2024 Investment Climate Statements: Albania

Policies Towards Foreign Direct Investment

Albania maintains a liberal foreign investment regime designed to attract FDI. The Law on Foreign Investments outlines specific protections for foreign investors and allows 100 percent foreign ownership of companies, except in the areas of domestic and international air passenger transport and television broadcasting. Albanian legislation does not distinguish between domestic and foreign investments.

The Law on Strategic Investments approved in 2015 offers incentives and fast-track administrative procedures, depending on the size of the investment and number of jobs created, to both foreign and domestic investors. The law deadline was postponed several times and the last amendment that entered into force in late April 2014 extended its deadline from December 2023 to through December 2024.

The Albanian Investment Development Agency (AIDA) is the entity responsible for promoting foreign investments in Albania. Potential U.S. investors in Albania should contact AIDA to learn more about services AIDA offers to foreign investors ( Homepage – AIDA ). The Law on Strategic Investments stipulates that AIDA, as the Secretariat of the Strategic Investment Council, serves as a one-stop-shop for foreign investors, from filing the application form to granting the status of strategic investment/investor. Despite supporting legislation, very few foreign investors have benefited from the “Strategic Investor” status, and almost all projects have been granted to domestic companies operating in the tourism sector. Foreign investors that apply for the status of strategic investor cite that responses from AIDA are slow.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic investors have equal rights of ownership of local companies, based on the principle of “national treatment.” There are only a few exemptions regarding ownership restrictions:
Domestic and international air passenger transport: foreign interest in airline companies is limited to 49 percent ownership by investors outside the Common European Aviation Zone, for both domestic and international air transportation.

Audio and audio-visual broadcasting: An entity, foreign or domestic, cannot hold more than 40 percent of shares in a national audio or audio-visual broadcasting company, and not more than 20 percent of shares in a second national audio or audio-visual broadcasting company. Additional restrictions apply to the regional or local audio and audio-visual licenses.
Agriculture: No foreign individual or foreign incorporated company may purchase agricultural land, though land may be leased for up to 99 years. However, if the company registers in Albania, this limitation on agricultural land does not apply.

Albania lacks an investment screening mechanism for inbound FDI. There are efforts to introduce an investment screening mechanism in the legislation for foreign investments. A new provision in the Petroleum Law, introduced in 2017 allows the government to reject a petroleum-sharing agreement or the sale of shares in a petroleum-sharing agreement to any prospective investor due to national security concerns.

Albanian law permits private ownership and the establishment of enterprises and property. To operate in certain sectors, licenses are required but foreign investors do not require additional permission or authorization beyond that required of domestic investors. Commercial property may be purchased, but only if the proposed investment is worth three times the price of the land. There are no restrictions on the purchase of private residential property. Foreigners can acquire concession rights on natural resources and resources of the common interest, as defined by the Law on Concessions and Public Private Partnerships.

Other Investment Policy Reviews

Albania underwent a third-party investment policy review by the WTO in 2023, available at WTO | Trade Policy Reviews – gateway . In November 2017, the United Nations Conference on Trade and Development (UNCTAD) completed the first Investment Policy Review of South-East European (SEE) countries, including Albania:   https://unctad.org/publication/investment-policy-review-south-east-europe   .

According to  Environmental Justice Atlas  , 36 international and domestic civil society organizations sent an open letter to Prime Minister Rama highlighting the threat of irreversible damage the Vlora International Airport Project poses to the Vjose-Narta Protected Landscape. The EU noted in its Progress Report that the legislation on Strategic Investment raises concerns for the protection of biodiversity, as it may lead to large tourism and industrial investments in protected areas. The European Commission recommended Albanian authorities take immediate measures to review and improve environmental and strategic impact assessments on existing and planned projects, plans, and programs, especially in the hydropower, construction, tourism, transport, and mining sectors.

Business Facilitation

The National Business Center (NBC) serves as a one-stop shop for business registration. All required procedures and documents are published online  https://qkb.gov.al/information-on-procedure/business-registration/initial-registration/  . Registration may be done in person or online via the e-Albania portal. Many companies choose to complete the registration process in person, as the online portal requires an authentication process and electronic signature and is only available in the Albanian language. When a business registers in the NBC it is also automatically registered with the Tax Office, Labor Inspectorate, Customs, and the respective municipality. According to the 2020 World Bank Doing Business Report, it takes four and a half days, and five different procedures, to register a business in Albania.

