The self-employed person is taxed as a business, not as an employee. This means 15% on taxable profit up to 14,000,000 lek and 23% only on the excess, or 0% until December 31, 2029, when annual gross income remains below 14,000,000 lek. Lawyers, doctors, accountants, architects, and consultants fall under the same regime as any other business, following Constitutional Court Decision No. 52 of June 27, 2024.
This page compiles the current rates, the zero-regime threshold, the presumed expenses regime by activity, and the status of liberal professions following the constitutional decision. Status, contributions, and the comparison between wages and self-employment are covered on the sister pages.
Read also: Self-Employed Status Declaration and Contributions.
A self-employed individual is someone who carries out economic activities under their own NIPT and invoices in their own name, without forming a company. This category includes liberal professions, crafts, services, and small-scale commercial activities.
The profit from the business is his directly. There are no dividends and no second tier of taxation, so after paying income tax the money goes into his personal account with no additional obligation. This advantage is offset by personal liability for the business's obligations.
Read also: Why freelancers should register with NIPT.
Read also: Sole proprietor or LLC, which structure suits you?.
| Situation | Base | The |
|---|---|---|
| Annual gross income up to 14,000,000 lek | Profit | 0% until December 31, 2029 |
| Taxable profit up to 14,000,000 lek when turnover exceeds the threshold. | Taxable income | 15% |
| The portion of taxable profit above 14,000,000 lek | Surplus | 23% |
| Dividend from the self-employed person's activity | It doesn't exist. | without a second obligation |
The figure of 14,000,000 lekë appears twice with two different meanings. Under the zero regime it is measured on gross revenue, i.e., on turnover, whereas in the 23% bracket it is measured on taxable profit, i.e., on what remains after recognized expenses.
Self-employed with taxable profit of 18,000,000 lek. The first portion, 14,000,000 lek, is taxed at 15% and yields 2,100,000 lek. The excess, 4,000,000 lek, is taxed at 23% and yields 920,000 lek. The total tax is 3,020,000 lek, so it's 16.81% of the profit and not 23%.
Read also: Profit tax rates and thresholds.
Rate 0% applies until December 31, 2029 to annual gross income up to 14,000,000 lek. The threshold is measured on turnover rather than profit, so an activity with high turnover and low profit remains outside the regime.
Attention. A self-employed person with a turnover of 20,000,000 lek and a taxable profit of 5,000,000 lek does not qualify for the zero-rate regime because their turnover exceeds the threshold. The tax is 15% on the 5,000,000 lek, i.e. 750,000 lek. The 23% rate does not apply because the profit remains below 14,000,000 lek.
The zero regime removes the tax, not the obligations. The annual return, quarterly payroll statements, contributions, and the invoiced bill remain fully in place even in years with zero tax.
Read also: Who does not pay capital gains tax until 2029.
The law provides a special regime for taxpayers with annual gross income of up to 10,000,000 lek. Instead of documenting each expense, a presumed percentage of the income is recognized as expense. The regime is chosen by the taxpayer and is not imposed.
| Activity | Presumed expenses | Assumed profit |
|---|---|---|
| Production | 60% | 40% |
| Wholesale | 90% | 10% |
| Retail trade and transport | 70% | 30% |
| Bar and restaurant | 60% | 40% |
| Services and crafts | 50% | 50% |
| Self-employed | 30% | 70% |
The self-employment rate is the lowest because its activity relies primarily on personal labor and has few material costs.
Self-employed graphic designer with revenue of 6,000,000 lek. With presumed expenses of 30%, expenses are recognized at 1,800,000 lek and taxable profit becomes 4,200,000 lek. With actual documented expenses of 2,600,000 lek, the taxable profit becomes 3,400,000 lek. At a rate of 15%, the presumptive method would yield 630,000 lek tax and the actual method 510,000 lek, a difference of 120,000 lek in favor of documentation.
Until December 31, 2029, this difference does not appear in the payment, because for turnover below 14,000,000 lekë the rate is 0% and each method multiplies the profit by zero. Therefore, the choice of method becomes financially significant as of January 1, 2030, and that's why we keep our expense documentation in order from now on.
The method isn't changed every year. The law allows a change only once every three years, so the decision is made with business figures in hand, not on the basis of impressions.
Read also: Which expenses are recognized and which are not..
Law No. 29/2023, in its original wording, removed professional services from the zero-rate regime and taxed them at 15% as of January 1, 2024, with a further detailed breakdown provided by Government Decree No. 753 of December 20, 2023.
The Constitutional Court, by decision no. 52, dated June 27, 2024, annulled the second and third sentences of Article 69, paragraph 1, letter “dh,” as well as Article 4 of Government Decree no. 753/2023. Following this decision, liberal professions benefit from the 0% regime in the same way as any business below the 1,400,000 lek threshold.
A lawyer with an annual gross income of 6,000,000 lekë is exempt from income tax on business income until December 31, 2029. Insurance contributions are paid as usual, and the annual return is filed by March 31.
The classification by activity that the VKM had established no longer has tax effect. If you come across a sign still displaying it, it's outdated.
Read also: Tax framework for influencers and content creators.
Zero until December 31, 2029, when annual gross income remains below 14,000,000 lek. Above the threshold, 15% on taxable profit and 23% only on the portion exceeding 14,000,000 lek of profit.
Yes. Following Constitutional Court Decision No. 52 of June 27, 2024, liberal professions no longer receive special treatment and benefit in the same way as any business below the threshold.
Only on the portion of taxable profit exceeding 14,000,000 lek. With a profit of 18,000,000 lek, the tax is 3,020,000 lek, i.e., 16.81% of the profit.
The zero regime does not apply because turnover is measured. The tax is 15% on amounts over 5,000,000 lek, so it's 750,000 lek.
Compare it with last year's figures. When actual documented expenses exceed the assumed percentage, the actual method reduces taxable income. The election is maintained for three years, so it is made once by calculation.
For the self-employed person, the rate is 30% of income, so the assumed profit remains 70%. The regime applies only when annual gross income does not exceed 10,000,000 lekë.
There isn't any. The profit goes directly to him, and after income tax the money is transferred to his personal account with no further obligation.
The regime is tied to gross income for the tax year, so the assessment is made on a year-by-year basis. For effects of crossing the threshold during the year and for falling back below the threshold, please write to us with your figures.
Read also: Self-Employed Status Declaration and Contributions.
Read also: Salary or self-employment, which costs less?.