Corporate Tax in Albania: Rates, the 0% Regime and Dividends

Introduction

Corporate income tax in Albania is simple at first sight — one standard rate — and more nuanced once you look at the details: a transitional 0% regime for small businesses, a separate rate for dividends, withholding taxes on certain payments and special rules for different kinds of taxpayers.

This guide explains the rules as they stand in the consolidated text of Law no. 29/2023 “On Income Tax”, the law that replaced the old income tax law from 1 January 2024 and has been amended several times since, most recently in December 2025. It is written for founders and owners of Albanian companies, including foreign investors. We cover:

• the standard corporate income tax rate
• the 0% regime for small businesses and its conditions
• what happens above the 14 million lekë limit
• how dividends are taxed
• withholding tax on payments to others
• the end of the reduced rate for software
• how the tax year and compliance work in practice
• examples, mistakes to avoid and frequent questions

Tax rules change. Before acting on any figure, check that it still applies to your situation — we do this for our clients every year.

The Standard Corporate Income Tax Rate

Under Article 41 of Law no. 29/2023, the corporate income tax rate is 15%. It applies to the taxable profit of companies such as the Sh.p.k. and Sh.A., unless a special regime applies to them.

Taxable profit is not the same as the accounting result. The law defines which revenues are taxable and which costs may be deducted, and some costs are not deductible at all or only within limits. That is why the corporate tax calculation always starts from properly kept accounts and then adjusts them for tax purposes.

The 0% Regime for Small Businesses

The most important rule for new and small companies is a transitional provision. Article 69, point 1(dh), of Law no. 29/2023 provides that individual traders, self-employed persons and entities with gross income of up to 14 million lekë a year apply an income tax rate of 0% until 31 December 2029.

Three points are worth emphasising:

• The condition is the 14 million lekë limit. The 0% applies to taxpayers whose gross income stays within up to 14 million lekë a year — not to every small company regardless of income.
• It is transitional. The law fixes the end date: 31 December 2029.
• 0% income tax does not remove other obligations. Accounting, declarations, VAT where applicable and payroll obligations remain.

When you read “0% tax in Albania” on any website — including older pages on ours — read it as “0% income tax for annual gross income up to 14 million lekë, until 31 December 2029”.

Above the 14 Million Lekë Limit

For a company whose gross income exceeds 14 million lekë a year, the 0% regime does not apply and the standard corporate income tax rate of 15% applies to its taxable profit (Article 41).

For individual traders and self-employed persons outside the 0% regime, Article 24(2) sets progressive rates on the net taxable business profit: 15% on the annual tax base up to 14,000,000 lekë and 23% above that.

Choosing between operating as an individual and as an Sh.p.k. therefore has tax consequences beyond the question of liability. The right choice depends on expected profit, plans to distribute it, employees and the long-term structure of the business.

→ Read: LLC vs sole proprietor in Albania

How Dividends Are Taxed

Profit that a company distributes to its shareholders is taxed separately from the company’s own profit.

• Article 41 of Law no. 29/2023 sets the rate for dividends at 8%, with no costs deducted.
• For individuals, Article 24(3)(a) taxes income from dividends at 8%.
• Article 59 sets the withholding tax rate on dividends at 8% — the tax is withheld by the company that pays the dividend.

For foreign shareholders, a double taxation agreement between Albania and the shareholder’s country may affect how the dividend is taxed in each country. Check the treaty that applies to you before the distribution, not after.

Withholding Tax on Other Payments

Besides dividends, Albanian companies withhold tax on certain other payments listed in Article 58 of the law. Article 59 sets the withholding rate on these payments at 15%.

In practice this matters most when an Albanian company pays non-resident persons — for example for certain services or rights — and when it pays individuals outside employment. The company is responsible for withholding and paying the tax, so the obligation sits with the payer, not with the recipient.

Double taxation agreements can change the outcome for payments to residents of treaty countries. Their application depends on the conditions of each treaty and on documentation, so review cross-border payments before you make them.

Foreign-Owned Companies, Branches and Subsidiaries

Ownership does not change the corporate tax rate: an Albanian Sh.p.k. owned by a foreign citizen or a foreign company is taxed under the same rules as one owned by Albanians — including the 0% regime when its gross income stays within up to 14 million lekë a year, until 31 December 2029.

What does change with foreign ownership is the cross-border side:

• Dividends to foreign shareholders are subject to the 8% withholding tax, and a double taxation agreement may affect how they are treated in the shareholder’s country.
• Payments to the foreign parent or related companies — services, fees, interest — need documentation and may fall under the 15% withholding tax on Article 58 payments.
• Transactions between related companies should follow market terms and be documented, because the tax administration can review them.

A branch of a foreign company and a subsidiary are also treated differently in practice: the subsidiary is an Albanian taxpayer in its own right, while the branch is part of the foreign company, whose Albanian activity is taxed in Albania. Which structure suits you depends on liability, accounting and how profit will flow back to the parent.

→ Read about company setup for foreign companies

The End of the 5% Rate for Software

Older articles about Albania often mention a reduced 5% rate for companies that produce or develop software. Under Article 69(1)(ç) of Law no. 29/2023, that rate applied to legal persons registered before the law entered into force, and only until 31 December 2025. It has expired.

A software company today is taxed under the general rules: the 0% regime if its gross income is up to 14 million lekë a year (until 31 December 2029), otherwise the standard corporate income tax rate.

The Tax Year and Compliance in Practice

Corporate income tax is calculated per calendar year. During the year companies make advance payments, and after year-end they file the annual declaration together with their financial statements. Exact dates and amounts depend on the company’s situation, so we prepare a calendar for each client.

• keep accounts that support the tax calculation from the first day
• track gross income during the year if you rely on the 0% regime
• document cross-border payments and withholding tax
• prepare dividend distributions with the 8% withholding in mind

A practical habit helps most: close each month with up-to-date books. Advance payments, the annual declaration, the decision on dividends and the check against the 14 million lekë limit all become straightforward when the figures are already there.

→ Our accounting and tax service

Practical Examples

Illustrative scenarios (not client cases; amounts simplified):

Mistakes to Avoid

Professional Advice

→ Read our guide to taxes for foreigners in Albania

FAQ – Frequently Asked Questions

Conclusion

Albania taxes company profit at 15%, dividends at 8%, and — until 31 December 2029 — applies 0% income tax to taxpayers with gross income up to 14 million lekë a year. The reduced software rate has ended.

The details decide the outcome: your gross income, your legal form, how you distribute profit and where your shareholders live. Planning them together keeps the tax predictable.