Albania Income Tax

Albania personal income tax, tax year 2026

Source-cited draft. Built by Michael Cutajar and the OpenAccountants team from the consolidated texts of Law No. 29/2023, General Instruction No. 26/2023 and Law No. 9920/2008 published by the General Directorate of Taxes, read on 2026-10-23. No accountant has reviewed it. Do not file from it without review by a qualified Albanian professional.

Tax year: the calendar year, 1 January to 31 December (Law 29/2023 art. 6). Currency: Albanian lek (ALL). Authority: Drejtoria e Përgjithshme e Tatimeve (General Directorate of Taxes), tatime.gov.al. Returns are filed on e-Filing.

See also: al-corporate-tax, albania-payroll, albania-social-contributions, albania-vat, al-cross-border, albania-tax-optimization.

Who this applies to

Taxpayers. Every natural person is a personal income taxpayer (art. 7). "Natural person" covers the self-employed individual (individ i vetëpunësuar: services and other professional activity), the individual trader (individ tregtar: commercial activity) and any other individual, including employees (art. 3(2), (5), (6)).

Residence (art. 8). An individual is resident for the tax year if any one of these is true:

• has a permanent home (vendbanim i qëndrueshëm) in Albania during the year;
• is in Albania for 183 days or more in the year, counting the days of arrival and departure;
• is an Albanian citizen working abroad as an employee or official of the Albanian government;
• has a shop, professional office, factory or other place of activity in Albania, or a habitual abode there, unless they have a permanent home abroad for the whole year and none in Albania;
• has the centre of vital interests in Albania.

From the Law 81/2025 amendment, foreign artists are not resident for 24 months from their first entry into Albania, whatever their days of presence (art. 8(dh)).

Residents are taxed on worldwide income. Non-residents are taxed on their worldwide income attributable to an Albanian permanent establishment, and, to the extent not already covered, on their Albanian-source income (art. 2(2)(a), (b)). Source rules are in art. 4: work done in Albania, pay owed by a resident employer even for work abroad, Albanian real estate, dividends from residents, interest and royalties paid by residents, and more.

Three income categories (art. 10): employment, business, investment. Each is taxed on its own scale (art. 21; Instruction 26 para. 21.2). Inheritances, gifts and gambling winnings are taxed under Chapter VI (art. 60).

Not in scope here: companies and other entities (al-corporate-tax); social and health contributions (albania-social-contributions).

Rates, bands and thresholds

No 2026 change to the scales. The consolidated law read today (amended up to Law 81/2025 of 11.12.2025) does not amend arts. 22 or 24. The Law 81/2025 changes that touch individuals are the self-declaration exception in art. 12(1)(ç), the foreign-artist rule in art. 8(dh), sponsorship received (art. 11(g)) and the crypto-asset definition (art. 3(24)).

How the monthly payroll works. The employer deducts 1/12 of the art. 22(1)(a) to (c) deduction, then applies art. 24 (art. 65(1); Instruction 26 para. 24.1). Monthly gross up to ALL 50,000 is fully deducted, so no tax. ALL 50,001 to 60,000: 13% of the amount above ALL 35,000. Above ALL 60,000: 13% of the amount above ALL 30,000, up to gross ALL 200,000 (taxable ALL 170,000); above that, ALL 22,100 plus 23% of the amount above ALL 200,000. The base is gross pay, less any voluntary pension contribution withheld, less the deduction; employee social contributions are not deducted (Instruction 26, payroll form notes, items 26 to 28). Only the one employer with whom the employee signs the personal status declaration gives the deduction; other employers apply the scale with no deduction (art. 65(1)). The child and education deductions are claimed only on the annual return (art. 65(2)).

The ALL 14 million rule is a threshold, not a band. Art. 69(1)(dh) applies 0% to individual traders, the self-employed and entities "with gross income up to ALL 14 million a year" ("me të ardhura bruto deri 14 milionë lekë në vit"), until 31 December 2029. The test is gross income, not profit:

• Gross income up to ALL 14,000,000: the whole business profit is taxed at 0%.
• Gross income above ALL 14,000,000: no 0% at all. The whole taxable profit is taxed under art. 24(2), 15% on the first ALL 14,000,000 and 23% on the rest. Instruction 26 para. 24.4 taxes a taxable profit of ALL 20,000,000 as 14,000,000 × 15% + 6,000,000 × 23% = ALL 3,480,000.

