Tax Instructions for the 2025 Summer Season
On the eve of the 2025 summer tourist season, the General Directorate of Taxes has published a Notice for accommodation facilities (hotels, guesthouses, resorts, etc.) related to billing and correct implementation of tax legislation. This guideline aims to facilitate reporting procedures and ensure compliance with VKM No. 160, dated 03/12/2025. The main points that accommodation businesses should consider are:
Usage of the term “Room” on an invoice
In every fiscalized invoice for accommodation services, the item description must necessarily begin with the word “Room.” This ensures that the accommodation service is clearly identified and treated with its specific tax regime.
Exact specification of nights of stay
Every invoice must clearly state the number of days or nights the client stayed at the accommodation facility. The use of general descriptions such as “weekly package” or “daily stay” should be avoided, and instead specify e.g. “Room – 3 nights” as applicable.
Clear separation of additional services
The invoice should clearly separate the accommodation price from other services (e.g., restaurant, pool, beach umbrellas).t. This means that if a facility also offers additional services, these must be billed separately from overnight stays, unless an all-inclusive package is sold. For example, a hotel that also operates a private beach must issue a separate invoice for each sun lounger/umbrella rented to vacationers.
Correct application of the VAT rate
It should be noted that the reduced VAT rate of 6% applies only to the accommodation service in tourist facilities. This preferential rate applies to accommodation (and breakfast, when included in the room rate), according to the categories of establishments defined in tourism legislation. Other services that the hotel may offer (bar, restaurant, spa, etc.) do not benefit from the 6% VAT rate but are taxed at the respective standard rates.
The Tax Administration emphasizes that following these steps increases legal compliance, reduces the need for tax verification, enables the correct benefit of reduced VAT, and contributes to the formalization of the sector. Businesses are encouraged to implement the guidelines and enter the tourist season prepared, avoiding problems with tax reporting.
VKM No. 160, dated 12.03.2025 – Utilization Capacity and Mandatory Declaration
In March 2025, the Government approved VKM No. 160 which establishes new rules for the period of utilization of accommodation facilities and the minimum level of their utilization capacity. These rules are closely linked to tax compliance, as they aim for realistic declaration of activity during the calendar year. The main terms and obligations arising from this DCM are explained below:
Key Definitions
The decision determines that:
“Accommodation structure capacity” refers to the total number of rooms that the structure makes available to tourists during its operating period.
“Utilization capacity” it refers to the ratio between the number of occupied rooms and the total capacity over a specific period. So, it's the average percentage of occupied rooms.
“Minimum level of capacity utilization” is the lowest threshold of capacity utilization (i.e., of room occupancy) required by this decision for the respective period.
Seasonal use periods
The tourist year is divided into two seasons, with an operating period defined for each:
High season (summer) May 1 – September 30.
Low season (winter): October 1 – April 30 (of the following year).
Within these ranges, all calendar days are accounted for in the utilized capacity analysis.
Minimum utilization level
The VKM mandates that accommodation structures must achieve on average at least:
65% of their capacity during the high season. (May-September)
30% capacity during the low season (October-April)
These thresholds are valid as an average for each seasonal period, not for each individual day. This means that, for example, a hotel with 100 rooms must have an average of 65 rooms occupied during the summer and 30 during the winter to meet the minimum annual criterion.
Utilization declaration options
Entrepreneurs have two alternatives on how to declare the utilization level of the structure:
(1) Report according to the specified minimum level (i.e., 651 TP3T/301 TP3T per season).
(2) Declare another level (as foreseen by themselves), if they believe their used capacity will be different from the minimum.
Consequences of declaration and non-fulfillment
If the entity chooses option (1) and declares during the year that it will meet at least the minimum levels, at the end of the tax period the tax authorities will verify the actual utilization. If the declaration made turns out to be below the minimum level, the tax administration will automatically correct it to the minimum level required by the tax system. In other words, the hotel will be taxed as if it had had 65% (or 30%) of occupied rooms, even if it actually had fewer. This can only be avoided by meeting or exceeding the declared minimum threshold.
If the entity chooses option (2) and declares a utilization percentage according to its own prediction, the tax administration has the right to verify the reality of these figures during or after the season. In cases where it is determined that the declaration does not reflect real data (e.g., it is inflated or manipulated), then the tax authorities will apply alternative valuation methods to calculate tax liabilities. This implies additional on-site or office audits, and a reassessment of turnover/taxes based on indirect data, which may result in fines or additional liabilities for the entity.
Annual declaration procedure
Every entrepreneur of an accommodation facility of defined categories (hotel, guesthouse, motel, resort, B&B, heritage property, etc. – as listed in the decision) is obliged to declare the data on capacity and utilization rate to the Ministry of Tourism. The deadline is within January of each year for the previous year's period.
The declaration is made through the standard form (Annex 2 of the DCM) and includes capacity data (number of available rooms) and utilization level (average occupancy rate) for each seasonal period. If the capacity changes during the year (e.g., rooms are added or removed), the business must notify the Ministry of Tourism of the change within 15 days.
Information exchange
After collecting the statements, the Ministry of Tourism forwards the declared data to the Tax Directorate and the local municipality where the structure is located, within February. This aims for tax and local authorities to have the declared information for each structure, to cross-reference the data with the fiscalization system and on-site inspections. Any change in capacity reported within the year is also communicated to the tax authorities and the local unit within 15 days.
Exclusions and deadlines for 2025
Since this regulation is new, the decision provides for a special procedure for the first year of implementation. Exceptionally for the year 2025, entities must submit their capacity and utilization level declaration within 30 days of the DCM's entry into force. (The DCM entered into force after its publication in the Official Gazette in March 2025, so the declaration had to be submitted within the following month).
