as well as
- for unpaid invoices for technical services, consulting, and management expenses, invoiced by third parties, for which withholding tax has not been paid by the taxpayer within the tax period.
Caution
- For dividends, the declaration and payment of tax withheld at source is made by August 20 of each year, regardless of when the dividend payment to beneficiaries will be made.
- For unpaid invoices for technical, consulting, and management services, the declaration and payment of withheld tax must be made by December 20 of the tax period, regardless of when their settlement will take place.
Tax is not withheld on payments made for:
- resident Albanian individuals, registered as taxpayers for profit tax and value-added tax, or individuals registered as taxpayers for the local small business tax;
- dividends and other profit distributions for participations legally exempt from profit tax;
- payments made to non-residents for international passenger and freight transport services.
Source: General Directorate of Taxes.