Resident individuals are subject to the obligation for personal income tax during the tax period, for all sources of income realized on a worldwide scale, so in Albania and everywhere else,
The principle of residency
When a resident individual, secures income from sources outside the Albanian territory, the personal income tax, payable by that resident, related to these income, is reduced (credited) by that amount of foreign tax paid on those income.The amount of foreign tax payable must be verified with an authentic document.
The reduction of personal income tax must not exceed the tax payable on income from the foreign source, in case these income are realized in the Republic of Albania.
The reduction of tax, is calculated in a separate way, related to every foreign country, from which the income were benefited.
Non-resident individuals are subject to the obligation for personal income tax during the tax period, for sources of income, realized in the territory of the Republic of Albania,
The principle of source
If you are a resident but benefit income with a source outside the Republic of Albania you will pay the tax in the Republic of Albania, for the worldwide income realized based on the provisions of the law “On income tax”, as amended.
If you benefit passive income (dividends, interests, royalties) outside the Republic of Albania and benefit from tax agreements in force, the amount of tax paid outside will be that defined in the tax agreement.
The amount of foreign tax, verified with the relevant document, will be deducted from the tax payable in Albania, in accordance with the legal provisions in force.
If you are a resident and benefit income outside the Republic of Albania you must be equipped with the Confirmation of Residence (Certificate of Residence), issued by the Albanian Tax Administration.
The confirmation of residence serves the taxpayer to verify that they pay taxes for global income in Albania, so that the tax organ of the foreign state where they realized the income can make the application of the Agreement, applying, as the case may be, the reduced rate or by not taxing those income.
Source: General Directorate of Taxes.