Value Added Tax

Value Added Tax (VAT) is a general tax on the consumption of goods and services.
VAT is applied as a percentage tax on the price of goods and services and becomes payable after deducting the VAT that directly burdens the cost elements of those goods and services.

The following are subject to Value Added Tax:

• të gjitha furnizimet e mallrave dhe shërbimeve, të kryera kundrejt pagesës, brenda territorit të Republikës së Shqipërisë, nga një person i tatueshëm;
• të gjitha importet e mallrave në territorin e Republikës së Shqipërisë.

Person i tatueshëm konsiderohet:

• çdo person, pavarësisht nga forma e organizimit të tij, i cili në mënyrë të pavarur kryen veprimtari ekonomike, cilido qoftë vendi dhe qëllimi ose rezultati i kësaj veprimtarie.
  Economic activity includes any activity carried out by producers, traders, and persons supplying goods or services, including mining, agriculture, and professional activities.
• çdo person rezident në Shqipëri, qarkullimi vjetor i veprimtarisë ekonomike të të cilit është mbi vlerën 2,000,000 lekë, që është kufiri minimal të regjistrimit për TVSH-në.

Please note, you are required to register:

• Within 15 days from the date the minimum threshold is exceeded, when your turnover over 12 consecutive months surpasses the limit.
• Immediately within 15 days from the date the threshold is exceeded, if the minimum VAT registration limit is surpassed in less than 12 months.
• When you import circulating goods (goods intended for trade), regardless of the actual or expected turnover.

Sqarim
Exempted from this rule are taxable persons who realize or anticipate realizing a turnover below the minimum registration threshold and import goods categorized as Tangible Fixed Assets (TFA) to be used for the purposes of their economic activity and not for trade. These taxable persons may import investment goods for use in their economic activity—which is subject to the small business regime under the law—without being required to undergo the normal VAT regime.

Specifics for Exporters
Taxable persons who carry out exports and whose turnover is below the minimum VAT registration threshold are not required to undergo the normal VAT regime.

Përjashtim nga rregulli i përgjithshëm
Personat e tatueshëm, që ofrojnë shërbime në veprimtari ekonomike, sipas profesioneve të tilla si: avokat, noter, mjek i specializuar, dentist, dentist i specializuar, farmacist, infermier, veteriner, arkitekt, inxhinier, mjek-laborant, projektues, ekonomist, agronom, ekspert kontabël i regjistruar, kontabilist i miratuar dhe vlerësues i pasurisë, si dhe kryejnë veprimtari ekonomike në fushën e hotelerisë, pavarësisht nga qarkullimi vjetor, janë persona të tatueshëm të regjistruar për TVSH-në.
Ky kusht për këta persona vlen edhe nëse kryejnë veprimtari të përjashtuar sipas ligjit.

Tax Representative
When the person responsible for declaring and paying VAT is a taxable person not established in Albania (the country where the VAT must be paid), this person must appoint a tax representative in the Republic of Albania as the person responsible for the VAT payment.

The registration of the tax representative is handled by the Regional Tax Directorate.

Ju mund të çregjistroheni:

• Kur qarkullimi juaj në 12 muajt e fundit kalendarikë bie nën kufirin minimal të regjistrimit. Çregjistrimi, hyn në fuqi 12 muaj pas datës së paraqitjes së kërkesës për t’iu nënshtruar regjimit të bizneseve të vogla.

Qarkullimi që shërben për llogaritjen e pragut të regjistrimit dhe përfshin:

• qarkullimin e realizuar nga të gjitha furnizimet e tatueshme të mallrave dhe shërbimeve, pa përfshirë TVSH-në;
• furnizimet e përjashtuara dhe furnizimet e taksuara me shkallë tatimore 0%;

Entities Not Considered Taxable Persons:

• Non-profit organizations: For payments received from membership fees, funds, grants, and donations obtained for the non-profit purposes of the organization.
• Employees: Any individual bound to an employer by an employment contract.
• organet e pushtetit qëndror dhe vendor, organe të tjera të së drejtës publike, për veprimtari të ushtrimit të funksionit të tyre si autoritete publike.

