Indirect tax - Albania

Value Added Tax (VAT) is the main type of indirect tax in Albania.

VAT applies to the following transactions: 

• The supply of goods and services performed by a taxable person in Albania
• Importation of goods into Albania, regardless of the status of the importe
• Services supplied to taxable persons in Albania by service providers, of which the place of business is outside Albania
• Certain supplies of services rendered to nontaxable persons in Albania by providers whose place of business is outside Albania, such as digital services and services related to an immovable property located in Albania

The use of goods or services purchased or produced during a business activity for private purposes constitutes a taxable supply to the extent the VAT on those supplies was deducted. 

Goods and services subject to a 0% tax rate include:

•  Export of goods
• International transport
• Supplies made under diplomatic agreements
• Supply of gold to the Central Bank of Albania
• Intermediary services related to zero-rated suppliers or provided internationally

Goods and services subject to a 6% tax rate include: 

• Supplies of accommodation services in accommodation structures
• Any service supply offered within accommodation structures such as "Hotel/Resort with five stars", special status of an internationally recognized trademark
• Supplies of accommodation and restaurant services, excluding beverages by the certified structures that carry out certified "agrotourism" activities
• The supply of advertising services by audiovisual media
• The supply of licensed public transport vehicles for passengers with a bus of nine plus one seats or more, powered only by electricity
• The supply of books of any kind
• The supply of construction services for state investments by sports clubs/sports federations or for investments by private entities in sports infrastructure, as defined in the sports legislation
• Supply of electric engine buses licensed for public transportation, with capacity of nine or more people

Goods and services subject to a 10% tax rate include:

• The supply of agricultural inputs including chemical fertilizers, seeds, pesticides with exception of hormones classified in codes 2937

Goods and services that qualify for exemption include:

• Postal services
• Hospital services & medical care
• The provision of medical care in the exercise of the medical and paramedical professions
• The supply of human organs, blood, and milk
• The supply of services by dental technicians in their professional capacity.
• The provision of children's or young people's school or university education.
• Education services
• The supply of pharmaceutical products & implantable medical devices
• The supply of services and goods closely related to social assistance
• Activities carried out by Albanian public radio and television
• Insurance and reinsurance services
• Supply and rent of land & buildings
• Betting, lottery, and other gambling activities
• The supply of services intended solely for the research phase of hydrocarbon operations

Yes, there is. 

A taxable person established in Albania is obliged to register for VAT purposes and charge VAT if the annual turnover exceeds ALL 10 million. Once this threshold of ALL10 million is exceeded, any supply shall be subject to VAT and the taxable person is required to apply for VAT registration within 15 days. 

Taxable persons with an annual turnover less than ALL10 million may voluntarily register for VAT, and that taxable person must remain registered for a minimum of two years.

Taxpayers involved in import or export activities must register for VAT regardless of the amount of turnover.

There is no VAT registration threshold for businesses that are not established in Albania.

A non-established business refers to a business that does not have a fixed establishment in Albania. Such businesses must register for VAT in Albania if they engage in any of the following activities:

• Supply of goods located in Albania at the time of supply.
• Certain services provided to non-taxable persons in Albania, such as digital services or services related to immovable property located in Albania.
  Import and export activities within Albania.

In these cases, non-established businesses are required to register for VAT in Albania, regardless of the value of their supplies.

Albania follows the destination principle for cross-border digital services supplied to non-taxable persons. This means the place of supply for such services is determined by where the non-taxable person is established, where they have their permanent address, or where they usually reside.

As a result:

• Nonresident providers of electronically supplied services (B2C) are required to register for VAT in Albania, regardless of the value of their supplies, and appoint a VAT representative to account for and pay the VAT liability.
• Nonresident providers of electronically supplied services (B2B) are not required to register for VAT in Albania. Instead, the VAT is self-accounted for by the customer under the reverse-charge mechanism.

Additionally:

• Imported goods purchased online and imported into Albania through postal mail are exempt from both import duties and VAT if their value is lower than EUR 22 (or its equivalent in Albanian lek, ALL).