Outward Investment

Albania neither promotes nor incentivizes outward investment, nor does it restrict domestic investors from investing abroad.

Transparency of the Regulatory System

Albania’s legal, regulatory, and accounting systems have improved in recent years, but there are still many challenges. Persistent corruption, uneven enforcement of legislation, cumbersome bureaucracy, distortion of competition, and a lack of transparency hinder the business community.
Albanian legislation includes rules on disclosure requirements, formation, maintenance, and alteration of firms’ capitalization structures, mergers and divisions, takeover bids, shareholders’ rights, and corporate governance principles.

The Law on Accounting and Financial Statements includes reporting provisions related to international financial reporting standards (IFRS) for large companies, and national financial reporting standards for small and medium enterprises. Albania meets minimum standards on fiscal transparency, and debt obligations are published by the Ministry of Finance and Economy. Albania’s budgets are publicly available, substantially complete, and reliable.

In August 2020, Albania approved the law for the establishment of the register of the Ultimate Beneficiary Owners. The law aims to ensure transparency on the ultimate beneficiary owners, who directly and indirectly own more than 25 percent of shares, voting rights, or ownership interests in all entities registered to do business in Albania, and was adopted following the recommendations of the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (F).

According to the World Bank’s Global Indicators of Regulatory Governance  the rulemaking process in Albania meets the minimum requirements of transparency. Ministries and regulatory agencies develop forward regulatory plans that include changes or proposals intended to be adopted within a set timeframe. The hierarchy of laws in Albania is Constitution, international ratified agreements/conventions, laws, and normative acts/executive orders of the Council of Ministers. Law on notification and public consultation requires Albania to publish draft laws and regulations for public consultation or notification and sets clear timeframes for these processes. Such draft laws and regulations are published at the following page:  konsultimipublik.gov.al/Error/Error404?aspxerrorpath=/” /t . The business community frequently complains that final versions of laws and regulations fail to address their comments and concerns and that comment periods are frequently not respected.

The Albanian Assembly  publishes a list of both proposed and adopted legislation Kuvendi i Shqipërisë (parlament.al) . The proposed laws are accompanied with a report on the proposed changes, reasons, and the impact of the proposed laws or amendments. All laws, by-laws, regulations, decisions by the Council of Ministers (the government), decrees, and any other regulatory acts are published on the National Publication Center at the following site:   https://qbz.gov.al/  

International Regulatory Considerations

Albania acceded to the WTO in 2000 and the country notifies the WTO Committee on Technical Barriers to Trade of all draft technical regulations. Albania signed a Stabilization and Association Agreement (SAA) with the EU in 2006. The EU agreed to open accession talks on March 25, 2020, and the country held its first Inter-Governmental Conference (IGC) in July 2022, marking the official opening of accession talks. Albania has long been involved in the gradual process of legislation approximation with the EU acquis. This process is expected to accelerate now that the country has opened accession negotiations. In November 2023, the EU finalized the screening process which defined the level of alignment with EU rules and policies and Albania’s preparedness to implement the remaining parts and fulfil the criteria for EU membership. Albania is waiting to open the chapters for negotiations.

Legal System and Judicial Independence

The Albanian constitution provides for the separation and balancing of legislative, executive, and judicial branches, thereby supporting the independence of the judiciary. The civil court system consists of district courts, appellate court, and the High Court (the supreme court). The district courts are organized in specialized sections according to the subject of the claim, including civil, family, and commercial disputes.

The administrative courts of first instance, the Administrative Court of Appeal, and the Administrative College of the High Court adjudicate administrative disputes. The Constitutional Court reviews cases related to the constitutionality of legislation and protects the constitutional rights of citizens and legal entities.

Investors in Albania are entitled to judicial protection of legal rights related to their investments. Foreign investors have the right to submit disputes to an Albanian court. In addition, parties to a dispute may agree to arbitration. Many foreign investors complain that judicial corruption and inefficient court procedures undermine judicial protection in Albania and seek international arbitration to resolve disputes. It may be beneficial to U.S. investors to consider including binding international arbitration clauses in any agreements with Albanian counterparts.

Laws and Regulations on Foreign Direct Investment

There is no one-stop-shop that lists all legislation, rules, procedures, and reporting requirements for investors. However, foreign investors should visit the Albania Investment Development Agency webpage (    www.aida.gov.al     ), which offers wide-ranging information for foreign investors.