Supply of Goods and Services
Supply of Goods
Me furnizim mallrash kuptohet transferimi i së drejtës për të disponuar si pronar pasurinë e trupëzuar.

Konsiderohen gjithashtu si “Furnizim malli” edhe transaksionet e mëposhtme:

• The transfer of ownership of property against payment, by order of/or on behalf of a public authority or pursuant to the law.
• The delivery of goods under a contract which provides for the leasing of goods for a certain period or the sale of goods on installments, where ownership passes upon payment of the final installment.
• The transfer of goods based on a contract under which a commission is paid for the purchase or sale.
• The supply of electricity, water, gas, heating or cooling energy, and other similar items.

Supply of Goods for Consideration
A supply of goods is considered to be made for consideration (payment), in whole or in part, if the supplier directly or indirectly receives or is entitled to receive payment in cash or in kind for that supply, whether from the person supplied or any other person.

Warning! The transfer of an economic activity does not constitute a supply of goods or services within the meaning of this law; instead, it constitutes a transfer of assets from the transferring taxable person to another person, who is treated as the successor of the transferor.

Importation of Goods
The importation of goods is the release for free circulation of goods within the territory of the Republic of Albania, as defined in the customs legislation in force.

Supply of Services
A "supply of services" is defined as any transaction that does not constitute a supply of goods. A service performed by an employee for their employer by reason of employment does not constitute a supply of services by the employee.

Mixed Supplies

• The supply of services included in a supply of goods is part of the supply of goods.
• The supply of goods included in a supply of services is part of the supply of services.
• The supply of services included in the importation of goods is part of the importation of goods.

Place of Supply of Goods and Services
Place of Supply of Goods

• When goods are not dispatched or transported, the place of supply of goods is in Albania if the goods are located in Albania at the moment the supply is carried out.
• When goods are dispatched or transported by the supplier, the buyer, or a third party, the place of supply is in Albania if the goods are located in Albania at the moment the dispatch or transport to the buyer begins.
• When goods dispatched or transported by the supplier, the buyer, or a third party are installed or assembled (with or without testing) by or on behalf of the supplier, the place of supply is in Albania if the goods are installed or assembled in Albania.

Place of Importation of Goods
The place of importation of goods is in Albania if goods originating from other territories are released for free circulation within the Albanian customs territory.

Warning! For goods which, upon entry into Albania, are not in free circulation and are subject to special customs regimes, the place of importation is in Albania if these goods are released from the aforementioned regimes or situations within the Albanian customs territory.

Place of Supply of Services

General Rule
The place of supply of services is in Albania if the recipient of the service, a taxable person acting as such, has in Albania:

• Their business headquarters (seat of economic activity) or a fixed establishment;
• Their domicile or habitual residence, in the absence of a business headquarters or a fixed establishment.

Vendi i furnizimit të shërbimit është në Shqipëri, nëse marrësi i shërbimit është një person i patatueshëm, ndërsa furnizuesi i shërbimit, një person i tatueshëm, ka në Shqipëri:

• selinë e veprimtarisë së tij ekonomike ose një vendndodhje të qëndrueshme, nga e cila janë ofruar shërbimet ose;
• Their domicile or habitual residence, in the absence of a business headquarters or a fixed establishment.

Special Rules
In other cases, depending on the status of the recipient (taxable or non-taxable person) and the type of service provided, the place of supply of services may be an exception to the general rule.

Lindja e tatimit, kërkueshmëria
General Rule
Për furnizimet brenda vendit, lindja e tatimit ndodh dhe TVSH-ja bëhet e kërkueshme kur :

• furnizimi i mallrave ose
• furnizimi i shërbimeve kryhet.

For importation of goods, the tax becomes chargeable and VAT becomes due when the importation of goods is completed.

