Supply of goods and services performed for payment

Any supply of goods or services made by a taxable person is considered “for consideration” for VAT purposes, pursuant to Law No. 92/2014 of July 24, 2014 “On Value Added Tax in the Republic of Albania,” as amended. The rule seems simple, but there are cases when VAT is paid even without having a customer in front of you.

From our daily work, we see the same mistake in many businesses. Administrators link VAT only to actual sales to a third party and forget that private use of business goods, cessation of operations, and services provided free of charge for personal needs are also treated as taxable supplies.

Read also: When and how is VAT applied?.

When is it considered supply in exchange for payment?

A supply is considered to have been made for consideration if the supplier receives payment, or is entitled to receive it, directly from the person supplied or through a third party, regardless of whether the payment is in cash or in kind.

Regular paid supplies

The law establishes, for the purposes of VAT application, the two types of supplies commonly known as “sales.”.

• Supplies of goods made for consideration by a taxable person acting as such.
• Supplies of services rendered for payment by a taxable person acting as such.

A transaction for consideration includes any countervalue, regardless of its value or nature, when the buyer of the goods or the recipient of the service pays something in return.

When the supplier is also the recipient.

The same taxable person is treated as the supplier even when directing the goods or services to themselves, that is, when:

• used for private purposes, his own or that of his staff, outside economic activity
• It is transferred for private use when it ceases economic activity in order to be deregistered.
• provides services free of charge for personal needs, for staff, or for purposes outside the business

Private use of goods and services

Caution. Supplies that a taxable person treats as business goods or services but does not use for business purposes are known as private use of business goods or services and are considered supplies for payment for VAT purposes.

The rule also applies when the taxable person takes a good or service from the assets of his economic activity for purposes for which the right to deduct VAT would not have been exercisable had it been purchased from another taxable person.

Self-sufficiency

The taxable person is considered to have made a self-supply when goods or services created in the course of his taxable economic activity are used for the needs of that same activity. These are treated as taxable supplies with the right to deduct input tax, and the person issues an invoice as the supplier while at the same time being the purchaser of his own supplies.

Note: Self-supply applies only when there is a taxable supply for the purposes of a taxable activity.

The supply of goods used for purposes other than economic activity remains subject to VAT, even if the enterprise has produced them itself or has purchased and supplied them in that condition.

Exclusion when VAT was not deductible

The only exception is when the VAT paid on the purchase of the goods or equipment was not deductible in the first place. In that case, subsequent use outside the business is not treated as a supply for payment, because the business never benefited from the deduction that the rule seeks to recover.

Goods remaining when you cease operations

Business closure is understood as the abandonment or termination of all activities, due to the permanent shutdown of the enterprise, the voluntary dissolution of the company, or a judicial procedure. Investment goods (assets) still on hand at the date of closure are subject to adjustment of the VAT deducted if they have not been sold.

For VAT purposes, the cessation of activity is considered to occur on the date the stocks are sold, or on the date all movable capital goods are sold or taken out of use. Investment movable assets that are still in stock and are transferred for private use upon closure are subject to adjustment of the VAT previously deducted, if they were eligible for full or partial deduction.

This is the point that many businesses leave until the end, when in fact it should be calculated before submitting the deregistration request, not after.

Read also: How to register for and deregister from VAT.

How is this supply reported in practice?

Supply for payment arising from private use or from the cessation of activity is declared as VAT calculated in the same tax period in which the event occurs, regardless of there having been no actual customer.

The moment of declaration

The liability is declared in the tax period when the goods or services are withdrawn for private use, or when the activity is discontinued, no later and no earlier.

Self-supply invoice

The business issues the corresponding invoice as the supplier, records it in the sales book, and includes the amount in the periodic VAT return, in the same way as any other taxable supply.

Read also: When VAT is declared and how the books are filled out.

Calculated example

The liability changes based on the discount percentage the business applied at the time of purchase.

The case of full deduction

A business ceases operations and still has in its warehouse equipment purchased for its activity, valued at 1,000,000 lekë, for which the VAT deducted at purchase was 200,000 lekë, i.e., a full deduction. These devices are not sold but are transferred for the owner's private use. At this point, the business must calculate and pay the VAT previously deducted on their remaining value, namely 200,000 lek.

The case of partial deduction

Those devices, with the same value of 1,000,000 lek, but with only a partial initial deduction, e.g., 50 percent of the VAT, amounting to 200,000 lek. When they are transferred for private use, the tax is calculated at the same rate, i.e., only 100,000 lek, not the full amount.

Why it Matters

The supply-for-payment rule applies not only at the point of sale but at any moment when a business's goods or services leave their normal course of trade.

Moments when you need to check

When an administrator plans to wind down operations, sell equipment outside normal turnover, or transfer it for personal use, a preliminary check of any potential VAT liability saves time and prevents unexpected recalculations after the application is filed.

How we handle this with our clients

This is precisely the kind of review we conduct as part of our ongoing work with clients, not just in the closing month, so that the decision to close, sell, or convert to private use is made with prior knowledge of the VAT implications.

Frequently asked questions

Is VAT payable if the goods are never sold but simply remain in the warehouse?

No, as long as the goods remain in stock and in use in the economic activity. The obligation arises when the goods leave the activity, whether through sale, private use, or the cessation of operations.

Does this rule also apply to goods purchased without deductible VAT?

No. If the VAT on the purchase was not deductible from the outset, subsequent use outside the business is not treated as a supply for consideration.

How is this VAT declared, and in which period?

In the tax period in which the event occurs—that is, when the goods or services are put to private use or when the activity is discontinued—no later than then. The amount is included on the next VAT return, together with the invoice that the business issues itself as the supplier.

Who should I contact to verify my specific case?

Each closure or deregistration case has its own specifics, so the correct VAT treatment of the remaining goods is verified on a case-by-case basis before the procedure begins, not after it has been carried out.

Full publication on the official DPT website https://www.tatime.gov.al/c/8/222/401/furnizimet-e-mallrave-dhe-sherbimeve-te-kryera-kundrejt-pageses