Tax Compliance for Entrepreneurs in Albania

Albania, situated in Southeast Europe, is one of Europe’s most promising emerging early-stage start-up markets, boasting many advantages for entrepreneurs including low operating costs and an outstanding business climate. Entrepreneurs in Albania do have access to some tools to use.

Female entrepreneurship is still relatively novel in Albania but already it has made significant impactful contributions to economic development.

Startup Ecosystem

Albania’s startup ecosystem is relatively young and many entrepreneurs are exploring creating their own startups. There are various factors supporting its expansion such as rising technology-focused company demand and international collaboration opportunities; furthermore, local initiatives offer funding and mentoring support for emerging entrepreneurs.

The European Bank for Reconstruction and Development (EBRD) has introduced the European Bank for Reconstruction and Development Star Venture Programme in order to promote innovation within Poland. It helps startups develop business plans, connect with investors, improve operations, and learn from global best practices.

Though Albania’s startup ecosystem remains young, it offers huge potential to develop and become one of the region’s premier tech hubs. Already there are promising startups such as Gjirafa – an index search engine dedicated to Albanian websites – and Softmogul (a hotel management software company that raised $8.7 million from venture capitalists). Furthermore, Albania boasts an abundance of highly qualified professionals that support this ecosystem.

Government policy places a strong emphasis on entrepreneurship and is taking steps to develop it as a key economic sector. There are various programs and initiatives underway that aim to foster startup ecosystem development; among these is the UK-Albania Tech Hub which promotes collaboration between both countries as well as provides funding for local startups so they can expand their businesses while creating jobs and providing access to the innovative technology in local markets.

Company Incorporation

Albania boasts one of the most liberal economies in Europe and provides generous tax incentives and support for strategic investment sectors. Furthermore, Albania boasts highly educated workers at low costs as well as abundant natural resources like nickel, copper, coal peat limestone alabaster oil.

For entrepreneurs to launch businesses in Albania, registration with the National Business Center (NBC) must first occur. This registration is quick, inexpensive, and efficient and can be done either in person or through the e-Albania portal. The NBC serves as an all-in-one-shop center that covers registration with the registry of companies, tax authorities, social and health insurance providers as well as labor inspectorates.

Registration can take anywhere between one to four weeks. After incorporating their business, entrepreneurs can apply for a business license through the National Business Registration Centre. Their application requires standard information about the name, activity, shareholders & percentages, directors, and memorandum of association of their company as well as standard forms for approval from an NBC. Once approved they will receive both their unique business identification number and registration certificate from them.

Limited partnerships are the most frequently formed business entity for entrepreneurs in Albania. A limited partnership typically comprises both general and limited partners, with limited ones only liable for their contribution amount to the business. It should be stipulated in its articles of incorporation that each partner should make specific contributions and their percentage participation rate within the partnership.

Inc. companies must submit audited financial statements every year. Foreign companies, however, can establish a branch or representative offices in Albania without having to physically relocate into the country – this office may engage in noncommercial, nonproductive activities like market research or promotion without incurring restrictions from local laws on the number of employees employed from outside.

Taxes

Albania, located just across the Adriatic Sea from Italy, is one of Europe’s most promising emerging early-stage start-up markets. Home to an educated youth population with global market access, Albania can present unique challenges when it comes to tax compliance for US expats; but by understanding its structure and benefits they can maximize their chances of success.

Individual taxpayers in Albania are subject to personal income tax (PIT), which is levied at a flat rate of 15% on all gross income. Residents of Albania pay tax only on Albania-sourced earnings while non-residents must also pay PIT on worldwide earnings. Companies may deduct some expenses as credits against their PIT bill.

The state imposes various indirect taxes of importance for entrepreneurs in Albania, such as excise duties on tobacco and alcoholic beverages, energy products (petroleum, gasoil, and gas) as well as customs duties on baked coffee with plastic, glass, or mixed packaging as well as customs duties on energy products like petrol oil. A sales tax is levied on goods sold within the country as well as services provided to both residents and non-residents alike.

Individuals and entities must also pay social security contributions (SSCs), at an amount equal to 15% of their net income, at the same time they submit tax returns. Furthermore, local property tax is collected in four equal payments: due by April 20, July 20, October 20, and January 20.

As there is no bilateral tax treaty between the US and Albania, rules regarding foreign income and deductions are determined by federal law and local regulations. Workers in Albania who earn income from US sources could qualify for the Foreign Earned Income Exclusion, which lets them exempt up to 112,000 of their US earnings from taxation (this figure may change each year). Those making less than this threshold could claim a Foreign Tax Credit instead.

Funding

Albania is making strides to promote entrepreneurship within its borders, but much work remains. There are various programs designed to assist entrepreneurs start businesses and access funding – for instance, TechBoost is a regional program which assists startups to develop and market their products while offering various financing solutions including loans and equity investments.

The AAEF also supports footwear and manufacturing companies that export their products abroad, which not only helps these firms to expand internationally but also fosters job creation and encourages the use of locally sourced raw materials – thus creating economic benefits for an entire community.

Albania faces several difficulties that should be understood before investing there, such as its poor investment climate and high costs. Foreign investors should incorporate arbitration clauses in contracts with Albanian counterparties in order to protect themselves from disputes that escalate to international arbitration proceedings.

Although facing numerous obstacles, Albania has shown some encouraging signs in its startup scene. Home to several startups with billion-dollar valuations; tourism growth is fast-tracked thanks to low costs of living and its proximity to European markets.

Albanian organizations can seek R&D funding through Enterprise Europe Network (EEN). For assistance identifying project partners, the National Agency of Scientific Research and Innovation (NASRI) may also be useful; plus there’s access to over 45 national funding bodies!

Market Research

Market research in Albania is an integral component of business planning and strategy, helping companies create competitive advantages that attract customers while assessing the feasibility of new products or services, identifying competitive niches, as well as determine effective promotional techniques for them.

Albania, located in Eastern Europe with 2.9 million people, boasts an abundance of natural resources and enjoys strategic positioning on the Balkan peninsula. Albania’s economy is heavily export-driven and major industries include oil & gas production, mining operations, tourism services, and textile manufacturing. Albania is a member of both the World Trade Organization and the North Atlantic Treaty Organization and its main trading partners include Italy, Greece, and Germany.

The location has been key in Albania’s rapid economic development. Home to several ports such as Durres, Shengjin, and Saranda with Shengjin being its deepest port providing easy access to European markets.

E-commerce is an integral component of Albanian economic life, representing USD 1 billion as of 2022. The Albanian e-commerce market is expanding quickly, and government reforms to support it include streamlining business registration procedures and improving infrastructure.

Albania has long been known for its cash economy; however, digital technologies are slowly being adopted here as well. Albania boasts a high Internet penetration rate and the number of online shoppers continues to grow rapidly. E-commerce remains in its early stages due to limited credit card usage and higher shipping costs; nevertheless, it shows promise.