There are limited exceptions to this liberal investment regime, most of which apply to the purchase of real estate. Agricultural land cannot be purchased by foreigners and foreign entities but may be leased for up to 99 years. Investors can buy agricultural land if registered as a commercial entity in Albania. Commercial property may be purchased, but only if the proposed investment is worth three times the price of the land. There are no restrictions on the purchase of private residential property.

To boost investments in strategic sectors, the GOA approved a new law on strategic investments in May 2015. Under the new law, a “strategic investment” may benefit from either “assisted procedure” or “special procedure” assistance from the government to help navigate the permitting and regulatory process. Despite supporting legislation, very few foreign investors have benefited from the “Strategic Investor” status, and the vast majority of projects have been granted to domestic companies operating in the tourism sector. The insignificant share of foreign investors that have benefited from the status of strategic investors has fueled the perception among foreign investors that the law has benefited mostly domestic companies with strong ties to the ruling majority.

Albania’s tax system does not distinguish between foreign and domestic investors. Informality in the economy, which the IMF estimates to be around one third of the total economy, presents challenges for tax administration.

Visa requirements to obtain residence or work permits are straightforward and do not pose an undue burden on potential investors. Generally, U.S. passport holders are entitled to a one year stay in Albania without a residence permit, a special provision Albania reaffirmed in March 2022. The GOA approved a new Law on Foreigners in July 2021, which partially aligns the domestic legislation, including that on migration, with EU Directives. The new law introduces a single application procedure for permits in general. For investors there is a special permit called “Unique Investor Permit.” Foreign investors are issued a 2-year unique investor permit if they invest in Albania and meet certain criteria, including a quota ratio of one to five, of foreign and Albanian workers.

Competition and Antitrust Laws

The Albanian Competition Authority (  http://www.caa.gov.al/?lng=en    ) is the agency that reviews transactions for competition-related concerns. The Law on Protection of Competition governs incoming foreign investment whether through mergers, acquisitions, takeovers, or green-field investments, irrespective of industry or sector. The law is broadly in line with the EU legislation on competition. In the case of share transfers in insurance, banking and non-banking financial industries, the Financial Supervisory Authority AMF :: Autoriteti i Mbikëqyrjes Financiare  and the Bank of Albania (   https://www.bankofalbania.org/   ) may require additional regulatory approvals. Transactions between parties outside Albania, including foreign-to-foreign transactions, are covered by the competition law, which states that its provisions apply to all activities, domestic or foreign, that directly or indirectly affect the Albanian market.

Expropriation and Compensation

The Albanian constitution guarantees the right of private property. According to Article 41, expropriation or limitation on the exercise of a property right can occur only if it serves the public interest and with fair compensation. During the post-communist period, expropriation has been limited to land for public interest, mainly infrastructure projects such as roads, energy infrastructure, water works, airports, and other facilities. Compensation has generally been reported as being below market value and owners have complained that the compensation process is slow, unfair and the institutions fail to observe proper procedures. There have been reports of extortion of U.S. businesses connected with threats of property expropriation. Civil courts are responsible for resolving such complaints.

There are many ongoing disputes regarding property confiscated during the communist regime. Identifying ownership is a longstanding problem in Albania that makes restitution for expropriated properties difficult. The restitution and compensation process started in 1993 but has been slow and marred by corruption. Many U.S. citizens of Albanian origin have been engaged in long-running restitution disputes. Court cases go on for years without a final decision, causing many to refer their cases to the European Court of Human Rights (ECHR) in Strasbourg, France. A significant number of applications are pending for consideration before the ECHR. Even after settlement in Strasbourg, enforcement remains slow.

To address the situation, Albania approved new property compensation legislation in 2018 that aims to resolve pending claims for restitution and compensation. The 2018 law reduces the burden on the state budget by changing the cash compensation formula. The legislation presents three methods of compensation for confiscation claims: restitution; compensation of property with similarly valued land in a different location; or financial compensation. It also set a ten-year timeframe for completion of the process. In February 2020, Albanian Parliament approved the Law on the finalization of the transitory process of property deeds in the Republic of Albania, which aims to finalize land allocation and privatization processes contained in 14 various laws issued between 1991 and 2018. Despite efforts, property issues continue to be cumbersome and potential investors should exercise caution when dealing with property transactions. Corruption, lack of transparency and inefficiency in procedures, lack of an efficient integrated land management system, finalization of digitalization and reconciliation of legal titles and cadastral maps, and lack of completion of the first property registration are among the major property challenges. In its 2023 progress report for Albania, the EU noted that the legalization of informal construction, expropriation, and demolition of construction must strictly adhere to the legal framework in place, including the principle of transparency and due judicial process.

