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Scope of application
The VAT is a general tax on consumption of goods and services.
The VAT is applied as a percentage tax on the price of goods and services, and becomes required to be paid after the deduction of the VAT, which directly encumbers on the cost’s elements of the goods and services.
Liable to VAT are:
In the taxable transactions are included:
• The supply of goods, which means, the transfer of the right to dispose as an owner the tangible property
• The supply of services, which means, any transaction that is not a supply of goods, unless otherwise provided for in this law;
• Imports of goods, which means release for free circulation of goods in the Republic of Albania;
• Self-supply of goods and services, means any supply against payment by a taxable person, the supply of goods produced, constructed, extracted, processed, purchased or supply of services within the scope of his business to be used for the needs of this activity.
• Transfer of activity, is considered the transfer against payment or not, or in the form of a contribution in an enterprise of the totality of assets or a part thereof
• Mixed supply.
Is considered as a taxable person:
Attention: The registration is obligatory:
From this rule are exempted taxable persons that perform or expect to perform a turnover smaller than the minimum threshold of registration and import goods under the category of Incorporated Sustainable Activities (ISA) used for economic activity purposes, and not for trading purposes. These taxable persons may import goods of investments for the purpose of their economic activity, subject to the small business regime in accordance with the law, with no obligations to the normal VAT regime.
Characteristics of exporters
The taxable persons conducting exports, whose turnover is smaller than the minimum threshold for registration for VAT, are not obliged to normal the VAT regime.
Exemptions from the regular rule
The taxable persons that render economic activity services, in form of professions such as: lawyer, notary, specialized doctor, dentist, specialized dentist, chemist, nurse, vet, architect, engineers, approved accountant and estate appraiser, or conduct economic activity in the fields of hospitality, despite their annual turnover, are taxable persons registered for VAT.
In case when the responsible person to declare the VAT payment, is a taxable person non residing in Albania as the place where the payment of VAT is carried, then he must assign a tax representative within the Republic of Albania as the person responsible to fulfill VAT payment.
Tax representative is registered at the regional directorate of tax.
You may request the deregistration:
The turnover necessary for calculating the registration threshold includes:
Is not considered as a taxable person:
Supplies of goods and services
The Supply of goods
The supply of goods means the transfer of the right to dispose as an owner of the tangible property.
Are considers also as “Supply of goods” the following transactions:
The Supply of goods against payment
The supply of goods is considered as carried out against payment, entirely or partially, if the direct or indirect supplier gains or has the right to receive payments in cash or in the nature of such supply, from the supplied person or any other person.
Attention: Transferring of the economic activity is not considered as supply of goods or services, but as a passing of the assets from the transferring taxable person to another person, treated as the successor of the transferring person.
The Import of goods
Import of goods, means their release for free circulation within the territory of the Republic of Albania, as defined by the legislation into force.
The Supply of services
Supply of services means every transaction that does not represent supply of goods. Services performed by the employee for his employer for labor purposes, are not considered as a supply of services from the employee.
Place of supply of goods and services
The place of supply of goods
The Place of importation of goods
The place of importation of goods is in Albania, if goods originated from other territories are launched for free circulation within the Albanian customs territory.
Attention: The goods that from the moment of entrance into the Albanian territory, are not launched for free circulation and are subject to specific customs regimes, their place of import is in Albania when they are launched by the above cited regimes and situations within the Albanian customs territory.
The Place of supply of services
The General rule
The place of supply of services is in Albania if the service receiver is a taxable person that behaves as such, and has located in Albania:
The place of supply of services is in Albania, if the service receiver is an untaxable person, while the supplier of service, as a taxable person has located in Albania:
In other cases, according to the status of the service beneficent as taxable or non – taxable, also according to the type of the service rendered, the place of supply of the service is exempted from the general rule.
