If you follow the news, you probably have noticed that governments, and Western governments in particular, have been hiking corporate tax rates in order to sustain elevated deficit spending over the past few years. Notably, the average corporate tax rate in OECD countries in 2022 was 23.1%, with the vast majority of countries having corporate tax rates between 20 and 40%. In this light, Albania is a very attractive low-tax option for a person wanting to set up a business or work remotely.
In this article, we will guide you through the practical steps in setting up a business in Albania or registering as a freelancer. If you have further questions, feel free to ask TAX AI at the bottom of the article.
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In Albania, corporate income above ALL 14 million (roughly USD 130,380) is taxed at a flat rate of 15%. Furthermore, thanks to the government’s many incentives, foreign investors can expect to pay zero to single-digit tax rates in Albania if they fulfil specific requirements. Finally, strategic tax planning can also save you lots of tax dollars.
So, if you are looking to set up a business in Albania, you are in the right place. The administrative process is very simple and mostly online, with modest fees.
Learn everything you need to know about starting a business in Albania in this guide. Let’s get started.
Step 1: Apply At The National Business Centre Or Online
The first step is to request and obtain the Registration Certification and Unique Business Identification Number (NIPT in Albanian). There are two ways you can apply for a business number: Registration at the National Business Center is finalised within 24 hours of the submission of specific business documentation and can be done in any NBC service for ALL 100 (about EUR 1), regardless of the applicant’s location or location of the activity. Alternatively, you can apply online for free through the government portal e-Albania.
Step 2: Register Employees (If Any)
After the registration with NBC, all the information about the new company is available to the State Labor Inspectorate immediately through the online portal e-Albania. If you plan to hire employees, you must register them separately with the Tax Office at least 24 hours before they start working. The registration can be done online by filling out the declaration form E-sig 27 at tatime.gov.al. A small fine will be levied if you do not register them in time (ALL 1,000 or about EUR 10). The employees are also registered with the Labor Office on the same platform.
After registering employees, the employer must submit every quarter in person the following documents to the Labor Office for unemployment benefits, professional services, and other benefits:
1. A declaration provided by the employee
2. A copy of the payroll for the past 3 months (signed and sealed copy)
Naturally, you can also rely on a professional accountant to present the filings in person and take care of all bureaucracy. Feel free to ask TAX AI at the bottom of the article for more information.
Step 3: Register Your Business With The Local Municipality
The National Business Center, within 24 hours of the company’s registration, notifies the Municipality Bureau of Internal Revenue and Tax Authorities. After the business has obtained the registration certificate from NBC, the municipality Bureau of Internal Revenue will request additional documents to assess the list and amount of local fees and taxes that are due by the new company.
To finalize the registration with the Municipality Bureau of Internal Revenue, you should provide the following documents in person:
- Application form
- Registration Certificate from the National Business Center
- Statute and the By-Laws of the Company
- Rent agreement or proprietorship certificate of the Headquarters of the Company.
Note that your business will pay (fairly modest) municipality taxes in addition to corporate taxes. You can read more about business taxes in our guide here.
Step 4: What Kind Of Business Should You Register?
In Albania, you have the option to establish a physical person business, which is particularly suitable for freelancers. In this scenario, you can then explore the various aspects of business structures, including Limited Liability Companies (LLCs or SH.P.K in Albanian) for added protection and flexibility, joint stock companies for shared ownership, and the potential for global expansion through branches of foreign companies or foreign-held 100% owned subsidiaries.
There are other specialised types of company – for instance for agricultural businesses and financial institutions – which are more rarely used. When registering your company, you will have an expanded list to choose from.
Step 5: Your Business Might Need a License Depending On The Sector
The licensing/permitting process is also based on the sectoral legislation in force, which regulates the areas where a license is required, defining, among others, the detailed criteria and probative documents necessary for obtaining the relevant license/permit [are there a few examples?]. Feel free to contact us if you need specialized guidance regarding licensing in these sectors.
Administrative Costs of Business Operation
Running a business comes with some costs. If you don’t have an address, you can hire a legal accounting office, and here’s what it might cost you:
- Having a registered address: EUR 200 to EUR 500 a year
- Legal and accountancy fees: EUR 200 to EUR 400 per month
- Getting your company set up: EUR 500 to EUR 2000 one-time
Keep in mind: These costs cover the notarisation and official translation of foreign documents, which are needed according to Albanian law.
The costs for starting a business, along with ongoing accounting, office, and legal fees, can change. If you want to know the latest information on how much these might add up, just ask TAX AI at the bottom of this article.
Source
Albanian Investment Development Agency