Albania has generally not engaged in expropriation actions against U.S. investments, companies, or representatives. There have been limited cases in which the government has revoked licenses, specifically in the mining and energy sectors, based on contract violation claims. Several cases have ended up in international arbitration, with arbitration awards rendered both in favor and against the government.

The law on Strategic Investments, approved in 2015, empowers the government to expropriate private property for the development of private projects deemed special strategic projects. Despite the provision that the government would act when parties fail to reach an agreement, the clause is a source of controversy because it entitles the government to expropriate private property in the interest of another private party. The expropriation procedures are consistent with the law on expropriation, and the cost for expropriation would be incurred by the strategic investor. The provision has yet to be exercised.

Dispute Settlement

Albania is a member state to the International Centre for the Settlement of Investment Disputes (ICSID Convention) and is a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention). In 2000, Albania ratified the 1961 European Convention on International Commercial Arbitration (Geneva Convention).
Under the Albanian Constitution, ratified international agreements prevail over domestic legislation. In July 2023, Albania approved a new law on arbitration, based on UNCITRAL model law on International Commercial Arbitration. The law applies to both domestic and international arbitration. An arbitration is considered international when parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different states; the place of arbitration according to the arbitration agreement, or the country with which the dispute, subject to the arbitration, is most closely connected, is outside Albania; or a substantial part of the contractual obligations, subject of the dispute, are performed outside Albania. The recognition and enforcement of international arbitration award is done in compliance with the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, ratified by Albania in 2000. The concerned party shall submit the request for recognition and enforcement before the competent Albanian Court of Appeal of the General Jurisdiction. The recognition of an international arbitration award can be rejected only for the reasons listed in Article V of the New York Convention.

Investor-State Dispute Settlement

Albania signed a Bilateral Investment Treaty with United States in 1995, which entered into force in 1998. Foreign investors should opt to include international arbitration clauses in their contracts with Albanian parties including the government because the court system is not responsive or due to concerns about corruption.

Over the past ten years, there have been three investment disputes between the GOA and U.S. investors, two of which resulted in international arbitration. There is an active claim at the  International Center for Settlement of Investment Disputes (ICSID)  by a U.S. investor that holds a minority stake in the company under the Albania – United States of America Bilateral Investment Treaty. Despite Albania’s stated desire to attract and support foreign investors, U.S. investors in disputes with Albania reported a lack of productive dialogue with government officials, who frequently displayed a reluctance to settle the disputes before they escalated to the level of international arbitration, or before the international community exerted pressure on the government to resolve the issue. U.S. investors in Albania should consider including binding arbitration clauses in any agreements with Albanian counterparts.

International Commercial Arbitration and Foreign Courts

An alternative to dispute settlement via the courts is private arbitration or mediation. Parties can engage in arbitration when they have agreed to such a provision in the original agreement, when there is a separate arbitration agreement, or by agreement at any time when a dispute arises. In July 2023, Albania approved a new law on arbitration, based on UNCITRAL model law on International Commercial Arbitration. The law applies to both domestic and international arbitration. The concerned party shall submit the request for recognition and enforcement before the competent Albanian Court of Appeal of the General Jurisdiction. The recognition of an international arbitration award can be rejected only for the reasons listed in Article V of the New York Convention. Mediation is also available for resolving all civil, commercial, labor and family disputes, consumer rights, disputes between public and private entities, and intellectual property.

Bankruptcy Regulations

Albania maintains adequate bankruptcy legislation, though corrupt and inefficient bankruptcy court proceedings make it difficult for companies to reorganize or discharge debts through bankruptcy.
A 2016 Law on bankruptcy aimed to close loopholes in the insolvency regime, decrease unnecessary market exit procedures, reduce fraud, and ease collateral recovery procedures. The Bankruptcy Law governs the reorganization or liquidation of insolvent businesses. It sets out non-discriminatory and mandatory rules for the repayment of the obligations by a debtor in a bankruptcy procedure. The law establishes statutory time limits for insolvency procedures, professional qualifications for insolvency administrators, and an Agency of Insolvency Supervision to regulate the profession of insolvency administrators. The bankruptcy law provides for equal rights for the local and foreign creditors in a bankruptcy proceeding in Albania.

