- If the sale of the seized assets is not sufficient to cover the tax liability, the Tax Administration may transfer it to third parties who have benefited from the delinquent taxpayer.
- The Tax Administration may also require third parties who owe money to the delinquent taxpayer to pay those amounts directly to it.
- In commercial companies, when the company's assets are insufficient, the unpaid tax liability may be transferred to the partners, shareholders, and directors, in proportion to each person's share of the capital.
- This liability continues even during and after the liquidation or bankruptcy of the company for those who at that time held the status of partner, shareholder, or administrator.
When the Tax Administration fails to collect an unpaid tax liability through the sale of the taxpayer's seized assets, Law No. 9920 of 19.5.2008 “On Tax Procedures in the Republic of Albania,” as amended, grants it the right to pursue the liability from other persons who have financial or organizational ties to the taxpayer debtor.
In our daily work we often see partners and administrators who believe that responsibility for the company's tax obligations ends with the company itself, without realizing that the law explicitly provides for cases when that responsibility passes to them personally, especially during liquidation or bankruptcy.
Read also: On the key changes to the law on tax procedures.
Assignment of obligation to third parties
Who is considered a third party?
Third parties are considered those who, during the period of forcibly collecting obligations owed by the taxpayer, have benefited from him in various ways. If the sale of the taxpayer's seized assets is not sufficient to cover the liability, the Tax Administration may require these persons to pay the remaining amount, up to the value of the assets they have received.
Notice and calculation of the obligation
The Tax Administration sends the third party a notice containing the name or trade name, the NIPT if available, the registered office or place of residence, the amount of the liability being transferred, and information about the taxpayer debtor. The liability imposed on the third party is calculated based on the market value of the asset transferred to him, not on the full amount owed by the debtor.
Right of objection
The person to whom the obligation is transferred has the right to contest it and to prove to the Tax Administration that the obligation cannot be transferred. If the taxpayer does not object within the deadlines provided by law, the Tax Administration will initiate compulsory collection procedures against them, just as it would against the taxpayer debtor.
Collection of obligations from third-party debtors owed to the taxpayer.
When the third party owes the taxpayer directly
Parallel to other forced collection procedures, when the Tax Administration is aware that third parties owe amounts to the delinquent taxpayer, it may require those parties to pay their monetary obligations directly to the administration itself, rather than to the taxpayer.
30-day payment term
The Tax Administration notifies the third party in writing in advance, and its obligation to pay arises within 30 days from the date of receipt of the notice. If the third party does not settle the amount within this period, the same enforcement collection procedures that apply to any tax debtor are applied to it.
Liability of a partner, shareholder, and director
When the company's assets are not enough
When, after the sale of a taxable legal entity's assets, the Tax Administration fails to collect the unpaid tax liability, it transfers it to the entity's partners, shareholders, and administrators. Only those who appear with these capacities in the commercial register as of the date the tax liability is notified are considered. The individual liability of each is equal to the share they hold in the company's share capital.
The case of an administrator who is also a partner or shareholder
When the debtor is the company's own administrator, the Tax Administration verifies whether he also simultaneously holds the status of a partner or shareholder. If he does, his liability is calculated the same as that of any other partner or shareholder, in proportion to the capital he owns. If the administrator does not have the status of a partner, he is treated as a joint and several debtor, together with the company's other partners or administrators.
Liability during liquidation or bankruptcy
If the taxpayer legal entity fails to pay its tax liabilities even after completing the liquidation or bankruptcy process, the unpaid obligation is transferred jointly and severally to the persons who held the status of partner, shareholder, or administrator at the time that process was carried out. This means that leaving the company before its dissolution does not automatically eliminate this liability if the person still held that status when the liquidation or bankruptcy process began.
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 notificationsWhy it Matters
Withdrawal from society does not automatically eliminate the risk.
Many partners and directors walk away from a company with financial problems, believing this completely shields them from its tax liabilities. In fact, if they held the status of partner, shareholder, or director at the time of liquidation or bankruptcy, joint and several liability can be imposed on them even after leaving, up to the amount of capital they owned.
How we handle this with our clients
When the companies we advise run into financial difficulty or plan liquidation, we first verify their tax liability situation and clearly explain to the partners and managers which of those liabilities could be passed on to them personally, before they make decisions that might expose them without their knowledge.
Frequently asked questions
Can I be held liable if I'm no longer a partner?
The law ties liability to the status the person held at the time the obligation was notified or at the time of liquidation or bankruptcy. If you left the company before that date, your specific situation should be verified with the Tax Administration or with our assistance.
What is the extent of my liability as a partner?
The individual liability of each partner or shareholder is limited to the share they hold in the company's capital, not to its entire unpaid obligation.
Can I challenge the transfer of the obligation?
Yes. The law gives you the right to contest the notice and prove to the Tax Administration that the liability cannot be transferred to you. If you do not do this within the deadline, the administration will initiate forced collection procedures against you.
Where can I find the current chapter numbers?
Law No. 9920/2008 has been amended several times since its initial publication, so the exact article numbers for your specific case should be verified in the consolidated text of the law or directly with the DPT.
The principles described herein are part of Law No. 9920, dated May 19, 2008, “On Tax Procedures in the Republic of Albania,” as amended. Since this law has undergone several amendments since 2019, we recommend verifying the current article number before relying on specific procedural details.
