TAXATION IN ALBANIA - LEGAL ENTITIES 

Legal entities include: corporations/companies, subsidiaries, and branches of foreign companies and not profit organizations. The commercial company has the following main elements:

1. Doing business as a legal entity (incorporated) and not as an individual, natural person.
2. The company has “The Act of Establishment” and the “Statute”, which documents register/incorporate the company and address the nature of economic activity, objectives, and financial contributions of owners (shareholders).
3. The company is registered with the National Business Centre (NCB) through the E-Albania platform. 
4. The company is responsible for the obligations created during the period of the activity with all the assets (assets) of the company. In certain situations, the legislation provides for transfer of responsibilities from the company to the administrators and/or the owners. 

To choose the most appropriate form of business, consult the NBC website:

https://www.qkb.gov.al/informacion-mbi-proceduren/regjistrimi-i-biznesit/regjistrimi-fillestar/ 

Business registration at the NBC is mandatory:

1. Within 30 calendar days from the date of establishment; and,
2. Always before the effective start of the company's activity

Places where you can register:

1. On the e-Albania electronic platform

For details click:

https://e-albania.al/eAlbaniaServices/UseService.aspx?service_code

Mandatory documents and data required for business registration:

1. Documents:
   1. Identity card of the administrator (legal representative) or the person authorized by him.
   2. Act of establishment and statute.
   3. Identity cards of partners that are not cited in the acts of creation of the company.
   4. Other specific documents for company partners who are legal entities.
   5. Special declaration for the recognition, acceptance, and implementation of the legal provisions in force.
   6. Electronic signature for the person authorized to carry out the application (obtained in e-Albania. 

Attention: Follow the instructions how to apply in the e-Albania platform, 

• The minimum mandatory data to be included in the founding act and statute of a Limited Liability Company:
  1. Name of the company.
  2. Activity type.
  3. Address.
  4. Partners.
• The initial capital (founding capital), which cannot be less than 100 ALL.

1. The value of the quota owned by each partner.
2. Name of Administrator (legal representative).
3. Duration of the company

A certain forecast of the turnover (gross sales) of the company should be declared, as it is used as a starting base to define tax obligations/responsibilities from the moment of registration. Below (Table 1) are presented the types of tax obligations according to the turnover level.

Table 1 – Types of tax obligations depending on the annual turnover of the LEGAL ENTITY

• The registration process at the NBC ends after you have:

1. Completed and electronically signed the registration application procedure through the e-Albania platform, with the above data.
2. Submit all accompanying documents; and,
3. Received the unique identification document, called the Taxable Person Identification Number (NIPT), and the corresponding registration certificate.

This process takes one business day.

The next day you can verify the status of the registration request by clicking on the e-Albania platform and on the NBC website: https://qkb.gov.al/kerko/kerko-ne-regjistrin-tregtar/kerko-per-subjekt/ 

In case the request is suspended, you have 21 days to complete the deficiencies.

In case the registration is rejected, a new request is made, after eliminating the reasons for the rejection

a. Registration with the National Tax Authority, Local /Municipality Tax, Customs Authority and Labour Inspectorate

Simultaneously with the application for the registration of the legal entity in the commercial register, you must register the individual/s who directly or indirectly own/s 25% or more of the quotas/shares

For the registration of the beneficial owners, the following documents are required to be submitted electronically to the NBC

• Authorization for the applicant who must have an electronic signature.
• Document to prove the registration in the NBC.
• The document that proves the identity data of the beneficial owner.
• Document that the beneficial owner owns 25% or more of the quotas or shares.
• Other document containing necessary information for identification and registration of the beneficial owner such as data of the legal entity that owns the reporting subject and is owned or controlled by another beneficial owner (individual);
• Document that proves the control of the individual registered as beneficial owner, in the subject reporting (the case when it is impossible to identify the beneficial owner of 25% or more amount of shares/equity or voting rights);
• Documentation that proves the management position of the individual registered as beneficial owner, in the reporting entity (case when it is impossible to identify the beneficial owner of 25% or more of the shares/quotas of capital or voting rights);
• A written statement, signed by the legal representative of the reporting entity, where it appears that all steps have been taken to identify the beneficial owner and the reasons for his identification in this position (the case when it is impossible to identify the owner holder of 25% or more of the shares/equity or voting rights)

The initial application is made at the National Business Centre (NBC) through the e-Albania platform.