Special Rules

• For any payment made before the supply of goods is carried out or before the completion of the service, VAT becomes due upon receipt of the paid amount.
• In cases where a tax invoice is issued before the supply, VAT becomes due at the moment the invoice is issued.
• If partial or successive payments are made for supplies of goods or services, these supplies are considered completed at the end of each period to which the payments refer.
• Supplies of goods and services provided continuously over a period of time, including construction operations, are considered completed in the same month in which the invoice is issued.
• For goods which are not in free circulation and are subject to special customs regimes upon entry into Albania, the tax becomes chargeable and VAT becomes due when these goods are released from said regimes.

Taxable Amount
The taxable amount includes everything that constitutes the corresponding value that the supplier of goods or services receives or will receive from the buyer, client, or a third party in exchange for the supply—including subsidies directly linked to the price of these supplies—excluding VAT.

The taxable amount of imported goods consists of the value determined at import by the customs authority, based on the customs legislation in force in the Republic of Albania.

Elements Included in the Taxable Amount:

• Taxes, duties, levies, fees, and similar charges, excluding VAT.
• Incidental expenses, such as commissions, packaging, transport, and insurance costs.
• The value of packaging when it is non-returnable.

Elements Not Included in the Taxable Amount:

• Price reductions for early payment discounts.
• Price discounts and rebates granted to the buyer or client.
• Amounts received by a taxable person from their client as reimbursement for expenses incurred in the name and on behalf of the latter.

Tax Rates
Standard VAT Rate
Shkalla standarde e tatimit mbi vlerën e shtuar për furnizimet e mallrave dhe shërbimeve, e cila aplikohet si një përqindje e vlerës së tatueshme, është 20 për qind.

0% VAT Rate
The 0% VAT rate is applicable to:

• Export of goods;
• Supply of goods to non-profit organizations;
• Supply of services consisting of work on imported goods to be processed in Albania and subsequently dispatched outside of Albania;
• Supply of services directly linked to the export or import of goods;
• Certain operations related to the international transport of goods and passengers;
• Supplies of goods and services carried out within the framework of diplomatic and consular relations;
• Supplies of goods and services to international organizations and their members;
• Supplies of goods and services for the armed forces of other NATO member states;
• Supply of gold to the Bank of Albania.

Goods in the Personal Baggage of Travelers
Goods intended to be transported in the personal baggage of travelers are also considered exports and are taxed at 0%, provided that:

• The traveler is not established within the Republic of Albania;
• The goods are transferred outside of Albania within three months following the month of supply;
• The total value of the supply, including VAT, is not less than 120,000 (one hundred and twenty thousand) ALL.

Përjashtimet, furnizimet
Disa lloje furnizime të mallrave dhe të shërbimeve, për qëllime të interesit të përgjithshëm, apo përcaktimit të veçantë në ligj, megjithëse janë të përfshira në fushën e zbatimit të TVSH-së, janë të përjashtuara nga zbatimi i taksimit me TVSH.
Për më tepër referojuni Ligjit nr.92/2014 “Për TVSH”- nenet 51 -56

Right to Deduct VAT
Principle of VAT Deduction
A taxable person has the right to deduct from the VAT calculated for taxable transactions the amounts of VAT paid, to the extent that the goods and services received are used by the taxable person for the purposes of these taxable transactions.

Specifically:

• VAT paid or payable in the Republic of Albania for supplies of goods and services provided or to be provided by another taxable person;
• VAT paid for goods imported into Albania.

Shënim: Në ligjin e TVSH-së, hollësisht, paraqiten raste të veçanta të aplikimit të së drejtës së zbritjes së TVSH.

The right to deduct arises and is applied when:

• It serves the taxable activity;
• The deductible VAT becomes chargeable;
• It is formally supported by a legal justifying document (tax invoice, customs import declaration).

Application of Partial VAT Deduction (Pro-rata)
If goods and services are used by a taxable person both for transactions that grant the right to deduct VAT and for transactions that do not, only the portion of VAT related to the first category of transactions is deductible.

