International VAT Guide – Albania
VAT rates in Albania
How much is VAT in Albania?
The Standard VAT Rate in Albania is 20%.
Regarding the Reduced VAT Rate in Albania, at the moment, only one is applicable, at 6% for an exhaustive list of goods and services.
Some supplies are exempt from VAT. In this group of VAT-exempted sales, we can find the supply of medicines, basic foodstuffs, and land sales.
Albania VAT Rate | Rate Type | Coverage and imposition |
20% | Standard Rate | This applies to all taxable supplies in the country besides those that can benefit from a reduced rate, zero rate or VAT-exempt |
6% | Reduced Rate | Accommodation services to the extent defined in tourism-related legislation; provision of advertising services by audiovisual media; provision of public passenger transport services; supply of books of any kind; |
0% | Zero Rate | export of goods; supply of services directly related to exports or imports of goods; supply of goods and services to international organizations |
The exact list of taxable transactions and allocated Albania VAT rate can be found in VAT Albania regulations.
VAT thresholds in Albania
The essential pieces of legislation that determine the VAT Albania regulatory framework are the VAT Act and implementing regulations.
The first step for most businesses, especially the one’s that operate cross-border is to define the local threshold. The explanation of what the VAT threshold in Albania is can be found in the Tax Code. In most cases it’s a priori easier for local businesses to be aware of the registration threshold, however for non-resident businesses this could be tricky, e.g. depending on the type of sector they operate in.
VAT registration threshold for resident businesses: ALL 10 million
VAT registration threshold for non-resident businesses: In most cases, there is no registration threshold for foreign businesses with a permanent establishment in the country.
VAT registration threshold for foreign providers of digital services: No threshold
VAT Taxable Activities in Albania
According to the Albania VAT rules the taxable person is any person, regardless of of its organization, who independently, on regular basis, carries on its activity, no matter where it is based or what is the end result of its activity.
Types of taxable activities that trigger the imposition of Albania VAT:
- Supply of goods or provision of services against consideration
- Provision of services by foreign taxable persons
- Import of goods
Tax Representative in Albania
Non-resident economic operators that make supplies of goods or provision of services to customers in Albania, and when the Albania is defined as the place of supply, should accommodate local rules. In cases when they are obliged to account for VAT, the VAT compliance should be handled through a local tax representative.
Tax registration
Standard Registration
The Albanian Tax Code states that persons should register for VAT if they carry out a business activity and their turnover exceeds ALL 10 million in 12 consecutive months period.
Persons who don’t have an obligation to register can do it voluntarily.
Registration can be done online or in the respective tax authority office.
VAT on Electronically Supplied Services in Albania
Digital Services
Non-resident suppliers of digital services or products should register for VAT in Albania and charge an adequate VAT rate for their supplies. They should register prior to the commencement of their business activity.
How much is VAT in Albania for Electronically Supplied Services?
VAT rate Albania: A standard VAT rate of 20% is applied in most cases on sales of Electronically Supplied Services in Albania
Example of taxable ESS in Albania ↓ |
Supply of digital products, such as software, connected changes, and updates of the software |
Services that can be downloaded through the internet and saved on computer and/or mobile devices |
Supply of music, films, and games, including games of chance and gambling games Services that are ordered online but delivered in a physical location (e.g., short-term accommodation, rental of transport services). For example, the services are supplied through the online digital platforms set up by the foreign entity and used at a physical location in Albania. |
Supply of distance learning |
Access or download of music to a physical device |
Access or downloading of images, jingles, films, ringtones, and other audio output |
E-Commerce VAT Rules in Albania
Online vendors or digital marketplaces that facilitate the supply of goods to customers based in Albania are often mandated to account for local VAT.
Invoicing Rules
Albania has implemented the mandatory usage of e-invoicing for the most of the B2G, B2B, and B2C transactions, when the supplier has its place of business in the country.
Invoice Requirements in Albania
The invoice should contain at least the following:
- Date of invoice issuance;
- Unique invoice number and series.
Seller information:
- Company name;
- Full address (head office);
- Billing address if different from company address;
- VAT number.
Customer information:
- Name;
- Full address;
- VAT number (if applicable);
- Other relevant ID information depending on the invoice type.
Fiscal Information:
- Description and breakdown of the goods or services – quantity, discounts, unit price, excl. VAT;
- Total without VAT;
- VAT amount;
- The VAT rate(s) applied and the breakdown of VAT per rate;
- Invoice Total.
Additional information required in particular cases:
- Exemption reference – guaranteed by precise norm;
- Reverse charge – term if applicable;
- Self-billing – term if applicable;
- Tax Representative information for non-resident business;
- Advance payment (with accompanying amount and date).
Foreign Currency Invoice in Albania
In Albania, it’s permissible to issue tax invoices in foreign currencies, but the VAT amount on the invoice and sales amount should be converted to local currency.
VAT Return in Albania
Standard Return
Taxable persons should submit returns by the 14th day following the reporting period.
Standard Albania VAT Return
VAT Return Name | VAT Tax Return |
Filling frequency | Monthly |
Online Filling | Possible |
Annual Return | No |
Filing deadline | 14th, following the reporting period |
Payment deadline | Before submission of the return |
Payment currency | Albanian Lek |
Language | Albanian |
Local VAT acronym | TVSH |
Penalties for late reporting and omitted declarations
Domestic and non-resident taxable persons required to register for Albania VAT and account for the tax according to local rules should be aware of the penalties and fines that can be imposed if they aren’t operating according to the stipulated regulations.
In some cases, this non-compliant behavior reflects a lack of familiarity with defined rules, but in other situations, it is a consequence of simply not wanting to accommodate the guidelines. From the perspective of the penalty regime, this bears specific importance.
The best approach should be a positive one, investing enough time and preparation to learn about the VAT rules that could impact the interested business.
When the economic operator conducts its business activities without paying necessary attention to the tax rules, he is potentially exposed to various types of penalties and fines.
Businesses that conduct their operations as non-VAT registered, and they should, could incur late registration penalties, plus penalties for not submitting tax declarations.
If a taxable person makes a late payment, late registration, or erroneous declaration, different types of penalties could be assessed against the non-compliant taxable person.
- Concerning the late registration, the taxable person could expect a penalty ranging from ALL 10,000 to 15,000.
- A business that fail to submit tax declarations on time could expect a penalty in the range of ALL 10, 000.
- The taxpayer who doesn’t pay the owed tax in its entirety could expect a penalty of 0.06% calculated on the basis of the owed amount on each day of being late.
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