To complete the procedure, you must have an electronic signature.

For details click

https://e-albania.al/eAlbaniaServices/UseService.aspx?service_code=14519

In the event that the NBC, following the request made by a subject bound by law to update the data, the legal person (reporting subject), within 20 days, must:

• update the data on their beneficial owners in the register, according to this law, if the determination of the obliged entity is correct, or;
• confirm in the register the data on their beneficial owners, previously registered, if the determination of the obliged entity is not correct.

Immediately after the initial registration in the NBC:

1. Access the tax account via e-Albania or
2. Open and register your account on the website of the General Directorate of Taxes (DPT) using:
3. NIPT-in, as a username, and
4. "Tatimetemia12", as the initial password.

• Immediately after opening and registering the electronic account in DPT:

1. Within two working days after registration in the NBC, you must register the administrator in the payment list section of your electronic account on the DPT website;
2. Verify on the E-Albania platform information about local taxes and fees
   1. Submit a copy of the ownership deed/lease contract for the place/places of business; and
   2. Look for notification of the types, amounts and payment deadlines of your local taxes

3. Apply on the E-Albania platform for devices with electronic certificates for the fiscalization process.
4. Equip with a software solution (generally offered by certified private companies) to operate the fiscalization system (issue invoices, etc);
5. Open a company bank account no later than 20 calendar days from the day after registration.

• In relations with the tax administration, you have the right to request:

1. Information and clarification on tax legislation.
2. Maintaining the confidentiality of your data.
3. Receiving notification in advance for acts related to tax obligations.
4. Tax audits in a reasonable time, in the right place and within the deadlines of the law.
5. Be heard before making decisions related to your business.
6. Get information from your tax file;
7. Representation with persons authorized by you;
8. Appealing against the actions of the administration;
9. An independent administrative review of complaints made;
10. Received or printed from the electronic system (e-albania) certificates for:
11. Tax responsibilities;
12. Obligations paid;
13. Payment of social and health insurance contributions;
14. Turnover of the last 3 years;
15. Taxpayer status (active, passive) and specific deadlines for each case;
16. Possession of the vehicle.
17. Copies of payment lists with electronic stamp.

a. Registration Certificate (NIPT);

b. The list of selling prices for goods/services offered;

c. Notice-care to customers to receive tax voucher/receipt for cash purchases;

d. Notice-caution to customers to refuse purchase if not given tax voucher/invoice

1. For documentation of sales and purchases you must:
2. Issue electronic invoices/e-invoices with/without VAT

To issue an Electronic (fiscalized) Invoice, first fulfil the following requirements:

• Access the Internet at the place where electronic invoices are issued
• Be equipped with an Electronic Certificate from the National Agency of the Information Society (AKSH)

For details click:

https://e albania.al/eAlbaniaServices/UseService.aspx?service_code=13691

• Access the Central Billing Platform using your access credentials via E-Albania, at the address: https://efiskalizimi-app.tatime.gov.al/self-care
• Complete the data for the fiscalization process according to sub-points:
• Determine the Internet provider for the places of business activity;
• Determine the ownership of the environment and surface for the places of business activity;
• Define the rule of the serial number of invoices;
• Define business activity referring to NACE Rev. codes. 2;
• Determine the working hours for each place of business activity;
• Determine the coordinates on the map for each place of business activity;
• Add contacts for each place of business activity;
• Add the operator/s that will issue the electronic (fiscalized) invoices;
• Upload the Electronic Certificate in order to start the process of issuing electronic invoices.