Refund
Conditions for VAT Refund
A taxable person may request a refund of the excess VAT credit if:

• personi i tatueshëm ka mbartur tepricën e TVSH-së së zbritshme për 3 muaj radhazi;
• TVSH-ja e kërkuar për t’u rimbursuar është mbi 400 000 lekë.

When is a refund granted?
Exporters have the right to request a refund whenever their credit balance exceeds 400,000 ALL, without being subject to the first condition (the 3-month period).
The tax administration completes the refund procedure within 30 days from the submission date of the request for exporting taxable persons.
The tax administration completes the refund procedure within 60 days from the submission date of the request for non-exporting taxable persons.

Where is the refund request submitted?
Taxable persons must submit the VAT refund request to the VAT Refund Directorate at the General Directorate of Taxes. This request is submitted using the approved form: "Request for VAT Refund", which can be found below.

The payment of the refundable credit balance is processed within five days through the treasury system, in accordance with the rules established by the Minister of Finance.

Person Liable for Payment of VAT

• VAT is payable by the taxable person who carries out a taxable supply of goods or services, except where otherwise specified.
• VAT is payable by the taxable person or the non-taxable legal entity, identified for VAT, to whom the services are supplied, if these services are provided by a taxable person not established within the territory of the Republic of Albania.
• VAT is payable by any person who indicates VAT on an invoice.
• When an issued invoice does not correspond to the actual supply of goods or services, or indicates a price that is not effectively paid by the buyer, VAT is payable by the person who issued the invoice.
• For imports, VAT is paid by the person or persons responsible for paying customs duties, as defined in the Customs Code of the Republic of Albania.
• VAT is paid by the person who releases the goods for free circulation from special customs regimes.

Warning! A taxable person to whom a supply of goods or services has been made—and who is aware, or cannot deny the fact, that the VAT due (or part of it) on this supply or any previous supplies has remained unpaid due to fraud—is jointly liable with the supplier for the payment of the VAT.

Obligations of Taxable Persons
A taxable person must become identifiable. They must be equipped with a Unique Identification Number (NUIS) issued by the National Business Center (QKB), a number which is recorded on the certificate issued for this purpose.
The taxable person must ensure that an invoice is issued in the following cases:

• For every supply of goods or services carried out for another taxable or non-taxable person;
• For any payment made prior to the supply of goods or before the completion of the service;
• Periodically, for several supplies of goods or services provided on a regular or continuous basis between the taxable person and their client within the same month in which the supplies occurred;
• In the construction sector, a tax invoice must be issued every month;
• An invoice may also be issued by the buyer or the client of a good or service (self-billing) for supplies received from a taxable person.

The form and content of the VAT tax invoice are approved by the Minister of Finance.

A taxable person may issue a simplified invoice for values under 40,000 ALL, provided the buyer does not request a standard VAT tax invoice.

Personi i tatueshëm, është i detyruar të mbajë librin e blerjeve dhe të shitjeve, ku regjistron, të gjitha blerjet dhe shitjet e kryera në periudhën tatimore (muaji). Libri i blerjeve dhe i shitjeve, dorëzohet elektronikisht jo më vonë se data 10 e muajit që pason periudhën tatimore që deklarohet.

VAT Declaration: Every taxable person must submit a VAT declaration containing all necessary information used to calculate the VAT due, the deductible VAT amount, the taxable values of transactions related to these calculations, and the value of exempt supplies.

Modeli i deklaratës miratohet nga Ministri i Financave.

Deklarata e TVSH-së, duhet të dorëzohet jo më vonë se 14 ditë pas përfundimit të periudhës tatimore që deklarohet.

Special Schemes
The special VAT application regimes in Albania are as follows:

• Regime for travel agencies;
• Special regime applied to the sale of second-hand goods, works of art, collectors' items, and antiques;
• Profit margin regime;
• Auction sales regime;
• Special regime: Compensation scheme for agricultural producers;
• Special regime on investment gold.

Source: General Directorate of Taxes.