According to the World Bank’s 2020 Doing Business Report, Albania ranked 39th out of 190 countries in the insolvency index. A referenced analysis of resolving insolvency can be found at the following link:
https://documents.worldbank.org/en/publication/documents-reports/documentdetail/255991574747242507/doing-business-2020-comparing-business-regulation-in-190-economies-economy-profile-of-albania  

Investment Incentives

The Albanian Investment Development Agency is the best source to find incentives offered across a variety of sectors. To boost investments in strategic sectors, Albania approved a Law on Strategic Investments in May 2015 that outlines the criteria, rules, and procedures that state authorities employ when approving a strategic investment. Albania extended the deadline to apply to qualify as a strategic investment several times. The law expired in December 2023, but Parliament is seeking to extend the deadline to December 2024. The law does not discriminate between foreign and domestic investors. To date, most projects approved under this law have been granted to domestic investors in the tourism sector.

The following sectors are defined as strategic sectors: mining and energy, transport, electronic communication infrastructure, urban waste industry, tourism, agriculture (large farms) and fishing, economic zones, and development priority areas.

Major Incentives Albania Offers:

Energy and Mining, Transport, Electronic Communication Infrastructure, and Urban Waste Industry: Investments greater than EUR 30 million enjoy the status of assisted procedure, while investments of EUR 50 million or more enjoy special procedure status.
The GOA offers power purchasing agreements (PPA) for 15 years for electricity produced from hydroelectric plants with an installed capacity of less than 15 megawatts. The GOA also offers feed-in-premium tariff for solar installations with installed capacity of less than two megawatts and for wind installation of less than three megawatts through a competitive tendering process. The Energy Regulatory Authority (ERE) conducts an annual review of the feed-in-premium tariffs for wind and photovoltaic parks. The ERE http://www.ere.gov.al/  also conducts an annual review of the feed-in-tariffs for small hydroelectric plants with an installed capacity of less than 15 megawatts. Certain machinery and equipment imported for the construction of hydropower plants are VAT exempt. Imports of machinery and equipment for investments of greater than EUR 400,000 for small wind and solar parks with an installed capacity of less than three megawatts and two megawatts, respectively, enjoy a VAT exemption. Imports of hot water solar panels for household and industrial use are also VAT exempt.

Tourism and Agritourism:  Investments of five million euro or more enjoy the status of assisted procedure, while investments greater than EUR 50 million enjoy the status of special procedure. In 2018, Albania introduced new incentives to promote the tourism sector. International hotel brands that invest at least USD 8 million for a four-star hotel and USD 15 million for a five-star hotel are exempt from property taxes for 10 years, pay no profit taxes, and pay a VAT of 6 percent for any service on their hotels or resorts. For all other hotels and resorts, Albania reduced the VAT on accommodation from 20 percent to 6 percent. Profit taxes for agritourism ventures were reduced to 5 percent from 15 percent previously, while VAT for accommodation is now 6 percent, down from 20 percent. Five-star hotels and agritourism facilities are exempt from the tax on impact on infrastructure while both four- and five-star hotels are exempt from tax on buildings.

Agriculture (Large Agricultural Farms) and Fishing:  Investments greater than EUR three million that create at least 50 new jobs enjoy the status of assisted procedure, while investments greater than EUR 50 million enjoy the status of special procedure. In addition, Albania offers a wide range of incentives and subsidies for investments in the agriculture sector. The funds are a direct contribution from the state budget and the EU Instrument of Pre-Accession for Rural Development Fund (IPARD.). The program is managed by the Agricultural and Rural Development Agency (  http://azhbr.gov.al/   ). Agricultural inputs, agricultural machinery, and veterinary services are exempt from VAT. The GOA offers other subsidies to agricultural farms and wholesale trade companies that export agricultural products.
Some incentives offered in the agriculture sector include: Zero VAT for agricultural machinery and for fishing industry items including ships, nets, electronic equipment, refrigerators, ship engines, etc. Zero tariff for the registration and compulsory vaccination of livestock. Zero tax for the purchase of diesel from fishing vessels. A reduction of profit tax up to 5 percent for Agricultural Cooperative Societies and 10 percent VAT for supply of agricultural inputs including chemical fertilizers, pesticides, seeds, and seedlings.

Development Priority Areas:  Investments greater than EUR one million that create at least 150 new jobs enjoy the status of assisted procedure. Investments greater than EUR 10 million that create at least 600 new jobs enjoy the status of special procedure.