• The invoice is issued:

1. Immediately when selling goods or providing services to unregistered individuals;
2. Note that for the supply of services or goods up to 500,000 ALL, it is not mandatory to note the individual's ID on the invoice;
3. Immediately when selling goods or providing services to another commercial person;
4. Immediately or within 72 hours from the moment of payment when collecting an advance payment, for the sale of goods or the performance of services at a later date;
5. Immediately when buying from individuals, non-commercial natural persons. Attention, write down the number of his identity card, so that the invoice is valid for tax purposes ("Invoice issued by the buyer");
6. Not later than the 10th of the month following the month in which the service was performed when purchasing services supplied by a taxable person who is not located within the territory of the Republic of Albania;
7. Not later than the 10th of the month following the month in which the service was performed in the case of continuous services;
8. Immediately when you buy goods from agricultural producers, who are subject to the compensation scheme, in accordance with the legislation in force on value added tax

• If the electronic device does not work:

1. Equip yourself with the special block of manual invoices at the Regional Tax Directorate where you are registered;
2. Issue an invoice from the separate block of invoices without NIVF and NSLF and mark the words "Discontinuance of work of fiscal equipment" on the invoice;
3. Continue the serial number that starts after the number of the last invoice issued by the electronic device;
4. Record in the separate invoice block the initial cash deposit at the beginning of each working day, as well as the changes in the cash deposit;
5. Fiscalize within 5 days the invoices issued from the special block of invoices.

When transporting goods from one place to another in the territory of the Republic of Albania, without change of ownership

• Fiscalization of the customs declaration, should be done:

1. No later than three days from placing the goods under the customs regime of release for free circulation.
2. Immediately after the correction of the invoice data, based on the revised customs declaration and send it to the tax administration (in case of revision of the customs declaration, because of the customs revaluation or control after customs clearance, within the period specified in the customs code)

• Obligation to deposit money (banknotes and coins).

1. Declare at the beginning of each business day and before issuing the first bill, the initial amount of cash on hand for each electronic billing device
2. Deposit the next working day, after the day that the cash limit has been exceeded, in the bank account or in the account opened in other non-banking financial institutions that can hold deposits, the money (banknotes and coins) that you have accumulated during the day for the supply of goods or services, which exceed the maximum level of the cash register.

The maximum amount allowed to be maintained in cash is:

• For entities with a turnover of up to 2,000,000 ALL, the cash limit is 150,000 ALL
• For entities with a turnover of 2-10,000,000 ALL, the cash limit is 500,000 ALL
• For entities with a turnover of over 10,000,000 ALL, the cash limit is 500,000 ALL or 5% of the turnover.
• For foreign currency exchange entities, the cash limit is ALL 5,000,000 or 5% of turnover.

1. Employment and dismissal (hiring and firing) are declared in the electronic account:
2. 1 day before starting work (for new employees), and
3. within 10 days from the date of dismissal.
4. Only salaries paid through the banking system are recognized as deductible expenses.

The amount of tax liabilities is calculated by multiplying the amount (tax base) on which the tax is     calculated by the tax rate determined for each type of tax (Table 2)

Table 2 – Tax obligations for legal entities

 Table 2-1 – National taxes for legal entities

The periods and manners of declarations are given in Table 3 below:

Table 3 - Period and manner of declaration of tax obligations

Table 4 below gives deadlines for tax declaration and payment 

• Changes to tax declarations for errors or inaccuracies are made under following conditions:

1. A tax declaration in general can be changed not later than 36 months from the initial declaration date and it has not been audited by the tax administration during this time;
2. The declaration for social & health insurance contributions and employment income tax (payroll) can only be changed by the taxpayer within the first month after the month the declaration is made; 
3. A change which gives a higher tax liability and payment can be done any time, even for a tax audited period. 

