Tax legislation

Zero until December 31, 2029, if annual gross revenue does not exceed 14,000,000 LEK, pursuant to Article 69 of Law No. 29/2023. Above this threshold, entities pay 15% on taxable profit, while a sole proprietorship pays 15% on profit up to 14,000,000 LEK and 23% on the excess, according to Article 24. The threshold is a full threshold, so exceeding it by even one lek places the entire profit under the normal regime.

Yes. The annual declaration is filed by March 31, even if the tax is zero and even if there were no transactions during the year. Failure to file is penalized under Article 113 of Law No. 9920/2008, with 3,000 LEK for individuals, 5,000 LEK for regular taxpayers and 10,000 LEK for large taxpayers. This is the most common mistake among businesses below the threshold, because zero tax is confused with no obligation.

When annual turnover exceeds 10,000,000 LEK, pursuant to Article 117 of Law No. 92/2014 and Government Decree No. 953/2014. The application for registration must be submitted within 15 days from the moment the threshold is exceeded, Article 122. Voluntary registration is possible for amounts over 5,000,000 LEK and remains in effect for at least two years. Notaries and bailiffs are registered without a threshold. Return to the small business regime is allowed after 12 months.

The employer's cost is the gross salary plus 16.71% contributions, up to a maximum of 186,416 LEK. For a gross salary of 100,000 LEK, the cost amounts to 116,700 LEK per month. Employees are withheld 11.21% contributions plus payroll tax, which is not applied to up to 50,000 LEK per month and is then calculated at 13% and 23% under Article 24. The payroll is submitted by the 20th of the following month.

The rate is 8% on the distributed profit, according to Article 59 of Law No. 29/2023. The tax is withheld at source by the company at the time of distribution and must be reported by the 20th of the following month. Distribution requires a decision by the partners' assembly and may only be made from the profit remaining after covering losses and after creating statutory reserves.

Individuals who exceed the annual income threshold, those who have more than one employer, and those who have income from rent, dividends, interest, or foreign sources. The deadline is March 31. Child deductions of 48,000 LEK per child under 18, and education deductions of up to 100,000 LEK when income is below 1,200,000 LEK, are claimed only through this declaration, pursuant to Article 22.

As of January 30, 2026, the limit is 100,000 LEK per business-to-business transaction and 500,000 LEK when the other party is an individual, pursuant to Article 59 of Law No. 9920/2008. Exceeding it is punishable by a 10% penalty on the transaction amount, under Article 120. In addition to the transaction limit, there is also a cash register limit, which depends on the business's annual turnover.

The penalty is 0.06% of the obligation for each day of delay, up to 365 days, pursuant to Article 114. Late‐payment interest is also charged, currently 7.81 TP3T per annum, equal to 1201 TP3T of the interbank rate and updated quarterly. When the obligation cannot be paid immediately, the law allows an installment agreement, with an immediate payment of 20% and repayment by the end of the following year.

The amended declaration is submitted within 24 months, a shortened deadline from the previous 36 months, in accordance with Article 67 of Law No. 9920/2008. The individual DIVA declaration is corrected within six months and at most twice. Anyone who remembers the old rule loses the right without noticing, so the correction is made as soon as the error is detected.

The inspection notice is issued 30 days before the start, while for the fiscal visit the deadline is 10 days. The inspection lasts according to the schedule and may be extended up to 15 working days. Self-reporting an obligation within 30 days before the start reduces the penalty to 50%. After the assessment notice, payment must be made within 30 days and an appeal filed within 30 days, in accordance with Article 106.

Below the threshold of 14,000,000 LEK, both forms pay zero tax on profit, so the decision depends on legal liability and administrative cost, not on tax. Above the threshold, the LLC pays 15% on its profit and 8% on the dividend when it distributes it, so about 21.8% in total. The individual pays 15% up to 1,400,000 LEK of profit and 23% on the excess, with no additional tax when withdrawing the funds.

When 80% or more of gross income comes from a single client, or when 90% or more comes from fewer than three clients. In these cases, payroll tax rates apply. As of March 2026, the Self-Employment Status Declaration has been added, by which the individual verifies their independence even when exceeding the threshold.

Expenses incurred to earn, secure, and maintain income, within the limits of Article 50. Representation is recognized up to 0.31% of annual income, life and health insurance up to 51% of gross salaries. Expenses without proper documentation, fines, and punitive interest are not recognized. Depreciation follows the groups and rates prescribed by law, not internal accounting policy.

Quarterly, on March 31, June 30, September 30, and December 31, or monthly by the 15th if this method is chosen, pursuant to Article 63. The basis is the tax for the previous year, while for January, February, and March the tax from two years earlier is used. When the previous year's tax is zero, no installments arise.