Foreign Tax Credit: Albania applies foreign tax credit rights even in cases where no double taxation treaty exists with the country in which the tax is paid. If a double taxation treaty is in force, double taxation is avoided either through an exemption or by granting tax credits up to the amount of the applicable Albanian corporate income tax rate (currently 15 percent). In 2019, Albania reduced the dividend tax from 15 percent to 8 percent.

Corporate Income Tax Exemption:  Film studios and cinematographic productions, licensed and funded by the National Cinematographic Center, are exempt from corporate income tax.
Loss Carry Forward for Corporate Income Tax Purposes:  Fiscal losses can be carried forward for three consecutive years (the first losses are used first). However, the losses may not be carried forward if more than 50 percent of direct or indirect ownership of the share capital or voting rights of the taxpayer is transferred (changed) during the tax year.

Lease of Public Property:  Albania can lease public property of more than 500 square meters or grant a concession for the symbolic price of one euro if the properties will be used for manufacturing activities with an investment exceeding EUR 10 million, or for inward processing activities. Albania can also lease public property or grant a concession for the symbolic price of one euro for investments of more than EUR two million for activities that address certain social and economic issues, as well as activities related to sports, culture, tourism, and cultural heritage. Criteria and terms are decided on an individual basis by the Council of Ministers.

Incentives for the Manufacturing Sector and ICT:  Albania reduced the profit tax from 15 percent to 5 percent for software development companies and the automotive industry. Manufacturing activities are exempt from 20 percent VAT on imports of machinery and equipment. The GOA offers a one-euro symbolic rent for government-owned property (land and buildings) for investments exceeding USD 2.7 million that create a minimum of 50 jobs. No VAT is charged for products processed for re-exports. Employers are exempt from paying social security tax for one year for all new employees.

The manufacturing sector obtains VAT refunds immediately in the case of zero risk exporters, within 30 days if the taxpayer is an exporter, and within 60 days in the case of other taxpayers.Apparel and footwear producers are exempt from 20 percent VAT on raw materials if the finished product is exported. In 2011, Albania also removed customs tariffs for imported apparel and raw materials in the textile and shoe industries (e.g., leather used for clothes, cotton, viscose, velvet, sewing accessories, and similar items).

Technological and Development Areas (TEDA):  The Law on Economic Development Areas provides fiscal and administrative incentives for companies that invest in this sector and for firms that establish a presence in these areas. Major incentives include:

• Capital expenses are 120 percent deductible during a period of two years if developers and users invest in TEDA within three years of its operation.
• Developers and users are also exempted from 50 percent of the profit tax rate (currently at a rate of 15 percent) for a period of five years.
• A developer’s project is exempted from infrastructure taxes.
• Buildings in TEDA are exempted from real estate taxes for a period of five years.
• Buildings transferred to the TEDA are not subject to the transfer tax on real estate.
• Wages and social costs are 150 percent deductible for the first year, and new expenses for wages and social costs compared to the previous year are 150 percent deductible for the subsequent years.
• Training costs are doubly deductible for a period of 10 years. Research and Development costs are doubly deductible for a period of ten years.
• Albanian goods that enter TEDA are exempted from VAT taxation which is 20 percent.
• Goods can be transported from one TEDA to another without paying custom duties or VAT.
• From the moment goods enter Albania, they are exempted from custom duties and VAT.

For more information on TEDA-s, please refer to TEDA – AIDA 

Foreign Trade Zones/Free Ports/Trade Facilitation

Albania has no functional duty-free import zones or free trade zones, although legislation exists for their creation. The May 2015 amendments to the Law on the Establishment and Operation of Technological and Development Areas (TEDAs) created the legal framework to establish TEDAs, defining the incentives for developers investing in the development of these zones and companies operating within the zones.

Performance and Data Localization Requirements

There are no performance requirements for foreign investors or minimum requirements for domestic content in goods or technology. Investment incentives are equally available to foreign and domestic investors. Investments in certain sectors require a license or authorization and procedures are similar for foreign and domestic investors.

GOA approves an annual quota of foreign workers following a needs assessment by sector and profession. However, work permits for staff that occupy key positions, among other categories, can be issued outside the annual quota.

Albanian legislation regulating the functioning of the National Agency of Information (AKSHI) requires that every company contracted by the government to develop a computer system provide the source code and all related technical documents of the system. In addition, every government system and its data must be hosted at the government datacenter maintained by AKSHI.