• Tax obligations can also be paid in instalments if:

1. The taxpayer is in financial difficulties;
2. An agreement is signed between the taxpayer and regional tax directorate on instalment payment terms;
3. A prepayment of not less than 20% of the obligation is immediately;
4. The deadline for concluding the agreement is until the end of the year following the year when the agreement was concluded.

1. Overpaid tax liabilities are reimbursed or compensated:
2. Refunds (reimbursement):

1. A taxpayer is liable for a VAT reimbursement when a credit balance over 400,000 ALL is carried over for more than 3 consecutive months. VAT reimbursements are done under request presented (electronically) to the General Tax Department (GTD). For other taxes overpaid, with credit balance (surplus) the request can be done to the Regional Tax Directorate; 
2. The VAT refund is approved by GTD, after evaluation by the office or with in-depth inspection in the premises of the taxpayer; 
3. The refund will be done to the taxpayer’s bank account:
4. Within five days, after sending the payment order to the treasury system by the GTD;
5. Within 5 days after approval of the refund amount based on tax inspection results;
6. Within 30 days, for the difference after covering unpaid obligations (if any).

• Compensations:

1. The amount overpaid or approved for reimbursement goes on account of other unpaid obligations or future obligations:
2. Within the following tax period after the one in which the taxpayer results in a tax credit;
3. For income tax, within the first month following the month in which the taxable person results in a tax credit.
4. On account of the taxpayer's future tax obligations.

• Fines/penalties for non-declaration and non-payment of the tax liabilities:

1. A fixed fine is imposed for non-declaration and a fine of 0,06% per each day of delay plus interests is applied for late payments; 
2. The tax authority notifies electronically the taxpayer, after 5 days, from the date (deadline) for declaration; c. Within 10 days after the notification, the administration makes an automatic assessment of the missing declaration, which:
3. cannot be complaint/appealed, but
4. it can be cancelled if a new declaration is submitted by the taxpayer.
5. The tax IT system starts the automatic calculation of fines and interest for the unpaid obligation.

• Term and payment of local tax and fee obligations

1. Obligations for taxes and local fees are determined by law and by the Decisions of the Municipal Councils (VKB);
2. Local taxes are calculated and paid on an annual basis, except for the year of registration or suspension/deregistration of the activity, which are calculated proportionally for the period of the fiscal year that the business is active.
3. Taxes and Fees vary according to the type of business, the nature of its activity, turnover, place of activity, but the most typical are:
4. Tax on the building, Tax on agricultural land; Land tax; Hotel accommodation tax; Infrastructure impact tax from new constructions; Table tax; Temporary tax on educational infrastructure.
5. The fee for cleaning and removing waste, the fee for occupying public spaces, the fee for granting a license for fuel trading; Veterinary service fee; Administrative service fees of the Municipality and others that are set by VKB.

• Change of tax responsibilities

1. As a payer of profit tax, you are not allowed to change your tax responsibility (to become a small business taxpayer or a non-VAT taxpayer) even if the annual turnover of the business falls below ALL 8 million (threshold for small business);
2. Depending on the field of activity, you may also need to register for other specific tax responsibilities such as royalties, national taxes and national fees.

• Changes of business organization and location that must be declared/registered in the NBC

1. Changing the name of the company, the activity, the address of the headquarters, administrator, partners, etc., which are carried out by the decision of the owners;
2. Opening/closing of secondary addresses that are carried out by the administrator's decision;
3. Decisions are submitted online to the NBC by the administrator or a person authorized by him through the e-Albania portal;

