DOING BUSINESS IN ALBANIA IN 2023
Since 2003, Healy Consultants Group efficiently and effectively assists our Clients with i) Albania business registration ii) business licensing (when required) iii) Albania corporate banking solutions iv) visa options and staff recruitment strategies and v) work space rental solutions in Albania.
|Compare different Albania entities||Tax resident LLC||Fast nominee LLC||Free zone LLC||Representative office||Branch office|
|Also known as||SHPK||Shelf company||AFC company||RO||BO|
|Best use of company?||All products and services||Close a customer deal now||Manufacturing & export trading||Marketing & research||Specific projects|
|How soon can you invoice Clients\sign sales contracts?||2 months||2 weeks||3 months||3 months||3 months|
|How soon can you hire staff?||2 months||2 weeks||2 months||3 months||3 months|
|How soon can you sign a lease agreement?||1 week||1 week||1 week||1 week||1 week|
|How long to supply corporate bank account numbers?||3 months||4 weeks||4 months||4 months||4 months|
|How long to supply company registration \ tax numbers?||2 months||2 weeks||3 months||3 months||3 months|
|Corporate tax rate on annual net profits?||15%||15%||0%||0%||15%|
|Limited liability entity?||Yes||Yes||Yes||No||No|
|Government grants available?||No||No||No||No||No|
|Government approval required for foreign owners?||No||No||No||No||No|
|Resident director/partner/manager/ legal representative required?||No||No||No||Yes||Yes|
|Minimum paid up share capital?||€ 1||€1||€50,000||None||None|
|Can bid for Government contracts?||Yes||Yes||Yes||No||Yes|
|Corporate bank account location?||Alpha Bank||BKP||First Investment Bank||Intesa Sanpolo Bank||Tirana Bank|
|Can secure trade finance?||Yes||Yes||Yes||No||No|
|VAT payable on sales to local customers?||20%||20%||0%||None||None|
|Average total business set up engagement costs?||€10,555||€22,455||€13,405||€10,955||€11,655|
|Average total engagement period?||3 months||3 months||4 months||4 months||4 months|
Albania company registration summary
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Advantages and disadvantages
Advantages of Albania company registration
- It is relatively easy to setup a company in Albania because:
- A new company can be incorporated with 1 director and 1 shareholder, who only need to pay up €1. Furthermore, there is no nationality or residency requirement for directors or shareholders;
- Healy Consultants can secure Albanian company registration without our Client having to travel to the country to submit the documents.
- An Albanian company affords Clients certain tax advantages including:
- Albania imposes a relatively low corporate income tax rate of only 15%. Furthermore, new companies with annual turnover of under €65,000 can benefit from a lower rate of 5%;
- Foreigners registering their companies in Albanian free zones will enjoy multiple incentives including i) corporate tax exemption for the first 5 years and reduced tax rate of to 7% during the next 5 years ii) no custom duties or VAT on imports and iii) advantageous tax treatment of some expenses such as employee training;
- Subsidiaries registered in Albania will often benefit from waived/reduced withholding tax when remitting dividends and interest to their foreign parent company, as the country has a significant network of double taxation avoidance treaties with 37 countries including several EU countries, Russia, China and Singapore.
- Our Clients may use Albania as the base for their European manufacturing business because:
- Albania’s strategic location allows resident businesses access to markets in the European Union and the Balkan region. Consequently, our Clients will be able to reach a consumer base of more than 500 million people;
- Albania has the lowest labour costs in Europe; the hourly wage rate is estimated at €4.45, almost 45% less than Bulgaria (€8.18), the EU member State with the lowest labour cost. Find more statistics on EU labour costs on this Eurostat news release page;
- While Albania is not a member of the EU, products manufactured locally still benefit from duty free access to the European markets, thanks to the Albania-European Union association agreement signed in 2006;
- Although the main spoken language in Albanian, English is also widely spoken, especially amongst the youth. Consequently, our Clients will be able to communicate easily with the local labour;
- There are no foreign exchange controls in Albania. As a result, our Clients are able to easily remit their profits to their home countries.
- Albania has a stable economy which is favourable for businesses operating in the region:
- Albania has one of the lowest inflation rates of 1.5% (as per 2019) in the EU region and a consistent annual growth of around 2.85%. This ensures a promising and stable economy for the investors to conduct their business in;
- Albania has signed 39 treaties for the avoidance of double taxation. It has also signed other bilateral and multilateral agreements that would remove the burden of double taxation from companies incorporated in Albania;
- The Albanian government has reduced or exempted corporate taxes from few economic zones in order to promote economic activity in specific sectors such as agriculture, goods and services, the automotive industry and other light industries. Currently the following areas have been approved as economic zones in Albania:
- Koplik, Shkodër;
- Spitallë – Durrës;
Disadvantages of Albania company registration
- Our Clients’ sales will not be high in Albania as the country suffers from i) a population of only 3 million inhabitants ii) Europe’s lowest GDP per capita (US$6,300) and iii) limited economic prospects, with an economic growth projected at only 3.4% in 2020 by the International Monetary Fund;
- Corruption is a major issue for businesses established in Albania: this country has Europe’s lowest rank in the last corruption perception index prepared by Transparency International. 20% of the country’s companies have also reported to the World Bank that they had to bribe a public servant at least once over the past year;
- The country’s official language is Albanian and all foreign business documents will need to be translated in this language. This slows down the process of company registration in Albania. It is also a constraint when doing business in the country as communicating with employees and government officials is a problem for foreign investors;
- Albania has poor-quality infrastructural facilities and has been ranked 98th (out of 137 countries) for its Infrastructure on the 2019 Global Competitiveness Index. As a result, the nation’s poor-quality roads, ports, railways, energy infrastructure poses operational problems for Albanian based businesses.
- It is relatively easy to setup a company in Albania because:
Best uses of an Albanian company
- Due to low corporate taxation of 10-15%, the Albanian trading vehicle is s suitable option for foreign entrepreneurs looking to do business in the Balkans and Europe;
- Operating costs of Albania are one of the lowest in Europe, making it a good place to register a production and export oriented business;
- Albania is a great gateway for foreign Islamic business in Europe, as almost 60% of the population practices this religion.
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Useful links for Albania
Government and public authority websites:
- Factors Determining Foreign Direct Invetsment in Albania
- Attractiveness of Foreign Investments in Albania
- KPMG – Investment in Albania
- Albania Investment Climate
- Doing Business and Investing in Albania
- Strategy for Innovation