There are no legal restrictions to transferring business-related data abroad, except for a few cases that need prior consent. There are more stringent requirements for personal data. Albania has comprehensive legislation for the protection of personal data. Based on Albanian legislation, international transfers of personal data in countries deemed to have an adequate level of protection are not restricted. However, companies must notify the Commissioner in advance of any processing of personal data and any intention to transfer data to third countries. This applies to companies in foreign jurisdictions that operate in Albania using any means located within the country. To transfer data to third countries that do not have an adequate protection level, companies need prior authorization from the Commissioner. Countries with an adequate protection level include EU member states, European Economic Area countries, members of the 1981 Convention and related protocol, and all countries approved by the European Commission.
Many foreign companies operating in Albania that process sensitive data opt to keep their data in Albania.

Real Property

Individuals and investors face challenges with protection and enforcement of property rights in Albania. Despite improvements with the recording system, the inadequate state of the data remains a risk for title security and a constraint to investment and the property sector is identified by the government as one of the most exposed to corruption. In 2020, the GOA established   to obtain property titles are still cumbersome and prone to corruption. To streamline the property management process, Albania established in April 2019 the State Cadaster Agency (ASHK), which merged different agencies responsible for property registration, compensation, and legalization.

According to the European Commission Report 2023 on Albania, which assess the progress of the country into the EU accession path, Albania needs to develop an efficient and integrated land management system and proceed vigorously with the systematic digitalization and diligent reconciliation of legal titles and cadastral maps. The International Property Index, a publication of the assesses that Albania ranks 97th out of 125 countries in their 2023 index on the overall physical property right, 20th out of 25 countries in the Central Eastern Europe and Central Asia region.

The property registration system has improved thanks to international donor assistance, but the process has moved forward slowly as Albania has yet to complete the initial registration of property titles, especially in the southern coastal areas. In total, about 4 million properties have been registered as part of the initial registration process.

Intellectual Property Rights

Although Albania is not included on the U.S. Trade Representative’s (USTR’s) Special 301 Report or Notorious Markets List, intellectual property rights (IPR) infringement and theft persist due to weak legal structures and poor enforcement. Despite progress in the adoption of legislation on copyrights and industrial property rights in the framework of the alignment of the Albanian legislation with the EU Acquis, (Albanian law protects copyrights, patents, trademarks, industrial designs, and geographical indications), counterfeit goods are still present in local markets and shopping malls, including software, garments, machines, and cigarettes. Regulators are often ineffective at collecting fines and prosecutors rarely press charges for IPR theft. It has also improved its position among the 25 Eastern Europe and Central Asia countries, ranking 19th. Furthermore, Albania ranks 70th in the subcategory of patent protection and 23rd in trademark protection, but only 115th in terms of the perception for the protection of intellectual property. According to the American Chamber of Commerce 2023 Business Index, IPR protection has improved compared to the previous year and is not considered a serious concern. U.S. companies should consult an experienced IPR attorney and avoid potential risks by establishing solid commercial relationships and drafting strong contracts. According to the 2023 International Property Right Index, Albania ranks 66th out of 125 countries marking a significant improvement compared to last year.

In April 2022, the parliament adopted amendments to the Law 35/2016 on copyright and other related rights, which further aligns the legal framework with the EU acquis. The amendments also aim to regulate the functioning of Collective Management Organizations (CMOs) including the distribution process and percentage of fees collected by the CMOs. In 2022, GOA adopted the National Strategy for Intellectual Property 2022 – 2025 which aims to further protect and promote IP rights. Amendments to the Albanian Industrial Property Law, introducing new provisions regarding trade secrets and trademarks entered into force in 2021. The most significant change was the transposition of Directive (EU) 2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. In 2019, the Criminal Code was amended to include harsher punishments of up to three years in prison for IPR infringement. Additional amendments to the Criminal Code and Code of Criminal Procedures on enforcement of IP were introduced in 2021. GOA drafted a new law on patents for inventions and utility models to ensure better protection of patents, utility models, and protection certificates due to their important role in industrial property rights. The new law will better align the domestic legislation with the EU legal framework on patents and utility models.

The Customs Directorate is the main authority to protect IPR on imported products and reports on the counterfeited goods it seizes and destroys annually. In 2023, the customs administration suspended the release of 22,500 products suspected of infringing IPR, entirely consisting of garments. In cases of seized goods, the rights holder must provide the burden of proof and therefore must first inspect the goods to determine if they are infringing. The rights holder is also responsible for the storage and destruction of the counterfeit goods.

