Individuals > Double taxation >
Resident and non–resident individuals are both liable to income tax.
Resident individuals are liable to personal income tax during the tax period, for all sources of incomes generated on a global scale, hence in Albania and elsewhere, (principle of residency).
When a resident individual generates incomes from sources outside the Albanian territory, the personal income tax payable by the resident, in relation to these incomes, is reduced (credited) to the extensive amount of the foreign tax paid on those incomes. The amount of the foreign tax payable shall be attested by an authentic document.
The reducing of the personal income tax must not exceed the tax payable on income from the foreign sources, if such income is made in the Republic of Albania.
The tax reduction is particularly calculated with respect to any foreign country where the incomes are benefited from.
Non-resident individuals are subject to personal income tax during the tax period, for the sources of income, realized on the territory of the Republic of Albania (principle of source).
Tax income of residents generated outside the Republic of Albania.
If you are a resident, but your incomes are generated by a source outside the Republic of Albania, you will pay the tax in the Republic of Albania for the global incomes generated based on the provisions of the Law "On income tax", as amended.
If you receive passive incomes (dividends, interest, royalties) outside the Republic of Albania and you benefit from the tax treaties in force, the amount of tax paid abroad will be determined on the tax agreement.The amount of the foreign tax, certified by relevant documents, will be deducted from the tax payable in Albania, in accordance with the applicable legal provisions in force.
Eliminating the double taxation for residents
If you are a resident and you generate incomes outside the Republic of Albania territory, you must obtain an Attestation of Residence (Certificate of Residence), issued by the Albanian Tax Administration. The attestation of residence serves the taxpayer to demonstrate that he pays taxes for global incomes in Albania, so that the tax authorities of the foreign country where the incomes generate from can apply the Agreement, by applying, as the case may be, the reduced rate or by not taxing those incomes.