- The withholding agent is anyone who makes payments subject to withholding and is responsible for the amount even if they do not withhold it.
- The rates are 81% for dividends and 151% for interest, fees, rents, board participation, and gambling.
- The declaration is filed electronically by the 20th of the month following the payment.
- The statement is divided into two sections, payments to residents and payments to non-residents, where the data are entered manually.
- When tax is not withheld, the penalty is 50% of the amount. When it is withheld but not reported, the penalty is 100%.
The withholding agent is any entity that makes a payment for which the law requires withholding tax. The role arises automatically with the payment, without any separate registration.
The payment categories and rates are defined by Articles 58 and 59 of Law No. 29/2023 on Income Tax. The current declaration, divided by the beneficiary's residence, applies from January 2025.
The weight of the role lies in a detail that often goes unnoticed. The agent is liable for the tax amount even when they haven't withheld it from the payment at all.
Read also: Improvements to the withholding tax statement, pre-filing, and validation
What is the withholding agent responsible for?
There are three obligations, and they occur in sequence: withholding the tax at the time of payment, transferring the amount to the tax administration's account, and filing the electronic return within the deadline.
The three are independent of one another. Failure to declare is a violation, and declaring without payment incurs late interest.
Which payments are subject to tax and at what rates?
The categories are defined and are not expanded by interpretation. The full treatment of each case is provided on the page. withholding tax.
Dividends, rate 8%
The dividend is the distribution of profit approved by the company's statutory body. The rate is 81 TPB, and withholding arises at payment or at the end of the third month following the distribution decision.
For a distribution of 1,000,000 lek, the withholding tax is 80,000 lek. The decision procedure and its format are on the page of dividend.
Interest, fees, rents, and others, rate 15.1%
Rule 15% applies to interest, fees and royalties, rents, board participation fees, technical and consulting services, and gambling winnings.
In the typical rental scenario, it's clear. When the tenant is an NIPT subject and the landlord is an individual, withholding is done by the tenant.
When custody is not carried out
Withholding tax does not apply to payments between two registered resident businesses when the transaction is documented with a fiscalized invoice. The only exception is dividends, which are always subject to withholding.
This is the point that causes the most errors, in two directions: unnecessarily withholding from a business supplier, and not withholding from an individual who issues only one invoice.
How to complete the withholding tax declaration
The return is filed via e-Filing by the 20th day of the month following the tax period. For January payments, the deadline is February 20.
The structure is divided into two sections based on the beneficiary's residency. The division is not formal, because the way it is completed differs completely between the two.
Payments to residents and permanent establishments
For beneficiaries registered in the Albanian tax registry, the data are populated by the system. Enter the NIPT for entities or the NID for individuals, the payment date within the period, and the payment type.
The tax amount is calculated by the system according to the rate. When the same type of income is paid to multiple beneficiaries, the add-rows function is used, while bank interest is reported in aggregate.
Payments to non-residents and certificate of residence
Here, the data is entered manually because the system has no way to verify it. The beneficiary's full name, identification or registration number, tax residency state, payment date, and type of income are required.
When a double taxation avoidance treaty is applied, the beneficiary's certificate of residence is attached. Without this certificate, the domestic rate applies, even if the treaty provides for a lower rate. The treaties in force and their mechanisms are maintained on the website. foreigners and double taxation.
Read also: Double taxation with EU countries: the new resolution mechanism
What does the agent risk when he does not hold or declare?
The penalties are divided by violation, and each has its own section. The full table of fines by section is on the page of fines and late fees.
| Violation | Consequence | Article |
|---|---|---|
| It does not withhold tax from the payment. | Fine of 50%, plus the amount of tax. | Article 117 |
| Withholds tax and fails to report it. | Fine in the amount of 100% | Article 117 |
| Fails to file the statement on time. | 10,000 lekë for VAT or corporate income tax subjects, 5,000 lekë for others, 3,000 lekë for individuals. | Article 113 |
| Failure to pay on time. | Late‐payment interest of 0.061% per day, current rate 7.81% per day as of April 11, 2026. | Article 114 |
| General fine limit | Fines do not exceed 100% of the obligation; interest is calculated separately. | Article 111, point 5 |
A late filing penalty is automatically applied by e-Filing after the 20th. When the return is amended after submission, the system generates the difference in the tax liability.
Example of a full month
A company makes five payments during January, all subject to withholding. The figures are rounded for illustrative purposes.
| Payment type | Gross amount | The | Withheld tax |
|---|---|---|---|
| Dividend | 1,000,000 | 8% | 80,000 |
| Interest in loan | 500,000 | 15% | 75,000 |
| Consulting fee, individual | 300,000 | 15% | 45,000 |
| Office rental from individuals | 100,000 | 15% | 15,000 |
| Reward for participation on the board | 200,000 | 15% | 30,000 |
| Total | 2,100,000 | 245,000 |
The total of 245,000 lekë is declared and paid by February 20. Note that the two middle lines—honorarium and rent—are withheld because the beneficiary is an individual. If the consultant were a registered business issuing a fiscalized invoice, the withholding would not apply.
Read also: Partner loan and hidden dividend when withdrawals are reclassified
Read also: Payroll agent and personal status declaration
What the agent needs to have ready before the 20th
The monthly file remains the same every month. The list of payments subject to withholding, the document for each payment, and the residence certificates for non-resident beneficiaries.
Documentation retention and retention periods are addressed on the page of financial and accounting security, while the other tax deadlines of the year are at tax legislation. These pages are updated whenever the rule changes, so it's worth keeping them as a reference point.
Every time there is a tax or financial change that affects your business, we notify you directly by email with a practical explanation.
Send me free notificationsFrequently asked questions
Who is the withholding agent?
Any entity that makes a payment is subject to withholding. The role arises with the payment, without separate registration, and includes the self-employed, nonprofit entities, and individuals who pay rent or honoraria.
When is the withholding tax return filed?
By the 20th of the month following the tax period, via e-Filing. For January payments, the deadline is February 20.
What happens if I forget to pay the tax?
You are required to pay the tax amount and a 50% penalty, pursuant to Section 117. The fact that you did not withhold it from the payment does not eliminate the obligation.
What is the fine when tax is withheld but not reported?
100% of the amount withheld, pursuant to Article 117. This is the most severe consequence of this category, because the tax was withheld but not remitted to the budget.
Is tax withheld at source when I pay a business supplier?
No, when the supplier is a registered resident business and the transaction is documented with a fiscalized invoice. Dividends remain exempt and are withheld in any case.
What is required for a payment to a non-resident?
Data are entered manually, along with the tax residence status. When a double taxation avoidance treaty applies, the residence certificate is attached; otherwise, the domestic rate is applied.
What is the late fee for a late payment?
Late payment interest is calculated at 0.061% per day of delay pursuant to Article 114. The rate published by the tax administration for the period from April 11, 2026 is 7.81%.
