UTC:
Capital City:
Language:
Population:
Currency:
Country Code:
Domain:
+1
Tirana
Albanian
2.79 million
Albanian Lek
+355
al.
Recent news
Israel-Albania relations
Israel and Albania have had diplomatic relations since 1991, however, Albania has recognized Israel since 1949. In 2008, the economic relations between the countries began to tighten, and since then there have been several diplomatic visits and mutual trade missions. Relations between the countries are considered warm, and in 2019, when the devastating earthquake hit Albania, Israel sent IDF personnel to Albania to help search and locate missing persons.
Details about the Embassy of Israel in Albania
Address: Rr. Abdyl Frasheri. EGT Tower, Tirana-Albania
Phone: +35544508502
Website: https://embassies.gov.il/tirana/Pages/default.aspx
Email: cao-assistant@Tirana.mfa.gov.il
Details about the Embassy of Republic of Albania in Israel
Ambassador Dr. Bardhyl Canaj
Address: Laz-Rom Building, 11 Tuval Street, Ramat Gan 5252226.
Phone: 03-546-5866
Website: http://www.ambasadat.gov.al/israel/
E-mail: embassy.telaviv@mfa.gov.al
Business activity in Albania
The volume of trade between Israel and Albania in 2018 was 20 million dollars. The main export from Israel to Albania is chemical products, and the main import from Albania to Israel is textile products.
Our office is currently establishing the Israel-Albania Chamber of Commerce in cooperation with the Albania-Israel Chamber of Commerce lead by Mr. Elton Naik.
Our office connections with both high levels in the government and lawyers, accountants, and bankers in Albania, assists us to do business in a convenient and simple way.
Our firm specializes in helping professionals who do business in Albania – In the near future Israel citizens will be offered a business plan package of professional support that will include, among other things, setting up a company, opening a bank account etc., and all in a fast, efficient and professional manner through an Israeli company (Melius) and in collaboration with leading law firms in Albania.
Specific information on business activity in Albania can be found on the Nimrod Yaron Albania website.
Agreements between Israel and Albania:
- Investment encouragement and protection agreement;
- Tax treaty for the Prevention of Double Taxation.
Investment encouragement and protection agreement
In 1997, a bilateral agreement between Israel and Albania regarding the encouragement and protection of investments entered into force. Its purpose is to legally protect investments and activity of investors from non-commercial risks and to encourage investments by Israelis in Albania by creating a comfortable and safe investment climate.
A link to the agreement on the website of the Ministry of Finance can be found here.
Tax Treaty for the Prevention of Double Taxation between Israel and Albania
Treaties to prevent double taxation are agreements between countries that determine the rules of taxation that will apply to income and assets related to both countries. On May 3, 2021, after prolonged negotiations, a double tax prevention treaty was signed between Albania and Israel. On behalf of the Israeli government, Foreign Minister Gabi Ashkenazi signed the treaty, and on behalf of the Republic of Albania, the Albanian Ambassador to Israel, Dr. Bardhil Chenai, signed the treaty.
Our office was involved on behalf of the Albanian government in the contacts between the countries and helped promote the signing of the treaty. In September 2020, even before the tax treaty between the two countries was signed, our office held a meeting at the Embassy of Albania, during which the Ambassador of Albania and CPA Nimrod Yaron discussed ways of cooperation between the countries in order to ease the tax procedures for businesses and investors interested in entering the Israeli and Albanian market.
Since the treaty was signed, our office has been holding regular meetings with the Embassy of Albania to help businesspeople from both countries to increase their cooperation mainly in the fields of tourism and technology.
The full double tax treaty between Israel and Albania can be found here.
Applicability of the MLI
The MLI is an automatic mechanism for amending bilateral tax treaties, which will only apply when both countries sign the multilateral treaty and confirm its application in their domestic law.
Israel signed the treaty in 2017 and ratified it in 2019, and Albania signed it in 2019 and ratified it in 2020. This means that starting 2020, the treaty between Israel and Albania changed automatically in accordance with the content of the MLI treaty, subject to the reservations established by both countries.
Residency for tax purposes
Residence of an individual
An Israeli citizen will be considered a resident of Albania if he stayed in Albania for more than 183 days during the relevant fiscal year. In that case he will be liable to pay tax according to the law of Albania.
To learn about how an individual is considered a resident of Israel read here.
Residency of a company
A company will be considered a resident of Albania for tax purposes, when it has a branch in Albania, a head office or if the management of the company is based in Albania.
To learn about how a company is considered a resident of Israel read here.
Albania’s tax regime
The Albanian Tax Authority is called the General Directorate of Taxation (GDT).
The most common types of taxes in Albania: income tax, national insurance, corporate tax, and value added tax.
Individual income tax: the preparation tax is progressive, and the tax ceiling is 23%.
Income tax for companies and branches: income above 14 million Lek (113 thousand euros) will be taxed at 15%, and below at 5%.
VAT: 20%.
Capital gains tax: 15%.
Withholding Tax
| Albania Internal tax rate | Israel Internal tax rate | Treaty Withholding Tax |
Personal Income tax (Tax brackets) | 0%/13%/23% | 0%-50%
|
|
Corporate income tax | 15% | 23% |
|
Individual capital gains tax rate | 15% | 25%-30% (plus exceptional income tax for high earners at 3%) |
|
Branch tax | 15% | 23% |
|
Withholding tax (Non-Resident) Dividends |
8% |
25% or 30%
|
5%/15% |
Interest
| 15% | 15%/25%/23% | 10% |
Royalties | 15% | 23%-40% | 5% |
Tax on renting real estate in Poland | 15% | Margin or 15% |
|
VAT | 20% | 17% |
|
Inheritance Tax | 15% | NA |
|
Inheritance/estate tax in Albania
Inheritances and gifts in Albania are subject to a fixed tax rate of 15%.
