VAT

Last reviewed 21 Aug 2023

Tax rates

Standard rate: 20%

reduced rate 6%

• Supplies of accommodation services by the accommodation facilities
• Supplies made within five-star accommodation structures of an internationally known trademark
• Supplies of accommodation and restaurant services, excluding beverages, by the certified structures operating in agritourism
• Supplies of advertising services by audiovisual media
• Supply of licensed public transport equipped with electric motors, with nine plus one places or
  more
• Supply of books of any type
• Supply of construction work services for public investments in sports clubs/sports federations or for investments in sports infrastructure undertaken by private entities

at 0% rate

• Exports of goods
• International transport
• Services relating to maritime activities
• Supplies under diplomatic arrangements
• Supply of gold to the Central Bank of Albania
• Intermediary services related to zero-rated supplies or services rendered abroad

 

Supply of goods

Supplies of goods with consideration, withdrawal for private use (self supply) as well as any other supply without consideration are taxable.

Place of supply of goods

The location of a supply of goods is at the location where the goods are delivered or are made available by the suppliers.

If the delivery of goods or making the goods available involves transport of the goods, then the location is considered the place where the transport of goods begins, except in the cases defined otherwise in the VAT law.

Supply of electric energy, gas, water, heating, cooling, or air conditioning is performed at the location where the supply is received.

Import from third countries: if supplier is liable for import VAT, in importing country

Supply of services

Supply of services and private use / supply of servi- ces without consideration (self-supply) are taxable

Place of supply of services

A differentiation is made between services rendered

• to taxable person (“Business to Business”, “B2B”) or
• to non-table person (“Business to Customer”, “B2C”)

For the purpose of determining the place of the supply of services.

• taxable persons (holding a VAT registration number) and
• non-taxable legal entities holding a VAT registration number will be considered as “taxable persons”

Basic rule

B2B	B2C
Place of recipient (Place where the recipient of services has established his business)	Place of supplier (Place where the supplier of services has established his business)

Special cases

	B2B	B2C
Supplies of services by intermediaries	Place of recipient (basic rule)	Place of the underlying transaction
Property services	Place of property	Place of property
Cultural, artistic, scientific, educational, sports, entertainment or similar services, like services in connection with fairs and exhibitions including services of the respective organizers; not applicable to admission and related services	Where the services are physically carried out (place of event)	Where the services are physically carried out (place of event)
Admission and other related services for events like fairs and exhibitions	Where the services are physically carried out (place of event)	Where the services are physically carried out (place of event)
Passenger transport	Proportionally with the distance covered	Proportionally with the distance covered
Transportation of goods (without intra-Community goods transportation)	Place of recipient (basic rule)	Distances covered
intra-Community goods transportation	Place of recipient (basic rule)	Place of departure
Ancillary transport services	Place of recipient (basic rule)Place of recipient (basic rule)	Where the services are physically carried out
Appraisal and processing of movable tangible objects	Place of recipient (basic rule)	Where the services are physically carried out
Restaurant and catering services	Where the services are physically carried out	Where the services are physically carried out
Restaurant and catering services in connection with intra-Community passenger transport	Place of departure	Place of departure
Renting of means of transport for up to 30 days	Where the means of transportation is actu- ally put at the disposal of the customer	Where the means of transportation is actu- ally put at the disposal of the customer
Renting of means of transport for over 30 days	Where the means of transportation is actu- ally put at the disposal of the customer	Where the means of transportation is actu- ally put at the disposal of the customer
“Listed services” to third country customers 1)		Place of recipient
“Listed services” to customers in the EU		Place of supplier (basic rule)
Electronically supplied services, such as telecom, radio and TV services 2)	Place of recipient (basic rule)	Place of recipient

Mini-One-Stop-Shop (MOSS) / One-Stop-Shop (OSS)

N/A

Reverse charge (reversal of tax liability)

Generally for all transnational supplies of services and work supplies.

Requirements

Supplier is a foreigner (no residence, no place of business or establishment in Albania involved in providing the service).
Customer is a taxable person holding a VAT identi- fication number.
When a person, for the purpose of VAT, is a tax- payer, but does not have a fixed place of business, or, in the case of an individual, a usual place of residence in Albania, the Ministry of Finance has the right to require him to appoint another person as his tax representative

Consequences

Invoice without VAT, indication that tax liability is transferred to the customer Customer liable for the VAT

Application also

Tax reliefs

Exemption (Input VAT deductible even though no VAT chargeable on supply of goods and services)

Land and buildings

• Leasing a land or a site, except the cases when the land is used for parking of transport vehicles and other means of transport.
• Supply of buildings except to the construction process.
• Rental of buildings unless:
  a) lease for a period not exceeding two months;
  b) accommodation in hotels or similar

Financial Services

• Insurance and reinsurance, Granting, negotiating, and dealing with loans, credits, credit guarantees and any money insurance, including management of loans, credits or credit guarantees by the grantor;
• Transactions relating to bank accounts, payments, transfers, debts, checks and negotiable instruments, except for debt collection;
• Transactions relating to currency, bank notes, and money which are legal tender, except for items used solely for collection.
• Transactions relating to stocks, bonds and other securities, except for supervision services;
• Management of investment funds;
• Transactions relating to contracts for life insurance, including reinsurance;
• Transactions relating to management of pensions funds and obligatory health insurance

Gold Supply

• Supply of gold by the Bank of Albania and commercial banks, as well as banknotes and coins of the Bank of Albania
  Postage services
• Supply of postage stamps for use for postal services, supply of similar stamps.
  Not- for profit organizations
• Supply of goods or services for medical or dental treatment;
• Supply of services for the protection or care of children or old people;
• Supply of educational, cultural, or sport services;
• Supply of services by religious or philosophical organizations for the purpose of spiritual welfare.

