Albania’s tax system treats residents and non-residents differently, and the distinction affects how your income is taxed. Whether you live in the country full-time or just earn income from local sources, your tax obligations will depend on your residency status for tax purposes—not your residency permit alone.
Who is considered a tax resident?
You are considered a tax resident in Albania if you spend more than 183 days in the country during a calendar year or if Albania is your primary place of economic or personal activity. This means that even if you hold a residency permit, you are not automatically a tax resident unless your time and financial ties meet the legal criteria.
If you meet the conditions, you are expected to report and pay taxes on your worldwide income. If not, you are only taxed on income earned from within Albania.
Taxation rules for residents
Tax residents in Albania are subject to personal income tax on both domestic and foreign income. This includes income from employment, self-employment, real estate, dividends, or capital gains. Residents who qualify under specific tax programs may benefit from reduced rates or exemptions, depending on their income source and structure.
Annual declarations are required if your income exceeds the legal threshold or comes from more than one source. Income must be reported accurately to avoid penalties, even if it comes from outside Albania.
Taxation rules for non-residents
Non-residents are only taxed on income that is generated inside Albania. This includes salaries earned from work in Albania, profits from Albanian businesses, and income from local rental properties or other assets. If you do not live in Albania full time and do not meet the tax residency threshold, you are not taxed on your foreign income.
However, if you receive payments from within Albania, certain taxes may still be withheld at the source before you receive your income.
Why the difference matters
Understanding whether you are classified as a resident or non-resident is critical for tax planning. Many individuals mistakenly assume that holding a residency permit makes them a tax resident, but the legal definitions are separate. Clarifying your position early helps prevent compliance issues and allows you to structure your finances correctly.