Albania is a permanently transforming jurisdiction. Among others, it makes small steps in terms of upgrading its business environment on an ongoing basis. In particular, this can be illustrated by the simplification of business registration procedures and diversified incentives in many industries, including for foreign investors. As a consequence of these efforts, Albania has already become a hub for many startups, many of which are located in the capital city of the country – Tirana.
Apart from favorable business conditions, Albania is also good for its strategic geographical position, the wealth of natural resources, skilled and not costly labor force. Sectors like energy, agriculture, transportation, telecommunications are among the leading industries for investment. Foreign entrepreneurs consider these areas in the first turn to establish a company in Albania.
Advantages of Albanian law for a new Company Incorporation
Investors will benefit from a number of advantages if choosing Albania as a place to operate their businesses:
- Overall fast and easy process of company formation;
- Albania is a party of double taxation treaties with about 40 trading nations;
- Low-cost labor as compared to other European countries;
- Low rate of corporate income tax;
- Strategic geographical location;
- No foreign exchange controls.
Types of Companies
These are major legal forms to choose from in Albania:
- Limited Liability Company is a legal form set up by either natural or legal entities that are liable only to the extent of their contributions into the initial investment in the business.
- Joint Stock Company is formed for large corporations intending to trade shares at the stock market. The investments can be made in cash or property, not in services. The JSC shares may be ordinary or privileged.
- Branch – an extension to the parent company – is typically being established for marketing, promotional, or research purposes. No capital requirement.
Other legal forms to choose from when setting up a company in Albania: general partnership with all partners jointly liable for business obligations and splitting profits; limited partnership organized by two partners, one having full liability and another having limited liability to the extent of his/her investment.
General Requirements for Forming a Company in Albania. Business and Finance Regulations
The Commercial Registry of Albania is the main government agency in charge of the incorporation and formation of companies. The list below highlights the general requirements for setting up a company in Albania:
- Select a unique company’s name and get approval of the business activities from the Commercial Registry of Albania.
- Prepare and submit the Articles of Incorporation and the Memorandum of Association for registration with the Office for the Registration of Companies.
- Open a corporate account in the Albanian bank to deposit the required initial capital.
- Register your business for tax purposes with the Municipality Bureau of Internal Revenue.
- Get your staff registered with health insurance companies and social security authority.
- Receive the certificate of incorporation and a unique company seal.
It is important to notice that a subsidiary company will be liable for all debts and obligations independently. Its mother company will not be in charge of potential losses under any circumstances but can retain control over a newly-formed entity in full.
Company incorporation in Albania is generally a streamlined multi-step process that includes a few very demanding steps, but with the assistance of Prifinance team of experts specializing in offshore company formation, it can be accomplished quickly and easy.
Documents For Company Formation in Albania
To start a process of company formation in Albania, entrepreneurs must supply the following set of documents:
- Statutory documents: Memorandum of Association, Articles of Incorporation, Decision of the Board of Directors or Power of Attorney.
- Bank receipt to confirm that bank account has been opened in the Albanian bank and the required initial investment has been deposited.
- Lease contract to show the legal address of a new company in Albania.
The above documents are generic and a set of documents varies case by case.
Taxation in Albania
Both federal and local governments levy taxes in Albania. The federal government applies income tax on a progressive basis. Government tax compliance rules refer to advance tax payments made quarterly with filing of annual tax return by the end of March the following year.
Corporate income tax is applied at a flat rate of 15%. Value-Added Tax is levied at 20% as a standard rate, with 10% and 6% as reduced rates; some medical services and supply of certain medical products are tax exempt.
Foreign investors setting up businesses in the Albanian free zones benefit from tax exemption for the first five years.
Company Formation in Albania with the Support of Prifinance
If you are interested in incorporating, forming and organizing a business in Albania, please contact Prifinance team and we will take your business efforts to the next level by strictly adhering to the current laws and regulations in Albania.