Art. 69(1)(dh) has no profession exclusion. The professional-services list in Council of Ministers Decision No. 753 of 20.12.2023 is described in art. 69(6) as repealed by Constitutional Court decision no. 52 of 27.6.2024. The disguised-employment rule below still applies, and income it reclassifies is employment income, outside art. 69(1)(dh).

The taxable base

Employment income (art. 12) is wages, bonuses and benefits from an employment or similar relationship in which the person must follow the payer's instructions; directors' and board fees; pay from a company to its partner for work done; and termination payments. Not employment income (art. 12(4)): meals, soft drinks, work equipment and medical care provided in kind to all staff on similar terms; documented travel, accommodation and per diem reimbursements; hardship payments within the rules (Instruction 26 para. 12.12(c) caps them at 20% of the employee's annual employment income); employer-paid life, health and work-accident insurance. Cash paid instead of a benefit in kind is taxed as pay (Instruction 26 para. 12.12(a)). A one-off lump sum on termination is taxed at 15% under art. 65(1)(b); termination pay spread monthly goes through payroll (Instruction 26 para. 12.10).

Disguised employment: art. 12(1)(ç). A self-employed individual's income is employment income if:

1. 80% or more of the income comes, directly or indirectly, from a single client; or
2. 90% or more comes from fewer than 3 clients.

Client shares are measured on gross income from each client (Instruction 26 para. 12.8, note to the example). The rule applies even if one of the clients is a non-resident, and whether or not the person has staff (para. 12.8). The reclassified amount is net income (invoiced income less deductible business expenses), less the art. 22 deductions, taxed at 13% and 23%. It is reported in the employment boxes (8 and 9) of the annual business return, and the business boxes are left blank (para. 12.8).

There are two exceptions:

• Self-declaration. The rule does not apply if the person declares, on the self-employed status declaration (Deklarata e Statusit të Vetëpunësuarit, model in Annex 1 to the law), that they are not in an employment situation. It is filed with the regional tax directorate, with the annual business return, within March of the following year. The tax administration uses it as an assessment tool and can still reclassify the income under the tax procedures law if it finds tax avoidance (art. 12(1)(ç), paragraph added by Law 81/2025; Instruction 26 para. 12.8.1). The examples in para. 12.8.1 show the facts it looks at: whose equipment is used, who sets the hours, who supervises, who bears the financial risk, whether the person can send a substitute.
• Non-resident clients only. The rule does not apply if the person provides services only to non-residents, or only to entities with no permanent establishment in Albania. The income is then business income (art. 12(1)(ç), last paragraph; Instruction 26 para. 12.9).

Business income (art. 13) is all income from the business of a trader or self-employed person, including business interest, dividends and royalties, sale of business assets or the whole business, grants and subsidies for the business, and business crypto income. Taxable business income is gross business income less documented expenses incurred to earn, keep and secure it, computed under the corporate chapter rules (arts. 13(2), 43 to 54; see al-corporate-tax for deductibility, depreciation and loss rules). Persons not required to keep accounts must keep at least a simplified register of income, expenses, receivables and debts (art. 9(2)).

Presumed expenses (art. 14). A trader or self-employed person with annual turnover up to ALL 10,000,000 may deduct a fixed share of income instead of actual expenses (rates in the table). The choice is declared to the tax administration and can be changed only once every three years (art. 14(2)). A person using it can claim no other deduction except the art. 22 personal deduction (art. 14(4)). Part-year turnover is annualised to test the ALL 10,000,000 limit (Instruction 26 para. 14.1(b)). While art. 69(1)(dh) gives 0% to anyone with gross income up to ALL 14,000,000, this regime matters mainly where art. 12(1)(ç) reclassifies the income: Instruction 26 para. 12.8 applies the 30% to a reclassified self-employed person.

