Many entrepreneurs exploring the Albanian market ask whether foreigners can open a sole proprietorship in Albania. The answer depends on the individual’s residency status.
Albanian law permits foreign nationals who are legal residents of Albania to register a sole proprietorship (physical person business). This business form is tied to the individual’s personal tax identification and liability.
However, foreigners who do not hold an Albanian residence permit cannot register a sole proprietorship in their personal name unless they first obtain legal residence in the country.
Why Residency Matters
A sole proprietorship in Albania is a business structure registered under an individual’s name and tax number. Since it is not a separate legal entity, it requires the individual to have a legal and tax presence in Albania. Without a residence permit or tax residency, a foreign national cannot meet this requirement.
For foreigners without Albanian residency, forming a company such as a Limited Liability Company (sh.p.k.) is the recommended alternative. An sh.p.k. can be fully foreign-owned and does not require personal residency in Albania by its shareholder or administrator.
Practical Considerations
Foreign residents who register a sole proprietorship in Albania are personally liable for business debts and obligations. There is no separation between personal and business assets. Additionally, tax obligations are reported under the individual’s personal tax account.
In contrast, registering a company provides limited liability protection and may offer more flexibility for expanding operations or attracting partners.
Foreigners can open a sole proprietorship in Albania if they hold legal residency status.
Non-resident foreigners must choose a different business structure, such as a Limited Liability Company.