- VAT on services provided outside the country does not apply when the recipient is a business established outside Albania.
- The requirement that the recipient be registered for VAT has been removed. Now it is sufficient to prove that they are a business entity.
- The recipient's status is proven by certification from the tax authority of their country, using their tax identification number.
- Grant or donation-funded projects are exempt from VAT upon registration with SASPAC, which issues the certificate and the Unique Project Identification Code within 10 business days.
- Refund of VAT paid before certification is carried out within 30 days, without a risk assessment.
VAT on services provided abroad does not apply when the recipient is a business entity established outside Albania. By Instruction No. 6, dated February 24, 2025, the requirement that this recipient be VAT-registered in their country was removed.
The instruction amended Basic Instruction No. 6, dated January 30, 2015, for the implementation of Law No. 92/2014 on VAT. His second amendment simplified the VAT exemption for supplies under grant and donation agreements.
In August 2026, both rules remain in effect. Meanwhile, the implementation practice has been supplemented with electronic invoicing rules for externally funded projects.
Read also: VAT on digital services from non-resident companies in Albania
Who pays the VAT when the service is provided outside Albania?
The place of supply determines where the service is taxed. According to Article 24 of Law No. 92/2014, when the recipient is a taxable person established outside Albania, the place of supply is not Albania. Therefore, the Albanian supplier does not charge VAT on the invoice.
This rule directly affects programming studios, consultants, marketing agencies, and any Albanian business serving a foreign client. The full treatment of cross-border supplies is on the page of VAT on imports and exports.
What was the old condition that no longer applies?
Before February 2025, it was required that the foreign recipient be VAT-identified in their country. If this was not proven, the Albanian supplier charged VAT at 20% on the invoice.
The requirement created a real problem for customers from countries where VAT registration does not exist or is not applied uniformly, such as the United States. This requirement no longer applies.
How is it proven that the recipient is a business?
A certificate issued by the tax authority of the recipient's country is required, showing that it is a registered entity engaged in economic activities. The certificate must include the fiscal identification number.
In addition to the certification, the file is kept complete with the contract or service agreement, the VAT-free invoice with a detailed description of the service, and proof of payment from abroad. This is the file required during an audit.
Calculated example. How much does the billing error weigh?
A programming studio in Tirana invoices 1,500,000 lek for a project for a business client in Germany. The place of supply is not Albania, so the invoice is issued without VAT.
If the same invoice is mistakenly issued with 20% VAT, the client is charged an unnecessary 300,000 lek. Conversely, when the invoice is issued without VAT but the file does not prove the recipient's status, the uncollected VAT may be demanded from the supplier during an audit, along with a fine and late‐payment interest.
How are grant- and donation-funded projects exempt from VAT?
Supplies of goods and services under grant or donation agreements are treated with a zero tax rate, like exports. The basis is Article 60 of Law No. 92/2014, while the procedure was simplified by the February 2025 directive.
The procedure is handled by the State Agency for Strategic Programming and Aid Coordination, known as SASPAC. The list of VAT exemptions by category can be found on the website of the Agency for Strategic Programming and Aid Coordination (SASPAC). exemptions from VAT.
| Step | Deadline |
|---|---|
| Project registration with SASPAC | At the start of the project |
| Issuance of the Registration Certificate and the Unique Project Code | 10 business days |
| Completing the documentation when it is incomplete. | five days |
| Automatic notification of Taxes and Customs | After certification, upon request. |
| Contractor's certificate from the Regional Tax Directorate | 5 business days |
| Refund of VAT paid before certification | 30 days, without risk analysis |
What exactly changed in the procedure?
Tax and customs notification is now made automatically upon issuance of the certificate. Previously, the entity had to notify them separately.
Contractors who are not subject to VAT obtain a certificate from the Regional Tax Directorate and purchase without VAT. Contractors who are subject to VAT apply for it. VAT refund with a 30-day term.
Unique Project Code on the electronic invoice
This is the step most often missed. The Unique Project Identification Code, issued by SASPAC, must be reflected on every project invoice.
According to the June 2025 notice of the General Directorate of Taxes, the code is entered in the appropriate field of electronic invoice, together with the reference of the Tax Regional Directorate's certificate. An invoice lacking this information risks exclusion, because the Tax Authority cannot link the supply to the registered project.
Read also: Pre-filling of the VAT return through fiscalization
Read also: Does it make sense to register for VAT if you're not required to?
What should the business check now?
Two checks cover the majority of the risk. First, for every business client from abroad, the file must include verification from their country's tax authority. Second, for every grant project, the invoices must include the Unique Project Code.
You can find the permanent VAT rules, from the registration threshold to the rates and filing deadlines, compiled at tax legislation. Those pages are updated whenever the rule changes, so it's worth keeping them as a reference point.
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 VAT be calculated on services provided outside the country?
No, when the recipient is a business entity established outside Albania. The place of supply is not Albania under Article 24 of Law No. 92/2014, so the invoice is issued without VAT.
What happens if the foreign client is not registered for VAT?
There are no consequences. The VAT registration requirement was removed by Instruction No. 6, dated February 24, 2025. It is sufficient to prove that the recipient is a business entity engaged in economic activities.
What document is required for a client abroad?
Certification from the tax authority of the recipient's country, including the tax identification number. The file is kept complete with the contract, the invoice, and proof of payment.
How long does it take to receive the certificate for a grant project?
SASPAC issues the certificate within 10 business days. If the documentation is incomplete, the entity has 5 days to complete it.
How is the VAT paid before certification refunded?
Reimbursement is processed within 30 days and does not undergo risk assessment. This is an express simplification of the new procedure.
Where is the Unique Project Code located?
On the project's electronic invoice, in the project reference field, include the Tax Regional Directorate certificate number. The exact format is specified in the Tax Authority's notice and must be verified before the first invoice is issued.