Investment income (art. 15): interest, dividends and royalties; gains on securities and financial instruments; gains from life insurance; private pension returns; gains on real estate; rent from real estate; crypto mining and transactions. No costs are deducted (art. 24(4)), so rent is taxed at 15% of gross rent. Rent, interest or dividends that belong to the business are business income instead (art. 13(1)(b), (ç); Instruction 26 para. 13.1(d)).

• Securities (art. 16): gain is sale price less purchase price. Costs directly linked to the purchase and the sale are treated as part of the purchase and sale prices and are not added or deducted separately (art. 16(1)). A loss can be set against gains on other securities in the same year only.
• Crypto (art. 16(3)): gain is sale value less purchase value; a loss for the year makes the taxable amount zero, and it cannot be set against other crypto gains.
• Real estate (art. 17): gain is sale price less purchase price. The sale price is the higher of the contract price and the official reference price. A loss gives zero. The seller pays the tax before the cadastre registers the transfer (art. 17(7)).
• Exempt (art. 15(2)): sale of movable property, except cars, aircraft and boats sold within 12 months of purchase; certain agricultural land transfers; interest and gains on Albanian government eurobonds held by non-resident individuals.
• Joint investment income of family members is taxed on the member with the highest annual taxable income (art. 15(3)).

Not taxable (art. 11) includes: benefits from compulsory social and health insurance; social assistance; income exempt under ratified treaties; expropriation compensation; state prizes for science, sport and culture; scholarships; court-awarded and insurance damages; agricultural grants; sponsorship received within art. 50(1)(p) limits.

Deductions (art. 22). The personal deduction applies separately against employment income and business income (Instruction 26 para. 22.1). The base cannot go below zero (art. 21(2)). The child deduction and education costs are claimed by the family member with the highest annual taxable income, with supporting documents (art. 23(1); Instruction 26 para. 23.1).

CFC rule (art. 19). An individual who, with related persons, controls more than 50% of a foreign entity that pays less than 50% of the Albanian tax it would owe includes its undistributed passive profits in investment income, unless passive income is 30% or less of the entity's profit.

Computation (art. 26). Employment and investment tax is computed separately from business tax (art. 26(2)). From the tax computed, deduct the foreign tax credit, tax withheld at source, payroll tax withheld and business instalments paid. An overpayment is refunded within 60 days of a claim made through e-Cats, or carried forward as an advance (art. 26(3); Instruction 26 para. 26).

Deadlines and filing

Returns are filed electronically on e-Filing (tatime.gov.al: Formulari i Deklarimit). Tax is paid to the state treasury accounts at second-tier banks or Albanian Post (tatime.gov.al: Pagesa e tatimit; Deklaratat tatimore). A return for a person under 18 is filed by their guardian; for a deceased person, by the heirs (art. 61(1), (3)).

Who must file DVAP (art. 67(1); Instruction 26 para. 67): gross income above ALL 1,200,000 a year from all sources (Instruction 26 para. 67(a) says "të ardhura bruto"); more than one employer, at any income; or more than ALL 50,000 of other income not taxed by final withholding. Instruction 26 gives rent from an individual tenant who is not a registered taxpayer, and foreign income, taxed abroad or not, as examples of the third case. An employee with one employer and income at or below ALL 1,200,000 need not file but may, for example to recover payroll tax (Instruction 26 para. 24.6, example 2).

Instalments. The tax administration computes the quarterly instalments from the previous year's business return and notifies them in the taxpayer's e-Filing account by 20 April (Instruction 26 para. 63.5). A reduction can be asked for at any time if the year's tax will be significantly lower; an increase can be imposed only for the last quarter, where the first nine months show monthly income more than 10% above last year's average (art. 63(4), (5); Instruction 26 paras. 63.3, 63.4).

Penalties and interest

All under Law No. 9920/2008 "On tax procedures", consolidated to Law No. 79/2025 (tatime.gov.al copy).