An exception to this is if the transfer of ownership of a building and/or land is done between family members. In such a case, the inheritance/gift is exempt from tax, but it should be noted that the exemption is limited to one transfer per beneficiary.
Transfer prices
The legislation in Israel regarding transfer prices appears in Section 85A of the Tax Ordinance (new version), 1961-5771 and the Income Tax Regulations (Determination of Market Conditions) – 2006 (Regulations).
Click here for more information on transfer prices.
The directive on transfer pricing in Albania states that only taxpayers whose total transactions exceed the amount of ALL 50,000,000 during the reporting period are subject to filling out the “Annual Audited Transactions Notification” form. The transfer pricing documents must be submitted within one year of the last day of the month in which the financial year ends. It is of crucial importance to submit the documents on time as for each month of delay in submission the taxpayer will be charged a fixed fine of 10,000 ALL, therefore we recommend using experts in the field to fill out the documents correctly and on time to avoid these payments.
Relocation
When an Israeli citizen moves to Albania and intends to work there, significant consequences arise. Their method of employment abroad must be examined, depending on the duration of their intended stay in the country.
Due to the complexity of the relocation, it is recommended to consult with experts in the field to ensure the softest landing. Contact us, and we will be happy to arrange an introductory meeting with you.
More information about relocation can be found on our website relocation page.
Real estate taxation in Albania
Foreign residents are taxed on their Albanian source income.
In Albania, property tax is collected at different rates, depending on the location of the property, its classification, and its use:
Taxation on newly built properties ranges from 1% to 4%. On the other hand, the taxation on buildings ranges from 5 ALL to 200 ALL per square meter, depending on the location of the building, the year of construction and the use of the property. Similarly, the tax on land ranges from 1,400 ALL to 5,600 ALL.
Transfer of funds
Transfer of funds from Israel to Albania
According to Section 170(a) of the Income Tax Ordinance, most money transfers from Israel to Albania will require prior approval from the Tax Authority.
Regarding the transfer of money abroad, in addition to the issue of withholding tax, our office handles the requirements of the foreign banks, such as the approval of a CPA for the payment of taxes and checking additional actions required considering the uniform standard of CRS between the countries – automatic exchange of information between countries that is carried out first through the banks and then between the tax authorities of the countries.
The banks raise difficulties and charge high fees for converting the shekels into Albanian Lek, so it is very important to consult before transferring the funds.
Types of business entities in Albania
People who are not residents/citizens of Albania can conduct economic activity in Albania as self-employed persons or by establishing and controlling companies. Foreign companies (which are not considered Albanian residents) can conduct transactions in Albania through the establishment of subsidiaries and branches.
According to Albanian law, non-residents/citizens of Albania can use the following forms of commercial business organization:
- Entrepreneur – A person whose independent economic activity requires normal business organization. The entrepreneur must be registered as such in the commercial register within 15 days from the first day of activity by submitting identification data, place of economic activity, field of activity and a sample signature.
- Company – A company founded by at least two people (except for limited liability companies and joint stock companies which can be created by one person). The new law in Albania requires written articles of association as a necessary document for the establishment of the company. The legal requirements for registration are the name of the company, its form, the date of its incorporation, identification data of its founders and managers and its place of residence.
- Limited liability companies – A limited liability company is a company whose founders’ liability for the company’s obligations is limited to their contribution to the company’s subscribed capital, that is, to the money they invested in purchasing the shares. Each member acquires his share in the company in proportion to his contribution. The basic capital of a limited liability company in Albania is fixed at ALL 100.
- Stock company – Companies of this type are usually large organizations whose wealth is accumulated by selling shares to the public. Its founders are not responsible for the company’s obligations and bear losses themselves only to the extent of their contribution to the subscribed capital (the number of shares they own). The basic minimum capital of a joint stock company with a private offering is ALL 3,500,000, and with Public offering ALL 10,000,000. According to Albanian law, the joint stock company is the only legal entity that may issue bonds.
- General partnership – A company will be considered a general partnership if it is registered as such, conducts its business under a joint name and the liability of the partners towards the creditors is unlimited.
- Limited partnership – A partnership will be considered limited, if the liability of at least one partner is limited to the amount of his interest (limited partner), while the liability of other partners is not limited (general partners). General partners have the status of partners in a general partnership.
- Tax benefits in Albania – There are a variety of entities in Albania that are exempt from corporate income tax (CIT). Some include legal entities that conduct religious, humanitarian, charitable, scientific and educational activities, or professional associations and chambers of commerce, industry, or agriculture.
There are specific agreements concerning international organizations, and cooperation agencies to exempt them from paying tax. In addition, there is a reduced corporate tax rate of 5% for high-tech companies engaged in research in Albania: development and production of software and cooperative agriculture and tourist agriculture ventures in Albania for a period of 10 years. Beyond that, projects that involve international investments in the construction and operation of “4-5 star” hotels and resorts will be exempt from corporate tax for a period of 10 years.
The list of countries with which Albania has signed a treaty to prevent double taxation:
Austria, Belgium, Bosnia and Herzegovina, Bulgaria, China, Croatia, Czech Republic, Egypt, Estonia, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Korea, Kosovo, Kuwait, Latvia, Macedonia, Malaysia, Malta, Moldova, the Netherlands, Norway, Poland, Qatar, Romania, Russia, Serbia and Montenegro, Singapore, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Arab Emirates, Great Britain and of course Israel.
