Withholding Tax Declaration for the period beginning from January 2025 there will be some important changes compared to the previous version. In addition to a more analytical format, the statement includes detailed information about each payment and tax withheld.
Through this guide, the aim is to provide a clear and practical description of how to fill out the declaration, the categories of income subject to withholding tax, and a practical example to help taxpayers comply with their tax obligations.
Responsibilities of the Tax Withholding Agent
The withholding tax agent is any entity that makes income payments that, according to Law no. 29/2023 “On Income Tax” are subject to withholding tax. The agent's main responsibilities include withholding tax at the time of payment, accurately calculating the amount, and transferring it to the relevant tax administration accounts within the specified deadlines.
The withholding tax declaration must be submitted through the e-Filing electronic system by the 20th of the month following the tax period. For each payment, the declaration must include data on the beneficiary, the type of income, the gross amount, and the tax withheld. If the beneficiary is a non-resident, it is mandatory to specify their country of residence and attach a residence certificate, when required.
If the obligations for withholding and remitting tax are not met in a timely or accurate manner, the tax agent faces penalties, including fines and interest for late payment, which are clearly defined by law and relevant guidelines.
Income Categories for Which Withholding Tax is Applicable
According to article 58 of Law no. 29/2023, withholding at source applies to several main categories of income. These categories are detailed below:
Dividends
Dividends include any distribution of profit approved by the statutory bodies of a company. The tax on dividends is 8%% and is withheld at the time of payment or at the end of the third month after the decision to distribute profits. For example, for a profit distribution of 1,000,000 lek, the tax withheld is 80,000 lek.
Interested
Interest income includes not only bank interest but also interest paid on loans granted by individuals or entities. For banks and financial institutions, the statement is presented with the total value of payments. For this income, the tax rate is 15%.
The fee
The honorarium includes income from copyrights, licenses, and trademarks. For this income, the tax is 15%. A payment of 300,000 ALL for a consulting service would have a tax withheld of 45,000 ALL.
Recitation
The withholding tax on rent is 15%% and applies when the tenant is a subject with NUIS, while the landlord is an individual. For example, for a monthly rent of 100,000 lekë, the tax withheld is 15,000 lekë.
Gambling Revenue
Gambling organizers withhold tax on any winnings paid out to players. The rate is 15%, and the tax is considered final for the player.
Completion of the Withholding Tax Statement
The new Withholding Tax declaration comes into effect from January 2025 and has a new, more detailed, and analytical format. This declaration includes every type of income subject to withholding tax, including full details about the income beneficiary, type of income, gross amount, payment date, and tax withheld. Accurate completion of the declaration is important to avoid errors and penalties that may arise from incorrect or late submissions.
The declaration is divided into two main sections:
- Payments to taxpayers resident or with a permanent establishment in Albania
- Payments to non-resident taxpayers or those without a permanent establishment in Albania
Below is a full description of how to complete the statement for each section.
Completion of the Declaration on Payments to Residents and Permanent Establishments in Albania
For payments to taxpayers resident or with a permanent establishment in Albania, the declaration includes specific data that must be completed for each transaction. In this section, beneficiary data can be automatically filled in by the system if the taxpayer is registered in the Albanian tax register.
First, the trade name of the beneficial entity or the first and last name for individuals must be included. If the beneficiary is an individual, it must be completed Identification Number (NID), and for legal entities, the Taxpayer Identification Number (NIPT) must be completed. These data ensure that the tax administration can identify the recipient of the income and carry out the necessary checks on payments and withheld taxes.
A key element in this section is the payment date, which must fall within the tax period for which the declaration is being filed. For example, if the declaration is being completed for January 2025, then the payment date must be between January 1 and January 31, 2025. The system will not allow the entry of a date outside this period.
For each type of income, the type of payment must be specified, such as dividends, interest, fees, rent, or gambling winnings. The system automatically calculates the amount of tax to be withheld, based on the respective rate stipulated by law. For example, for a rent payment of 100,000 lek, the tax withheld will be 15,000 lek (15%).
At the end of this section, the taxpayer should check that all entered data is accurate before submitting the return. The e-Filing system provides a validation function that identifies errors or discrepancies in the data and requests corrections before final submission.
Completion of the Declaration for Payments to Non-Residents and Entities without a Permanent Establishment in Albania
In the case of payments to non-resident taxpayers or those without a permanent establishment in Albania, the process of completing the declaration is a bit more complex, as the data is not automatically populated by the system and must be entered manually by the taxpayer.
First, for each beneficiary, the full name and country of tax residence must be completed. In the case of individuals, the International Identification Number (ID) or other data that can identify the beneficiary must be completed. If the beneficiary is a legal entity, the trade name, registration number, and country where the entity is registered must be included.
An important aspect is the accurate specification of the state of residence, as in some cases, double taxation avoidance agreements may apply, which alter the withholding tax rate.
In these cases, the beneficiary's certificate of residence must be attached, which proves the right to benefit from a lower rate or exemption from tax.
The date of payment and the type of income are two other elements that must be clearly specified in the declaration. For each payment, it must be determined whether it is a dividend, interest, fee, or other income. The system automatically calculates the tax withheld, using the standard rates defined by law.
At the end of this section, the final declaration must be submitted and a copy of it saved for accounting and auditing purposes. The e-Filing system automatically generates a summary report of all declared payments and tax withheld for each beneficiary.
Fines and Penalties for Non-compliance with Deadlines and Reporting Rules
Any taxpayer who fails to meet their obligations for withholding and transferring tax at source within the specified deadlines may face fines and late payment interest. These penalties are clearly defined based on the taxpayer's category and the nature of the violation.
For late submission of the withholding tax statement, penalties are divided into two levels:
- 5,000 new lekë for taxpayers not subject to corporate income tax. This includes the self-employed, non-profit entities, and individuals acting as tenants or paying fees.
- 10,000 leks for taxpayers registered for corporate income tax.
The penalty for late filing is automatically calculated by the e-Filing system if the declaration is not submitted by the 20th of the month following the tax period.
For example, for the period January 2025, the declaration must be submitted by February 20, 2025. Failure to meet this deadline will result in the automatic imposition of a fine in the system.
In addition to late delivery fines, taxpayers who do not pay their tax liability on time are subject to late payment interest, which is calculated daily on the unpaid amount. The late payment interest is a legally determined percentage and is intended to ensure that tax obligations are met promptly and regularly.
If the taxpayer corrects the declaration after submitting it, through the “Taxpayer Change” declaration model, the system automatically generates the differences in the payable obligation and enables the generation of a new payment order for the additional amount, including late payment interest.
Practical Example of Completing a Withholding Tax Declaration
The company “Alba Consulting” made the following payments during January 2025:
| Type of income | Shuma Bruto | Tax and Customs Law | Withholding Tax |
|---|---|---|---|
| Dividend | 1,000,000 | 8% | 80,000 |
| Interest in loan | 500,000 | 15% | 75,000 |
| Consulting fees | 300,000 | 15% | 45,000 |
| Office chair | 100,000 | 15% | 15,000 |
| Board participation | 200,000 | 15% | 30,000 |
Total tax withheld: 245,000 leke
If the company does not make the payment by the date February 20, 2025, will be subject to late payment interest and a penalty for late payment. To avoid these penalties, it is recommended that the declaration be completed and submitted within the specified deadline.
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