Recently, Albania has become an attractive country to relocate to for many foreign entrepreneurs who are looking for a relaxed lifestyle and a warm weather. Albania is a country with beautiful landscapes and low tax rates. As many OECD reports state, it is generally true that small businesses are very sensitive to tax laws and finding a fair and supportive tax system is a big incentive to make them decide to relocate their business. Fortunately, Albania has done a good job so far to make its tax system competitive in Europe, and also attract foreign entrepreneurs and investors to work and live in the country. Many clients contact me to help them set up their Albanian business, and also get more information about the Albanian tax laws. In order to make their decision process easier and smooth, I decided to share below some of the legal requirements to set up a limited liability company in Albania, as one of the main forms of business used by foreigners. By virtue of the Albanian law, every person may establish a commercial company in the form of a Limited Liability Company (in Albanian is named “SH.P.K.”). There are no restrictions in relation to the number, citizenship or the legal form (company or natural person) of the shareholders. However, only a natural person, Albanian or foreigner, may be appointed as administrator of the SH.P.K. The SH.P.K must have the legal seat within Albania and must have a minimum share capital of 1 euro. The SH.P.K acquires legal personality only upon registration with the Commercial Register kept by National Business Center (“NBC”). Upon registration with the Commercial Register, the NBC registers the SH.P.K with the Tax Authorities, Labour Inspectorate and Social and Health Insurance Institute. The documents required for the registration of a SH.P.K with NBC are as follows:
Moreover, depending on the city where the companies will have their office, it will be required to file documents such as office lease and other documents of registration of the companies with the Tax Office of the Municipality in order to be registered for Local Taxes. In regard to the profit tax in Albania, currently are applicable the following thresholds and tax rates: Currently, for the fiscal year 2021, profit tax is applied to companies having a yearly turnover of more than ALL 8 000 000 (approximately EUR 66, 000), to foreign companies having a branch in Albania, and any other persons disregarding their legal form unless they are considered as a small business. The tax rate is as follows: -0% for companies having a yearly turnover up to ALL 14 000 000 (approximately EUR 115,000); -15% for companies having a yearly turnover over ALL 14 000 000 (approximately EUR 115, 000) Also, are expected some changes to the income tax laws in Albania in the near future, and I firmly suggest that any interested party consult a professional to have an updated information before making any decisions.
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February 2025
AuthorLareda Zenunaj, LL.M in Taxation |