Medical services

• Supply of drugs and implantable medical devices
• Supply of health services and activities closely related to them, with the objective of protecting the health of citizens, including prevention, diagnosis, treatment of illness and rehabilitation of health disorders, from public or private health institutions
• Supply of organs, blood and human milk;
• Supply of goods or services for dental treatment;
  Education Services
• Educational services by educational institutions, public and private
  Packaging materials and drugs
• Supply of packaging and materials used for production and confection of drugs
  Sales of newspapers, magazines and advertise- ment services done in them
• Services of printing houses for newspapers, magazines and books of any kind as well as supplies of advertisement services by written and electronic media.
• Sales of newspapers and magazines, daily or weekly, as well as advertisement services they publicize for other persons.

Hydrocarbon operations

• The supply of goods and services by the contractors and subcontractors of hydrocarbon operations, which are affirmed as such by
  the National Agency of Natural Resources, in relation to the research and development
  phase of hydrocarbon operations, is no longer exempt from VAT. The import of such good and services is no longer exempt from VAT as well.
  Others
• Free of charge supplies in cases of support rendered for situations, defined in the Law “On Civil Emergencies”. (The Council of Ministers is charged to define rulings on cases of exemptions for support rendered in case of civil emergencies.)
• Supply of services of processing goods for re-export by taxable authorized persons on
  the basis of provisions defined in the Customs Code with regard to operations under active processing regime (The Minister of Finance defines the required documentation in Instruc- tion for exemption application.)
• Supplies of services on games, casinos and hippodromes

VAT exemptions on import

• Final import of all goods imported by a taxpayer, when their supply within Albania is VAT exempted
• Import of goods placed in transit regime.
• Import of goods declared to fall under temporary regime and active processing.
• Importation of goods by NATO and its bodies in the frame of operations on the basis of international agreements.
• Importation of military materials for Armed Forces donated by countries of NATO and its partners.
• Local and cross-border supplies of services and importation of goods carried out by operators in the hydrocarbons sector only if directly related to the exploration phase.
• Supply and importation of medicines and health care services as of 1 April 2014.
• Importing machinery and equipment for investment contracts with a value equal to or greater than 50 million; or investment contracts in active processing sector and agribusiness, regardless of the value of the investment; or for manufacturing entities subject to simplified profit tax.
• Importing of agricultural equipments and live cattle
• Importing of gold from Central Bank of Albania

Zero rates (“non-genuine” tax exemption) (Input VAT is not deductible)

Exports

Fasson services

• Supply of services in the temporary regime and active processing

International transport

• International transport of passengers from / to destinations outside the Republic of Albania.
• Refueling and supply of other resources needed for sailing vessels and airplanes.

Gold Supply

• Supply of gold by the Bank of Albania and commercial banks, as well as banknotes and coins of the Bank of Albania

Diplomats, etc.

• Supply of goods and services performed under diplomatic and consular relations;
• Supplies of goods and services to interna- tional organizations and their members recognized as such by the authorities of Republic of Albania

 

Supplies of goods and services in Republic of Albania to NATO Allies or civil personnel accom- panying them. The Minister of Finance defines with an instruction the exemption of supply to diplomatic or consular missions, as well as for their staff, on the basis of reciprocity, and the exemption of supply to international organizations based on international agreements.

Deductible input VAT

VAT invoiced to the business for the supply of goods and services and import VAT Generally no deduction of input VAT with respect to:

• Expenses that are not completely for the purpose of economic activity
• Fuel costs, unless: purpose of economic activity is the purchase of fuel in order to sell it, purchased fuel is used for technological needs.
• Costs for travel and per diems, accommodation in hotels and recreational activities
• The cost of cars, unless:
• The purpose of economic activity is the purchase of the vehicle in order to sell them.
• The use of cars is the sole purpose of economic activity (e.g. renting, taxi service, ambulance).
• The cost of fuel of any kind used for vehicles.
• The cost of promotional advertising items.

For representation expenses the right of deduction is not allowed for expenses beyond the allowed rate for their recognition as a deductible expense.

Input VAT correction

A VAT credit note may be used to reduce the VAT charged on a supply of goods or
services; a debit note may be used to increase the amount of VAT. Tax credit and debit notes must be cross-referenced to the original VAT invoice.

Real estate

Rentals

Rental of real property is exempt if the rent is for more than 2 monts . However the lesser has the right to select a taxable option under certain circumstances.

Sales

Sale of land is exempt

Refund of input VAT for Albanian taxable persons within the EU

N/A

Foreign taxable persons

N/A

Registration

N/A

Refund of input VAT for taxable persons domiciled in the EU

N/A

Refund of input VAT for taxable persons not domiciled in the EU

N/A