The emergent of tax, the claimability
The general rule
For internal supplies, the emerging of a tax happens and becomes claimable when:
For the import of goods, the emerging of tax happens and the VAT becomes claimable when the import of goods has already been conducted.
The Specific rules
The Taxable value
The taxable value includes everything that represents the corresponding value received or to be received by the supplier of goods and services from the buyer, client or third party, in return for such supply, including subsidies immediately linked to the price of supplies, no VAT comprised.
The taxable value of goods imported is composed of the value assigned at import by the customs authorities, in accordance with customs legislation into force within the Republic of Albania.
The elements included in the taxable value
The elements excluded from the taxable value
The Tax Rate
The Standard Tax Rate
The standard rate of the added value tax for good and service supplies, applied as a percentage of the taxable value, is of 20 per cent.
The 0% VAT rate
The 0% VAT rate applies for:
Goods inside the passenger personal baggage
The goods meant to be transported inside the passenger personal baggage are considered as exports and are liable to 0% tax rate, when:
There are cases when certain supplies of goods and services, because of their purpose for the general interest or special specifications of the law, although included as liable to VAT, are exempted from such obligation.
For more, please refer to the Law no. 92/2014 “ On the value added tax” articles 51 – 56.
Right to VAT deduction
The principle of VAT deduction
The taxable person has the right to deduct from the estimated VAT for taxable transactions, the amounts of VAT to the extent that the supply of goods and services received are used from the taxable person in function for these taxable transactions
Note: The law on VAT sets out in detail, specific cases of VAT deduction applications.
The conditions under which is applied the right to deduct. The right to deduct emerges and is applied when:
The application of the partial VAT deduction
When goods and service supplies are used by a taxable person, to effect taxable transactions that lead to VAT deduction and to effect transactions that do not lead to such right, then only the portion of VAT linked to the first category of transactions is deductible.
Conditions of VAT refund
A taxable person requests a VAT surplus refund if:
When to submit the refund request?
The exporters have the right to make a request for the refund when their surplus exceeds 400 000 ALL, so no need for the first condition.
Within 30 days from the day of the submission of the request of the exporting taxable person, the tax administration initiates the return procedure.
Within 60 days from the submission of the request of the non-exporting taxable person, the tax administration initiates the return procedure.
Where to submit the request for refund
The taxable persons submit the request for VAT refund near the Directorate of VAT Refund at the General Directorate of Taxes. The request is presented according to the approved form “Request for VAT refund”, which you can be found below.
The refundable Surplus tax payment is effectuated within five days through the state treasury system, in accordance with the rules designated by the Minister of Finance.
The person responsible for VAT payment
Attention: The taxable person who received the supply of service or goods and is aware of, or cannot deny the fact that the VAT required to be paid or part of it on this supply or every previous supply of goods and services has not been paid because of fraud, is liable severally and jointly liable with the supplier to pay the VAT.
Taxable person’s liabilities
The taxable person shall be identified. He shall be provided with a unique identification number (NUIS) at the National Business Center. The number is printed on the certificate issued for this purpose.
The taxable person needs to insure that the invoice has been issued, for:
The Minister of Finance approves the VAT tax invoice, in the form and content.
The taxable person, for services whose value is less than 40 000 ALL, may also issue a simplified invoice even if the buyer does not require the VAT tax voucher.
The taxable person is obliged to maintain the register of purchases and sales, where are registered all purchases and sales carried out during the taxable period (one month). The register of purchases and sales is electronically delivered not later than the 10th of the month subsequent to the declared taxation period.
Every taxable person shall submit the VAT declaration that contains all the information necessary to calculate the claimable VAT, value of VAT that may be reduced, taxable values of actions related to claimable and the deduction of VAT calculation, as well as the value of supplies exempted from VAT.
The Minister of Finance approves the declaration model.
The VAT declaration shall be submitted no later than 14 days after the declared taxation period has ended.
The specific regimes of VAT application in Albania:
The following documentation will show in detail all types of regimes.