Doing business in Albania involves understanding the legal framework, the process of company formation, and the specific opportunities and challenges in the market.
Here is a guide on how to approach doing business in Albania:
1. Business Registration and Legal Structure
The process for registering a new business is generally quick and is overseen by the National Business Center (Qendra Kombëtare e Biznesit – QKB), which functions as a single-window system.
A. Choose a Legal Entity:
The most common structures for foreign investors are:
- Limited Liability Company (LLC or SH.p.k.): The most popular choice, offering limited liability to its partners (members). It requires a minimum share capital of only ALL 100 (Albanian Lek).
- Joint Stock Company (JSC or Sh.A.): Suitable for larger ventures.
- Branch or Representative Office of a Foreign Company: An extension of the parent company, not a separate legal entity.
B. Registration Process:
- Name Reservation: Check and reserve the uniqueness of your company name.
- Document Preparation: Draft the legal documents, such as the Memorandum and Articles of Association.
- Application: Submit the application to the QKB, either in person or online via the e-Albania portal. The QKB automatically registers the business with the tax administration, social and health insurance institute, and the labor office.
- Obtain Documents: Receive the Registration Certificate and the Unique Business Identification Number (NIPT).
- Bank Account: Open a local business bank account.
- Licenses and Permits: Secure any industry-specific licenses, permits, or authorizations required for your sector.
2. Tax and Financial Considerations
Albania offers a generally competitive tax environment, especially for small businesses.
- Corporate Income Tax (CIT): The standard rate is 15%. Reduced rates may apply for specific sectors or small businesses (e.g., 5% or 0% for companies below certain annual turnover thresholds).
- Value Added Tax (VAT): The standard rate is 20%. VAT registration is mandatory if your annual turnover exceeds ALL 10 million (approximately €80,000).
- Dividend Withholding Tax: 8%.
- No Restrictions on Foreign Ownership: Foreign investors are generally allowed 100% foreign ownership of companies in most sectors.
- Profit Repatriation: There are no foreign exchange controls, allowing for the free movement and repatriation of capital and profits.
3. Key Opportunities
Albania’s economy is growing, with several sectors showing high potential for foreign investment:
- Tourism: Significant growth in this sector, particularly in coastal areas and mountain tourism. The government offers incentives for high-end accommodation structures.
- Energy: Untapped potential in renewable energy sources like solar and wind power, as the country seeks to diversify its hydro-power-dominant energy mix.
- Real Estate: High demand in both residential and commercial property, often linked to the tourism boom.
- Information and Communications Technology (ICT) / Software Development: A rapidly growing sector with a young, educated workforce and a reduced corporate tax rate (5% for software companies through the end of 2025).
- Agriculture and Mining: Rich natural resources offer potential in these traditional sectors.
4. Challenges and Risks
Foreign investors should be aware of the following challenges:
- Corruption and Informality: Challenges persist in the public sector, judiciary, and public procurements. A large informal economy can distort competition.
- Property Rights: Obtaining a clear title can be difficult due to historical issues and overlapping claims, which can lead to protracted legal disputes.
- Legal Enforcement: Weak enforcement of contracts and judicial independence can be a challenge.
- Labor Shortages: Emigration of young, skilled labor is creating shortages in some professional fields.
- Regulatory Changes: Frequent changes to fiscal legislation can create uncertainty for long-term planning.
5. Practical Steps for Success
- Professional Advice: Engage a reputable local lawyer and accountant early on to navigate the legal, tax, and registration procedures.
- Market Research: Conduct thorough research to understand local demand, competition, and the specific regulatory landscape for your industry.
- Local Partnerships: Building strong relationships with local partners and stakeholders is crucial for operational success and cultural adaptation.
- Stay Informed: Keep up-to-date on changes in tax laws, employment regulations, and government incentives, which can be frequent.
- Language and Culture: While many business people speak English, learning basic Albanian and understanding local business culture will foster trust and collaboration.