Foreign-owned companies and local employers alike need to understand payroll taxes and obligations for employers in Albania to ensure legal compliance and avoid penalties.
Albanian labor law requires employers to withhold taxes and social contributions from employee salaries and remit them to the tax authorities and social insurance system.
These obligations apply equally to Albanian and foreign employees working in Albania under an employment contract.
What Employers Must Withhold and Pay
Employers in Albania are responsible for calculating, withholding, and paying:
– Personal income tax on employees’ salaries, following progressive tax rates based on salary brackets
– Social security contributions, including pensions, unemployment insurance, and health insurance, both the employee’s and employer’s share
– Health insurance contributions as part of the social security system
The employer deducts the employee’s share from gross salary and adds the employer’s portion to determine total payroll obligations each month.
All payments must be declared and paid to the General Directorate of Taxes by the statutory deadlines to avoid fines or penalties for late filing or underpayment.
Payroll Registration and Reporting
Every employer must register as an employer with the Albanian tax authorities and the Social Insurance Institute before hiring staff. Each employment contract must be reported and registered within legal timeframes.
Monthly payroll declarations must be submitted electronically, listing all employees, their salaries, tax deductions, and contributions paid. Employers are also responsible for issuing annual income statements for employees’ tax records.
Penalties for Non-Compliance
Failure to meet payroll taxes and obligations for employers in Albania can result in administrative fines, interest on unpaid amounts, and reputational risks. Compliance is strictly monitored by the tax authorities, making accurate payroll management essential for every company.
Employers in Albania must comply with detailed requirements for payroll taxes, social contributions, and reporting. Accurate withholding, registration, and timely payments are critical to avoid penalties and ensure legal operation.