Advantages of Doing Business in Albania Compared to the Balkans

 

 

 

Albania provides various advantages for foreign investors and businesses, including a favorable tax regime, affordable labor costs, and efficient processes for business registration. Below is a detailed comparison of Albania's economic and tax environment with other countries in the Balkan region.

Value Added Tax (VAT)

In Albania:

  • The standard VAT rate is set at 20%, while the VAT registration threshold is 10,000,000 ALL annually.
  • Reduced VAT rates apply to specific sectors:
    • Accommodation services benefit from a lower VAT rate.
    • Certain essential services, like education and healthcare, as well as agricultural products, are VAT-exempt.

Comparison with neighboring countries:

  • Kosovo: The VAT rate is 18%, with a registration threshold of €2,000 annually.
  • North Macedonia: A standard VAT rate of 18% is applied, with a reduced rate of 5% for certain goods and services.
  • Montenegro: The standard VAT rate is 21%, with reduced rates of 7% for designated sectors.
  • Bosnia and Herzegovina: A flat VAT rate of 17% applies with no reduced rates.
  • Serbia: VAT is 20% as the standard rate, with a reduced rate of 10%.
  • Bulgaria: A 20% VAT rate is standard, with specific sector exemptions.
  • Greece: VAT is 24%, with reduced rates of 13% and 6% for essential services and products like food and tourism.

Corporate and Personal Income Tax

In Albania:

  • For companies:
    • A 15% corporate income tax is applied to taxable profits. Businesses earning up to 14,000,000 ALL annually enjoy a zero-tax rate until 2029.
  • For individuals:
    • Income tax is progressive, based on wage brackets.
    • Dividends are taxed at 8%.
    • Income from rents and other sources is taxed at 15%.

Regional comparison:

  • Kosovo: Businesses pay a 10% corporate income tax, while individuals are taxed progressively at rates of 0%, 4%, and 10%.
  • North Macedonia: A flat 10% tax applies to both corporate profits and individual incomes.
  • Montenegro: Corporate tax is set at 9%, making it one of the most competitive rates in the region.
  • Serbia: Businesses are taxed at 15%, while individuals face a flat 10% income tax.
  • Bulgaria: A uniform tax rate of 10% applies to both companies and individuals.
  • Greece: Corporate tax rates range from 22% to 28%, with progressive personal income tax rates reaching up to 44%.

Social and Health Insurance Contributions

In Albania:

  • The minimum wage is 40,000 ALL per month.
  • Contribution rates for social and health insurance are:
    • Social insurance: 15% from employers and 9.5% from employees.
    • Health insurance: 1.7% from both employers and employees.

How Albania compares to the region:

  • Kosovo: Total contributions amount to 10%, equally split between employers and employees.
  • North Macedonia: Contributions can go up to 27% of gross salaries.
  • Montenegro: The contribution rate is approximately 24% of salaries.
  • Serbia: Contributions vary between 19% and 26%.
  • Bulgaria: Social contributions account for about 32% of gross salaries.
  • Greece: Contributions can exceed 40%, covering pensions and health insurance.

Business Registration

In Albania:

  • Businesses can register in 1-2 working days.
  • Costs:
    • Registration for sole proprietors is free.
    • For limited liability companies (LLCs), minimal fees apply for document preparation.

Regional comparison:

  • Kosovo: Registration takes 1-3 days, with minimal fees.
  • North Macedonia: Processes are completed within 1-3 days, costing about €50.
  • Montenegro: Business registration takes 5-7 days, with costs ranging from €50 to €150.
  • Serbia: Procedures require 3-5 days and have low fees.
  • Bulgaria: Registration typically takes 2 days and costs around €50-€100.
  • Greece: The process can take 5-10 days and may cost up to €300.