The Ministry of Tourism, for its part, will transmit the data to the Tax Administration and municipalities within 30 days of the declaration deadline. This means that for 2025, the declaration will be made during the spring, while for subsequent years it will normally be made in January. This transitional period was allowed to give businesses time to adapt to the new requirements.
Decision VKM No. 160 is based on Article 64/1 of the “Tourism Law” and tax procedures, providing a legal basis for this mechanism. The goal is to formalize the accommodation sector by ensuring that hotels declare a minimal volume of activity. Critics have pointed out that this measure is unusual for a free market, but the government considers it necessary to combat informality (e.g., inaccurate declaration of nights sold) and to encourage establishments to stay open year-round at a minimal capacity.
Fiscal Facilities for the Accommodation Sector in 2025
Albanian fiscal legislation provides for several relief and favorable measures for accommodation structures, with the aim of encouraging investments in tourism and reducing the tax burden of this strategic sector. Below are the main fiscal benefits from which such structures can benefit in 2025:
Reduced VAT for accommodation
The provision of sleeping (accommodation) services in tourist facilities is taxed with VAT at 6%, a rate that is significantly lower than the standard 20%. This reduced rate applies to hotels, guesthouses, resorts, and other accommodation units categorized according to tourism law. For tourism businesses, this represents a significant price advantage over customers compared to other sectors (where the standard VAT remains 20%).
Note: Rate 6% applies only to the accommodation service itself (overnight stay, or room and breakfast when the latter is included in the price). Any other service provided by the establishment (food, beverages, spa, events, etc.) is subject to VAT at the applicable rate (usually 20%). This breakdown must also be reflected on the invoice, as mentioned above.
Reduced or waived tax for specific categories
Albanian law provides for a preferential profit tax on certain investments and tourism businesses:
Structures “4 or 5 star Hotel/Resort, special status”
These are luxury hotels that have obtained special status according to tourism law (they must meet criteria such as 4/5 star categorization and have a recognized international trademark). For these establishments, the law has offered an exemption from profit tax for a 10-year period. This means that for 10 years from the start of activity (but not later than a deadline set by obtaining the status), these businesses do not pay corporate income tax at all.
This stimulus was initially valid for structures obtaining special status until the end of 2024, but it was extended until December 2026 with latest legal changes. The start-up period for activity was also eased (the hotel is given up to 5 years after obtaining its status to start operations and enter the 10-year scheme, Three years agoThis tax exemption, together with the reduced VAT, infrastructure tax, and excluded property tax (see below), constitutes a powerful incentive package for strategic investors in Albania's luxury hospitality sector.
Agriturismo (certified farm accommodation)
Individuals or families who develop certified hosting activities such as “Agritourism” They enjoy a reduced profit tax rate of 51 TP3T (instead of the standard rate of 151 TP3T). This favorable rate will apply until on December 31, 2029. Therefore, for the next six years, agritourism structures—once officially certified as such—will be taxed at 51% on their profits. This stimulates the development of guesthouses and tourist farms in rural areas, offering tourists an authentic experience while providing operators with a tax break.
Small businesses in tourism
Albania applies tax incentives for small businesses across all sectors, which also affects small accommodation establishments. Currently, entities with annual revenues of up to 14 million lekë per year enjoy a reduced or zero corporate tax rate. Under transitional provisions, sole traders, self-employed individuals, and entities with turnover up to 14 million lekë will be subject to a 0.1% tax until December 31, 2029.
This means that a family-run guesthouse or small hotel (with turnover below the threshold) will effectively pay no income tax until the end of the decade, which is a significant financial relief. After this period (or if the turnover threshold is exceeded), the standard rate of 15% will begin to apply.
Exemptions from property tax and infrastructure (for large investments)
To encourage the construction of quality hotels, legislation provides that investments in 4- and 5-star accommodation facilities, with special status, shall be exempt from the infrastructure impact tax (a tax paid when a new building is constructed) and also exempt from the annual property tax (building).
These exemptions are approved by special law and local fiscal packages – e.g., the new draft law “On Property Tax” clearly exempts any 4-5 star hotel/resort, a special status, from property tax. This significantly reduces operational costs for luxury international brand hotels and, along with the profit tax exemption, creates a very favorable environment for strategic investors in tourism.
Compared to other sectors
The tourism sector, particularly accommodation, has been treated with tax incentives that do not apply to other industries. While most businesses in Albania pay a 20% VAT on services and a 15% corporate income tax, hotels and accommodation facilities enjoy the lowest VAT rate in the country. (6%), low tax rates on profits (some categories at 0% or 5%), as well as exemptions from various local taxes.
These measures reflect the strategic priority of tourism in the Albanian economy and aim to increase the country's competitiveness as a tourist destination in the region. Tourism businesses benefit from this lower tax cost, enabling them to offer lower prices to customers or invest more in service and quality.
In summary, Albanian tourism businesses in 2025 operate in a fiscal environment with lower VAT and favorable profit tax compared to the region, but at the same time, they bear an additional unique obligation to declare capacities and achieve a minimum occupancy threshold.
The blog above aims to provide accommodation structures with a clear overview of the obligations (what they must do to comply with new regulations) and benefits (what tax relief they can take advantage of) offered by the Albanian legal framework in the field of tourism in 2025. By being aware of these, businesses can better plan their activities, avoid penalties, and maximize the advantages offered by the law. In this way, the tourism sector will be not only more formalized but also better prepared to face regional competition and offer quality services to visitors.