The 0.06% a day is a penalty, not interest. It is the art. 114 late-payment fine, capped at 365 days, so at most 21.9% of the unpaid amount. The consolidated law has no separate flat 10% late-payment penalty.

Late-payment interest (kamatëvonesë) is charged on top, under art. 76. It runs from the due date to the payment date at 120% of the Bank of Albania interbank rate, set each quarter from the previous quarter's average (art. 76(1), (3)). It cannot be waived or appealed, except for calculation errors or a change in the underlying tax (art. 76(4)). The General Directorate publishes the rate in use: 8.1% from 22.07.2025, 7.8% from 11.04.2026, and 7.8% again from 08.10.2026 (tatime.gov.al: Normat e interesit).

A payee is not relieved of the tax because the payer failed to withhold; the payer is penalised as a withholding agent (Instruction 26 para. 67(c)).

Cross-border points

• Non-residents are taxed on worldwide income attributable to an Albanian permanent establishment and on other Albanian-source income (art. 2(2)(a), (b)). Albanian employment is taxed through the employer's payroll. Payments by Albanian residents to non-resident individuals for dividends (8%), and interest, royalties, services not received physically outside Albania, directors' fees, construction work and performers' fees (15%), bear final withholding (arts. 58(2), 59). Treaty rates can be lower. See al-cross-border for treaty claims and documentation.
• Foreign tax credit (art. 25). A resident deducts foreign tax on foreign income, up to the Albanian tax on that income, country by country, and separately for the annual base and for investment income. The foreign tax must be evidenced by documents from the foreign country (Instruction 26 paras. 25.2 to 25.4). The example in para. 25.4 credits only 15% of Italian rent when 20% was paid in Italy.
• Foreign income triggers DVAP if above ALL 50,000 and not finally taxed by Albanian withholding (Instruction 26 para. 67(c)).
• Arriving or leaving. A person who changes residence files for income up to the date of change (art. 61(4)). Foreign artists are non-resident for their first 24 months in Albania (art. 8(dh)).
• Freelancers with foreign clients. A self-employed resident serving only non-residents, or only entities with no Albanian permanent establishment, is outside art. 12(1)(ç) and keeps business treatment, so the 0% rate is available if gross income is up to ALL 14,000,000 (art. 12(1)(ç); Instruction 26 para. 12.9).
• CFC income from controlled low-taxed foreign entities is taxed as investment income (art. 19).
• Non-resident holders of Albanian eurobonds are exempt on interest and gains (art. 15(2)(c)).

Worked examples

Example 1: employee with rent from an individual tenant

Arta works for one Tirana employer all of 2026 at a gross salary of ALL 120,000 a month and has signed the personal status declaration with it. She also lets a flat to an individual (not a registered taxpayer) for ALL 25,000 a month, ALL 300,000 a year. She has no children.

Payroll: monthly income is above ALL 60,000, so the monthly deduction is ALL 30,000. The monthly taxable base is ALL 90,000, all in the 13% band: tax ALL 11,700 a month, ALL 140,400 for the year.

Her income from all sources is ALL 1,740,000, above ALL 1,200,000, and the rent is more than ALL 50,000 not taxed at source, so she must file DVAP by 31 March 2027. On the return, annual employment income ALL 1,440,000 less the ALL 360,000 deduction gives ALL 1,080,000 at 13% = ALL 140,400, equal to the payroll tax. Rent is taxed at 15% of gross with no costs: ALL 45,000. She owes ALL 45,000 with the return.

oaCopy code
name: Arta, employee ALL 120,000 a month plus rent ALL 300,000 (2026)
inputs:
  monthly_gross: 120000
  monthly_deduction: 30000
  annual_deduction: 360000
  annual_rent: 300000
steps:
  - monthly_base: monthly_gross - monthly_deduction
  - monthly_tax: min(monthly_base, 170000) * 0.13 + max(monthly_base - 170000, 0) * 0.23
  - payroll_tax_year: monthly_tax * 12
  - annual_base: monthly_gross * 12 - annual_deduction
  - annual_employment_tax: min(annual_base, 2040000) * 0.13 + max(annual_base - 2040000, 0) * 0.23
  - rent_tax: annual_rent * 0.15
  - due_with_return: annual_employment_tax - payroll_tax_year + rent_tax
expected:
  monthly_tax: 11700
  payroll_tax_year: 140400
  annual_employment_tax: 140400
  rent_tax: 45000
  due_with_return: 45000

