Electronic services. Key points
- Foreign companies that sell electronic services to consumers in Albania register for VAT here, appoint a tax representative, and charge 20% VAT.
- When the buyer is a registered business, VAT is not charged by the seller. The buyer calculates it themselves through self-billing.
- Payments for services to non-resident companies are subject to 15.1% withholding tax, unless a double taxation agreement applies.
- The agreement applies only with the certificate of residence obtained before payment.
- Failure to report the self-invoice is a standard audit finding, even when the net effect is zero.
Published May 29, 2025 · Rewritten August 15, 2026 as a practical guide notice, with two cases, an example, and frequently asked questions.
E-services purchased from abroad are subject to tax obligations in Albania even when the seller has no office here. Online advertising, software, hosting, and subscription platforms all fall under this rule.
The obligation is split into two parts. The foreign company has its own registration rules, while the Albanian business that purchases from it uses self-billing and withholding tax. This guide explains both, with concrete cases and a calculated example.
Read also: Pre-filling the VAT return. How it works
What are electronic services?
Electronic services are those offered over the Internet with minimal human intervention. In practice, this includes online advertising, software licenses and cloud subscriptions, hosting and domains, streaming platforms, online courses, and fees charged by sales platforms.
If your business pays one or more of these every month, this topic directly affects you, even though the invoice comes from abroad and is in foreign currency.
Who pays VAT: two cases
First case. The buyer is a consumer.
When the customer in Albania is an individual without an NIPT, the obligation falls on the foreign seller. The company registers for VAT in Albania through a tax representative and charges 20% VAT on the price, just like any domestic seller. For the consumer, this means that VAT is included in the subscription price.
Second case. The buyer is a registered business.
When the client is a business with an NIPT, VAT is not collected by the foreign seller. The Albanian buyer calculates it themselves via self-billing by the 10th of the following month and records it in their VAT books. When the business is fully entitled to a deduction, the same amount is both accounted for and deducted simultaneously, so the net effect is zero. However, the reporting obligation remains in full.
Withholding tax and agreements
Payments for services to non-resident companies are subject to 15% withholding tax. This tax is reduced or eliminated only when there is a double taxation avoidance agreement between Albania and the seller's country, and Albania has more than 40 such agreements in force.
The practical condition is a single document. The seller's tax residence certificate must be obtained before payment; otherwise the agreement cannot be enforced and 15% is fully withheld. The full rules are set forth in foreigners and double taxation.
Calculated example
An Albanian business purchases online advertising worth 100,000 lekë during the month from a foreign platform. As a registered business, it issues a self-invoice. It calculates VAT at 20%, i.e., 20,000 lekë, and declares it in Electronic filing And, since they have the full right to a deduction, they deduct it on the same return.
The additional net payment is zero. But if the autofacture is forgotten, the audit uncovers it by comparing bank payments with the books, and failure to declare it is punished with a fine even though the net tax was zero. That's why electronic services must go through the same procedure every month, without exception.
Frequently asked questions
What are electronic services?
Services offered over the Internet with minimal human intervention. Online advertising, software and licenses, hosting, streaming, online courses, and platform fees.
Does my subscription as a consumer on a foreign platform include VAT?
Yes. The platform registered in Albania charges VAT at 20% on the price. As a consumer, you have no additional obligations.
I buy ads from a foreign platform as a business. What should I do?
Issue a self-invoice by the 10th of the following month, record it in your VAT books, and file it. When you have the full right to deduct input tax, the net effect is zero.
Do I have to withhold 15% when I pay a foreign company for services?
As a rule, yes. The exception applies when there is a double taxation agreement with the seller's country and the certificate of residence was obtained before payment. It is verified on a case-by-case basis.
What is a tax representative?
A legal entity in Albania that registers and represents the foreign company before the tax administration for the declaration and payment of its VAT.
What happens if the foreign company doesn't register at all?
Its obligation isn't eliminated, but for you as a business buyer nothing changes. Your autofacturing covers the VAT on your purchase and keeps you in control.
Read also: VAT imports and exports