• Maintaining tax and accounting records

1. The documents that must be kept for tax purposes are: invoices of purchase and sale, VAT purchases and sales books, inventory of goods, book of business assets and any other records required by tax and accounting legislation and related implementing regulations;
2. Tax documents are kept for a period of not less than 5 years from the closing date of the fiscal year;
3. Accounting and the preparation of annual financial statements are based on the accounting law and the National Accounting Standards;
4. Financial Statements are uploaded online to the taxpayer's account by March 31 of the following year;
5. The financial statements and the allocation of profit after tax, for the previous year, are approved by the partner's decision or other related decision-making body of the company, within 6 months from the closing date of the financial year;
6. p. The partner's decision must be uploaded online to the taxpayer's account by July 31 of the following year;
7. In case of dividend distribution, the declaration and payment of the dividend tax shall be made by August 20 of the year when the decision is made, regardless of whether or not the dividend payment has been made.
8. The Financial Statements and the partner's decision must be uploaded online to the NBC, through the e-Albania platform, by July 31 of the following year. The electronic signature is mandatory for completing the application.

1. The tax administration has the right to check the tax returns, accounts, books and tax records of the taxpayer, including all documentation related to the financial statements;
2. The types of tax audit are:
3. In-depth/on-site inspection (audit), with 30 days written prior notice;
4. Fiscal visit, with 10 days’ prior notice;
5. Field verification, without prior notice but with a daily work order.

1. Tax obligations have not been paid according to the legal deadlines;
2. You have not exercised the right to appeal to the Tax Appeal Directorate (DAT) in the Ministry of Finance;
3. All stages of administrative and judicial review are over and there is a final court decision in power.

The following steps are taken for the enforced collection: 

1. Notification of the taxpayer with a request to pay, notifying that tax authority has the right of blocking of bank accounts, as well as, blocking and confiscation of the goods and business assets, for the unpaid tax liability;
2. In case the taxpayer does not proceed with the payment, the tax authority may start enforced collection measures starting with blocking of bank accounts for the amount of the un-paid taxes. The tax authority can also take/confiscate up to 50% of the taxpayer’s daily turnover;
3. The suspension of actions in the NBC and Customs is also requested by tax authority;
4. Transfer of tax liability to a third party;
5. Request for payment of obligations by third parties (for payments they make to the taxpayer);
6. Transfer of liability to the partner, shareholder and responsible administrator;
7. Initiation of bankruptcy proceedings with the courts;
8. Recognizing the tax due as non-collectible if no success is achieved with above measures. 

• for any tax assessments made by the tax administration and any other decision affecting the tax liability;
• within 30 days of receiving the tax assessment notification;
• after the payment or placement of the guarantee for the tax obligation complained, but not for accrued interest and penalties.

2. In the Regional Tax Directorate or the General Directorate of Taxes, for any action or non-action of employees of the tax administration that violate the rights of the taxpayer.
3. In the administrative court

When the taxpayer does not agree with the decision of the Directorate of Tax Appeals (DAT), within 30 days from receiving the decision of the DAT 

• Penalties and Late Interest:

1. Penalties and interests for late payments are applied for non-declarations and non-payments of tax obligations, within the legal deadlines;
2. Penalties and interests for late payments also apply for failure to issue sales invoices and/or tax coupons, failure to declare real salary, incorrect completion of tax returns, failure to install and maintain fiscal equipment, failure to declare employees, failure to maintain tax/accounting documents required, etc,.
3. Penalties for late payments (0,06% daily for any delay) are applied up to 365 days of delay, while interests for late payments are applied without any limit until the payment date. 

• Transition to passive tax status:
  • The transfer to the “passive register” can only be done if:

1. the taxpayer can suspend the activity any time and apply to the NBC, through the e-Albania platform, uploading the decision of the partners (owners), provided that there are no un-paid taxes and duties; or
2. the taxpayer has presented tax declarations with 0 (without activity) for the last 12 consecutive months and has no unpaid tax obligations;

• The transfer to the “passive status” means that no more tax declarations will be generated by the system, until the taxpayer will request re-activation of the business.

1. Voluntarily, with the decision of the partners for de-registration, with the liquidation procedure at NBC through the e-Albania portal;
2. With a court decision, by means of which the deregistration of the subject is decided:
3. Following the liquidation proceedings in court, or
4. Following the bankruptcy proceedings