Online marketplaces and platforms are also subject to these rules, meaning the place of supply for digital services provided to non-taxable person through these platforms is where the person is established, has their permanent address, or usually resides.

When the taxable person responsible for VAT payment is a taxable person who is not established in the Republic of Albania, country in which VAT must be paid, the taxable person must appoint a fiscal representative in the Republic of Albania as a taxable person responsible for the VAT payment, except when the person to whom the goods or services are supplied is a taxable person registered in the Republic of Albania.

The VAT return has to be submitted on a monthly basis, within 14th of the upcoming month. 

A default penalty may be imposed by the tax authority if VAT returns are not submitted on time, or the related tax is not paid by the due date.

For late submission of VAT returns, a penalty amounting to ALL 10,000 shall be applied to all taxpayers registered for CIT purposes and the other taxpayers will be liable to the penalty amounting to ALL 5,000.

The late payment of the VAT obligation, an interest of 0.06%, is calculated per day of delay up to a maximum of 365 days (i.e., capped at 21.9%).

No, there are not. According to the recent updates to the law, the purchase and sales ledger is automatically submitted based on data received from the Selfcare portal. However, the taxpayer still needs to:

• Cross-check the purchase and sales ledger to ensure all transactions are accurately recorded.
• Make Amendments, if there are any discrepancies or errors, the taxpayer must amend the ledger before it is submitted.

Yes. A range of penalties can be imposed where businesses do not comply with the VAT rules.

• Failure to Keep Proper Records
• Failure to issue an electronic invoice 
• Incorrect or Incomplete VAT Return
• Failure to Register for VAT
• Fraudulent VAT Activities

Input VAT incurred by non-established businesses in Albania is not recoverable.

In Albania, the invoice issued must comply with specific requirements set forth in the instruction of the Minister responsible for finance. The invoice should contain, at a minimum, the following information:

1. Title: The invoice must clearly state the title "Tax Invoice".
2. Date and Time of Issue: The exact date and time of the invoice issuance (including hour, minutes, and seconds) must be included.
3. Invoice Number: A unique invoice number should be assigned.
4. Seller’s Information:
   • Unique Identification Number of the seller.
   • Name of the taxpayer or the name and surname of the seller.
   • Address of the seller.
5. Buyer’s Information:
   • The unique identification number of the buyer.
   • The name of the taxpayer or name and surname of the buyer.
   • The address of the buyer. These details are mandatory if the buyer is:
     • A taxpayer subject to profit tax, simplified profit tax, or VAT.
     • A legal entity.
     • A person purchasing personal property valued over 500,000 lek.
     • In other cases, when the buyer requests these details on the invoice.
6. Operator Code.
7. Business Activity Code: The code of the place of business activity.
8. Date or Period of Supply: The date or period during which the goods or services were supplied, or the date of payment if this differs from the invoice issue date.
9. Goods or Services Description:
   • The quantity and description of the goods or services supplied.
   • The unit price of the goods or services.
10. Total Value: The full value of the goods or services supplied.
11. Other Adjustments: Any increases or reductions applied, such as compensation or payment adjustments.
12. Total Amount to be Paid: The total amount to be paid by the buyer.
13. Payment Details:
    • The payment method (e.g., banknotes, coins, card, check, bank transaction, electronic money, other non-cash methods).
    • The currency and exchange rate (if the invoice is in a currency other than the Albanian lek).
    • The payment deadline, if payment is not made at the time the invoice is issued.
14. Unique Invoice Identification Number (NIVF): A unique invoice identification number, expressed as an alphanumeric character.
15. Security Number of the Issuer (NSLF): The security number of the invoice issuer, expressed as an alphanumeric character.
16. QR Code: A QR code containing the data specified by the instruction of the Minister responsible for finance.
17. Applied VAT Rate: The VAT rate that has been applied to the transaction.

These requirements ensure that invoices are properly formatted and contain all the necessary information for tax compliance and record-keeping.

All purchase and sales invoices have to be declared in real time to the tax authority through selfcare portal starting from 2021.