The Albanian government has approved differences in the Guide No. 6, dated January 30, 2015, to clarify certain provisions on the Value Added Tax (VAT). These changes affect two main areas and are intended to simplify procedures for the businesses and institutions involved.
Status of the service recipient outside Albania
One of the main clarifications concerns determining the place of supply of services when the provider is registered in Albania and the recipient is outside the country. Previously, the guidance stipulated that the recipient had to be VAT-registered in his country in order for the service to be considered to be performed outside Albania.
Now a significant change has been made, clarifying that it is sufficient for the recipient to be a business entity, regardless of whether it is registered for VAT or not.
This change is reflected in the article. Article 24 of the VAT Law, where it is now clearly emphasized that the recipient must be “a taxable person acting as such outside Albania.” To confirm this status, a certificate from the tax authorities of the recipient's country is required, stating that he is a taxable person engaged in economic activities. This certificate must include a fiscal identification number, which may be the VAT number or another similar number.
Also, the term “of VAT” has been removed from some paragraphs to avoid ambiguities and make the wording clearer.
Restructuring of Article 63/1 – Import Exclusion Procedure and Treatment as a Supply Similar to Exports for Donation/Grant Agreements
Another significant change concerns the VAT exemption procedures for projects funded by donation/grant funds. Previously, the procedures for VAT exemption were complex and required several complicated registration and authorization steps. Now, the rules have been simplified and automated, including new digitized procedures for project registration and reporting.
Based on the amendments, project registration is carried out with the State Agency for Strategic Programming and Aid Coordination (the Agency) through a standardized application form. For projects where the implementer is a non-resident entity, registration may be done through a tax representative.
Upon submission of the application, the Agency issues the Project Registration Certificate within 10 business days. If the documents are incomplete, the applicant has 5 days to complete them. Once the certificate is issued, the General Directorate of Taxes (DPT) and the General Directorate of Customs (DPD) are automatically notified and receive a copy of the certificate.
As far as suppliers and contractors are concerned, the changes provide that contractors who are not required to register for VAT may obtain a special certificate from the Regional Tax Directorate (RTD), which enables them to purchase goods and services without VAT. Suppliers of goods and services are required to include on their invoices the Unique Project Identification Code and the certificate number issued by the Regional Tax Directorate.
Another significant change is the VAT exemption for imports carried out under donation-funded projects. For this, an authorization from the General Directorate of Customs (GDC) is required, which can now be obtained more quickly and with less documentation. The import exemption procedure is expected to be fully digitized and conducted online through the e-Albania government portal, eliminating the need for manual applications and excessive bureaucracy.
The tax and customs administration will have a greater role in monitoring and controlling supplies and imports for these projects. Transaction reporting will be carried out periodically on a quarterly basis to ensure transparency and accurate application of VAT exemptions.
As for VAT refund, for the first time a clear and swift deadline has been set. In cases where VAT has been paid before the project registration certificate is issued, it can be refunded within 30 days without a risk assessment. However, the refund does not apply when the costs have been covered by Albanian budgetary institutions.
Conclusion
These changes bring greater clarity and ease for Albanian businesses providing services abroad, as well as for foreign donors financing projects in Albania. The latest improvements aim to reduce bureaucracy and increase transparency in VAT procedures. In particular, the digitization of the VAT registration and refund process is expected to have a positive impact on the efficiency of tax administration.
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