Income tax in Albania
October 25, 2016
Residents are taxed on their worldwide income. Married couples must file their income tax returns separately; joint taxation is not permitted in Albania.
Taxable income falls under several categories: (1) employment income or salaries and other remuneration in connection with current employment, (2) dividend income, (3) interest income, (4) license fees and other royalties, (5) rental income, (6) capital gains or proceeds from the transfer of immovable property, and (7) other income.
Income is generally taxed at a flat rate 15%.
Income from salaries and other compensations deriving from labor agreements are taxed at progressive rates.
INCOME TAX ON LABOR INCOME
|TAXABLE INCOME, ALL (€)||TAX RATE|
|Up to 30,000 (€214)||0%|
|30,000 – 130,000 (€929)||13% on tax band over €214|
|Over 130,000 (€929)||23% on all income over €929|
|Source: Global Property Guide|
Rental income is subject to final withholding tax of 15%.
Rental income received by individuals in connection with business or trade activities may not be subject to withholding tax if the taxpayer provides evidence that he is registered for tax purposes in Albania.
Capital gains realized from the sale of Albanian properties are subject to final withholding tax of 15%. Taxable capital gains are calculated by deducting acquisition costs and related expenses from the sales price.
Capital gains received by individuals in connection with business or trade activities may not be subject to withholding tax if the taxpayer provides evidence that he is registered for tax purposes in Albania.
Real Estate Property Tax (REPT)
Real property tax is levied at different rates, depending on classification of the property, its location and the property use.
Tax on New Constructions
For newly constructed properties located in Tirana, property tax is levied at a rate of 2% to 4%. For newly constructed properties located in other municipalities, property tax is levied at a rate of 1% to 3%.
Real Estate Tax on Buildings
Buildings are taxed at rates ranging from ALL5 (€0.04) to ALL200 (€1.43) per sq. m. The applicable rate depends on the area of the building, the region where the building is located, the year of construction, and the intended use of the property.
Ground tax is levied at rates ranging from ALL1,400 (€10) to ALL5,600 (€40), depending on the use of the building and grounds.
Real Estate Tax on Agricultural Land
Agricultural properties are taxed from ALL700 (€5) to ALL5,600 (€40) per hectare, depending on the use of the land. In some cases, a 50% tax credit may be available for certain rural properties.
Income earned by companies is subject to corporate income tax at a flat rate of 15%. Income-generating expenses are deductible when calculating taxable income.
CAPITAL GAINS TAX
Capital gains earned by companies are subject to tax at a flat rate of 15%. Taxable capital gains are calculated by deducting acquisition costs and related expenses from the sales price.