Example 2: self-employed developer with one main client (disguised-employment edge case)

Besnik is a self-employed software developer, resident in Albania. In 2026 his gross income is ALL 9,000,000, of which ALL 7,650,000 (85%) comes from one Albanian company. His documented business expenses are ALL 1,500,000. He has no children and uses actual expenses.

85% from a single client meets the art. 12(1)(ç) 80% test. If he does not file the self-employed status declaration, his net income is employment income: ALL 9,000,000 less ALL 1,500,000 = ALL 7,500,000, less the ALL 360,000 deduction = ALL 7,140,000. Tax: 2,040,000 × 13% = ALL 265,200, plus (7,140,000 − 2,040,000) × 23% = ALL 1,173,000, total ALL 1,438,200.

If he files the status declaration with his business return in March 2027, or if all his clients were non-residents without an Albanian permanent establishment, the income stays business income. Gross income of ALL 9,000,000 is not above ALL 14,000,000, so art. 69(1)(dh) gives 0%: tax ALL 0. With a declaration, the tax administration can still reclassify on audit if the facts show employment. The amount at stake is ALL 1,438,200.

oaCopy code
name: Besnik, self-employed ALL 9m gross, 85% from one client (2026)
inputs:
  gross_income: 9000000
  largest_client: 7650000
  expenses: 1500000
  personal_deduction: 360000
steps:
  - client_share: largest_client / gross_income
  - net_income: gross_income - expenses
  - base_if_employment: net_income - personal_deduction
  - tax_if_employment: min(base_if_employment, 2040000) * 0.13 + max(base_if_employment - 2040000, 0) * 0.23
  - tax_if_business_0pct: net_income * 0
  - difference: tax_if_employment - tax_if_business_0pct
expected:
  client_share: 0.85
  net_income: 7500000
  base_if_employment: 7140000
  tax_if_employment: 1438200
  tax_if_business_0pct: 0
  difference: 1438200

Ask the client first

1. Residence for 2026. Home, days in Albania, place of business, centre of vital interests, and whether a foreign artist in their first 24 months. This decides worldwide or Albanian-source taxation.
2. Kind of income. Salary from one or more employers, self-employment or trade, rent, dividends, interest, securities, crypto, a property sale, a gift or inheritance.
3. For the self-employed: gross income for the year, and the share from each client. At or below ALL 14,000,000 the business rate is 0%. 80% from one client, or 90% from fewer than three, triggers art. 12(1)(ç) unless the status declaration is filed or all clients are non-residents without an Albanian permanent establishment.
4. Whether the clients are Albanian residents or have an Albanian permanent establishment.
5. Children under 18, and who in the family has the higher taxable income. Only the higher earner claims ALL 48,000 per child.
6. Who the tenant is. Rent from a business tenant is withheld at 15% at source; rent from an individual is paid with DVAP.

Sources

Not yet confirmed: the payment date for the balance on DVAP and on the annual business return (Law 29/2023 art. 61 sets only the filing date, and tatime.gov.al refers to "official instructions"); whether a self-employed person's or trader's late business return is fined ALL 3,000 (art. 113(c), individuals) or ALL 5,000 (art. 113(b)); how "gross income" is measured for the ALL 14,000,000 test in art. 69(1)(dh); the tatime.gov.al self-employed page says "three or fewer clients" for the 90% test while art. 12(1)(ç) says "fewer than 3" (this skill follows the law); how employment income from a foreign employer with no Albanian payroll agent is taxed during the year; the Council of Ministers decision classifying activities for the art. 14 presumed-expense rates; the 2026 national minimum wage that caps the private pension deduction under art. 20(4) (see albania-social-contributions).

Contributed by Ryan Duguid.

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