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 importer
• 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 in the course of a business activity for private purposes constitutes a taxable supply to the extent the VAT on those supplies was deducted.

Yes, there is.
A taxable person established in Albania is obliged to register for VAT purposes and charge VAT if the annual turnover in the previous 12 months exceeds ALL10 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 but greater than ALL5 million may voluntarily register for VAT, and that taxable person must remain registered for a minimum of two years.

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

No, there is no registration limit for businesses that are not established in Albania.

A “non-established business” is a business that does not have a fixed establishment in Albania. No VAT registration threshold applies to taxable supplies made in Albania by a non-established business. A non-established business must register for VAT in Albania if it engages in any of the following supplies:
• Supply of goods located in Albania at the time of supply
• Certain supplies of services to nontaxable persons in Albania, such as digital services and services related to an immovable property located in Albania
• Import and export activities in Albania

Albania follows the destination principle regarding cross-border digital services supplied to nontaxable persons in Albania. The place of supply of cross-border digital services to nontaxable persons is the place where the nontaxable person is established or where it has its permanent address or usually resides. Therefore, nonresident providers of electronically supplied services for business-to-consumer (B2C) supplies are required to register and account for VAT in Albania. This is done by appointing a VAT representative in Albania to account for and pay VAT liability. No VAT registration threshold applies.

Nonresident providers of electronically supplied services for business-to-business (B2B) supplies are not required to register for VAT in Albania. Instead, the customer is required to self-account for the VAT via the reverse-charge mechanism.

Imported goods are exempt from import duties and VAT, if the goods are purchased through the internet and imported into Albania through postal mail with a value lower than EUR22 (and its equivalent in ALL).

Online marketplaces and platforms. The above rules for the digital economy also apply to online marketplaces and platforms, i.e., the place of supply for services supplied by electronic means to nontaxable persons is the place where that person is established or where he has his 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 tax period is a calendar month. Purchase and sales ledgers must be submitted monthly by the 10th day of the following month. Following the recent e-invoicing reform the VAT return is automatically generated by the tax authorities based on the information provided in the sale and purchase ledgers. However, taxable persons have the right to review and amend the VAT return accordingly.
The deadline for VAT payment is the 14th day of the month following the tax period. For imports, VAT is payable upon importation.

For a taxable person that is newly registered, the first tax period begins on the date of the registration, as stated in the certificate of registration, and ends on the last day of that month.

VAT payable by a taxable person for a tax period equals the VAT on the total taxable value of supplies made during the tax period minus any input tax allowed as a deduction.

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 purpose 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 each day of delay up to a maximum of 365 days (i.e., capped at 21.9%).

Taxpayers that are registered for VAT in Albania are required to complete and submit the purchase and sales books each month. The deadline for submission purchase and sales ledger is 10th of the following month.

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

Penalties for errors: Erroneous completion of a tax filing or a tax refund claim is subject to a penalty of 0.06% of the tax due for each day of delay, up to a maximum of 365 days. In addition, default interest applies. Failure to notify or late notification to tax authorities of changes to a taxable person’s VAT registration details is considered an administrative offense and can be subject to a penalty of ALL15,000.

Penalties for fraud: Concealment of tax obligations constitutes a fiscal evasion and is subject to a penalty of 100% of the tax amount evaded.

Improper administration of sales and purchases books and documentation is subject to a penalty that can range from ALL10,000 to ALL50,000.

The failure to issue a VAT fiscal invoice for the whole amount of the transaction is subject to a penalty of 100% of the undeclared and unpaid tax liability.

Criminal offenses carried out by taxable persons are penalized under the criminal code.

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

A VAT invoice must show:
• Date, place and time of issuance of the invoice
• Invoice number
• Seller’s VAT number
• Buyer’s VAT number
• Name and full address of the seller
• Name and full address of the buyer
• Quantity, unit price, and description of services/goods
• VAT amount and the total amount of the invoice
• Discount rate, if any
• Total amount to be paid
• VAT rate applied
• Invoice title (e.g. tax invoice, prepaid invoice, invoice issued under special regime, invoice related to bad debt, etc.)
• Unique bill identification number
• Bill issuer security number
• QR code
• Payment details
• Operator’s code
• Code of the place of the business activity

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