For certain activities, VAT is not calculated on the full sale price but on the margin, or it is replaced by a compensation mechanism. These include agricultural producers under the 10% compensation scheme, travel agencies, traders in used goods, works of art, and antiques, auction sales, investment gold, and the Albanian Energy Exchange.
This page provides each regime with its corresponding subsections, explains the logic of margin calculation, gives examples calculated for the travel agency and for the used goods trader, and shows farmers' compensation with respect to the request deadlines.
Read also: How VAT works: collected, deductible, and liability.
| Sections | Regime |
|---|---|
| 117 to 122 | Small businesses, i.e., the registration threshold regime |
| 123 to 128 | Travel agencies, with margin-based calculations |
| 129 to 137 | Profit margin on used goods, works of art, and antiques |
| 138 to 144 | Auction sales |
| one hundred forty-five to one hundred fifty | Compensation of agricultural producers |
| 151 to 154 | Investment gold |
| 155 | Albanian Energy Exchange |
The special regime is not a stylistic choice for a business. It applies when the activity meets the conditions of the relevant provisions, and entering into a regime simultaneously changes the calculation basis, invoicing, and the right to deduct.
The small business regime is the part of the law that regulates entities below the registration threshold, the threshold of 10,000,000 lekë, voluntary registration above 5,000,000 lekë, the requirement to apply within 15 days of exceeding the threshold and to return to this regime after 12 months.
Read also: Registration and deregistration for VAT, with thresholds and deadlines.
Under the standard regime, VAT is calculated on the sale price and the VAT on purchases is deducted. In the margin regime, the calculation basis is the difference between the sale price and the purchase cost, because there is no VAT to deduct on purchases. The goods were sold by an individual, or the supply was made by a party that does not charge VAT.
The consequence of this mechanism is twofold. The tax base falls significantly, since only the margin is taxed, but the business loses the right to deduct supplies that go directly into that margin. The business's own costs, such as rent, energy, and administrative services, follow the general rules.
Caution. Under the margin scheme, VAT is not shown separately on the invoice to the customer as it is in a regular sale, so the business customer has nothing to deduct. When your customers are businesses seeking deductible VAT, this is an item that is negotiated before the sale.
For travel agencies, Articles 123 through 128 provide for margin-based accounting. The margin is the difference between the price the client pays for the package and the cost of the supplies the agency purchases from third parties for it, such as accommodation, transportation, and destination services.
An agency sells packages worth 3,000,000 lek in a period. The supplies purchased from third parties for these packages amount to 2,400,000 lek, so the margin is 600,000 lek. The VAT on the margin, when the margin is treated as VAT-inclusive, is 600,000 × 20/120, i.e., 100,000 lek VAT collected. The agency's own costs, rent, and administrative services, are 150,000 lekë excluding VAT, so 30,000 lekë VAT is deductible. The payable amount is 100,000 minus 30,000, so 70,000 lekë.
Comparison helps. Without the margin regime, the same agency would have charged VAT on 3,000,000 lekë. The margin regime taxes only the value the agency adds, and precisely for this reason it does not allow the deduction of VAT on the supplies included in the package.
Articles 129 through 137 provide for the margin scheme for traders in used goods, works of art, collectibles, and antiques. The most common case in Albanian practice is the trade in used vehicles and second-hand equipment purchased from individuals.
A dealer buys a used vehicle from an individual for 900,000 lek without VAT on purchase and sells it for 1,200,000 lek. The margin is 300,000 lek. The VAT on the margin, when the margin is treated as VAT-inclusive, is 300,000 × 20/120, i.e., 50,000 lek VAT collected. The trader's own period costs for rent and services are 100,000 lekë excluding VAT, so 20,000 lekë VAT is deductible. The payable amount is 50,000 minus 20,000, so 30,000 lekë.
✔ The individual's purchase document is kept in full, because it establishes the purchase cost and thus the margin.
✔ The goods' incoming and outgoing register is kept item by item, because the margin is calculated per transaction.
✔ The purchase VAT is not deductible, because there is no VAT to deduct on the purchase.
✔ Business administrative costs follow the general rules for deductibility.
✔ Switching between the margin regime and the general regime within the same business requires clear accounting separation.
Articles 138 through 144 regulate the VAT treatment of auction sales. The regime is similar in logic to the margin scheme, because the auction organizer mediates the sale of an item that does not belong to him, so the taxable base does not correspond to the full hammer price.
The agricultural producer not registered for VAT does not charge VAT, so a loss arises in the supply chain. The registered buyer has no VAT to deduct on the agricultural raw material. Articles 145 through 150 address this with a compensation mechanism.
| Element | Rule |
|---|---|
| Compensation rate | 10% |
| Calculation | Six-month |
| Invoice | Released by the buyer |
| Application deadline for the January to June period | December 31 of the same year |
| Application deadline for the July to December period | June 30 of the following year |
| Performance of compensation | Within 30 days |
A processor buys agricultural products worth 2,000,000 lek from farmers not registered for VAT, during the period from January to June. The reimbursement at the rate of 10% is 200,000 lek. The invoice is issued by the buyer, the request is submitted by December 31 of the same year, and the reimbursement is made within 30 days from the moment the request meets the conditions.
The mechanism was adjusted by the amendments to Law No. 80/2025, which changed the rate, the frequency of calculation, and the deadlines for requests. For practical implementation in a specific chain, the treatment in the buyer's declaration is verified in the text of the provisions and in the implementing guidance before the procedure is developed.
Read also: Formalization of the agricultural and livestock market.
Read also: Rate 10% for agricultural inputs and reduced rates.
Articles 151 through 154 provide for the special regime for investment gold, while Article 155 regulates the VAT treatment for the Albanian Energy Exchange. Both are closed regimes affecting a small number of entities and are applied according to the text of the respective articles.
Gold supplied to the Bank of Albania is treated separately, at a zero rate, pursuant to Article 61.
Read also: Exemptions and zero-rated supplies.
A method of calculation in which VAT is applied to the difference between the sale price and the purchase cost, rather than on the full price. It applies to travel agencies, used goods, works of art, collectibles, and antiques.
On the margin, that is, on the difference between the sale price and the purchase price. The VAT on the purchase is not deductible, because a private individual's purchase is not subject to VAT.
It is not calculated. Sections 123 through 128 provide for calculation on the margin, that is, on the difference between the package price and the cost of supplies from third parties.
10%. Billing is done semiannually, the invoice is issued by the buyer, and payment is made within 30 days.
For the period from January to June, by December 31 of the same year. For the period from July to December, by June 30 of the following year.
Under the margin regime, VAT is not shown separately on the invoice as it is in a regular sale, so the customer has no amount to deduct. This is discussed before the sale when the customers are businesses.
The regime applies when the conditions of the relevant provisions are met, so it is not a matter of free choice. For a mixed activity, write to us about the specific case and we will jointly determine the accounting allocation.
Yes. Investment gold is regulated in Articles 151 through 154, and the Albanian Energy Exchange in Article 155. Gold supplied to the Bank of Albania is treated at a zero rate under Article 61.
Yes, Articles 117 through 122 treat it as a separate regime. It includes the registration threshold, voluntary registration, and reentry into this regime after 12 months.