Albania is party to the World Intellectual Property Organization (WIPO) Patent Law Treaty, the Patent Cooperation Treaty, the Berne Convention, the Paris Convention, and is a member of the European Patent Organization.

For additional information about national laws and points of contact at local IPR offices, please see WIPO’s country profiles at  https://www.wipo.int/directory/en/details.jsp?country_code=AL   .
Statistics on Albania’s can be found at:    https://www.wipo.int/ipstats/en/statistics/country_profile/ 
Resources for Rights Holders – Contact Embassy Tirana on IPR issues:
E-mail: USALBusiness@state.gov 
Country resources:
American Chamber of Commerce
Address: Rr. Deshmoret e 4 Shkurtit, Sky Tower, kati 11 Ap 3 Tirana, Albania
Email:  info@amcham.com.al 
Phone: +355 (0) 4225 9779
Fax: +355 (0) 4223 5350
( www.amcham.com.al  )

Capital Markets and Portfolio Investment

The GOA has adopted policies to promote the free flow of financial resources and foreign investment in Albania.  Both Law no. 7746 dated 1993 on foreign investments and Law 55/2015 on strategic investments in Albania support the principles of equal treatment, non-discrimination, and protection of foreign investments. Foreign investors have the right to expatriate all funds and contributions of their investment.  In accordance with IMF Article VIII, the government and Central Bank do not impose any restrictions on payments and transfers for international transactions.  Despite Albania’s shallow foreign exchange market, banks enjoy enough liquidity to support sizeable positions.  Portfolio investments continue to be a challenge because they remain limited mostly to company shares, government bonds, and real estate as the Tirana stock market remains non-operational.

In recent years, the constant reduction of non-performing loans has allowed commercial banks to loosen lending standards and increase overall lending.  Non-performing loans (NPL) have further dropped at 4.7 percent at the end of 2023 compared to 5 percent one year ago.  Overall lending has steadily increased and at the end of 2023 reached about USD 7.3 billion marking a 4.2 percent increase compared to 2022.  The credit market is competitive, especially since local banks compete to increase their share of the market.  Average interest rates for new loans in domestic currency for the private sector reached 6.4 percent at the end of 2023 down from 6.9 percent at the beginning of the year.  In contrast, interest rate for new loans in euro reached 6.4 percent from 4.8 percent in the first half.  Commercial banks operating in Albania have improved the quality and quantity of services they provide, including a large variety of credit instruments, traditional lines of credit, and bank drafts, etc.  Reacting to the significant increase of inflation during 2022, Bank of Albania (BoA) has tightened its monetary policy increasing in different occasions the base interest rate to 3.25 percent in November 2023 compared to 2.75 percent at the end of the previous year.

Money and Banking System

In the absence of an effective stock market, the domestic banking sector remains the main channel for business financing.  The sector is sound, profitable, and well capitalized. Capital adequacy, at 19.63 percent in December 2023, remains above Basel requirements and indicates sufficient assets for the banking sector.  The Bank of Albania, the country’s Central Bank, is responsible for the licensing and supervision of the banking sector in Albania.  The banking sector is 100 percent privately owned and its total assets have steadily increased, reaching USD 20 billion at the end of 2023 mostly based on loans and investments in securities.  There were only 11 banks in December 2023, down from 16 in 2016.  As of December 2023, the Turkish National Commercial Bank (BKT) remains the largest bank in the market with 24.7 percent market share, followed by Albanian Credins Bank with 16.4 percent, and Austrian Raiffeisen Bank third with 15.3 percent.  The American Investment Bank is the only domestic bank with U.S. shareholders and ranks sixth with 6.2 percent of the banking sector’s total assets.

The number of bank outlets has decreased in recent years also due to bank consolidation.  Both the volume of online and card transactions has increased respectively USD 20 billion and 2 billion with an increase of 28 and 7 percent.

In theory there are no restrictions for foreigners who wish to establish bank accounts as they are not required to prove residency status, but in practice procedures can be burdensome. U.S. citizens must complete a form allowing for the disclosure of their banking data to the IRS as required under the U.S. Foreign Account Tax Compliance Act. The BoA reports that banks in Albania have not lost any correspondent banking relationship.  However, some banks with Albanian shareholders continue to have problems with finding correspondent banks due to their small volume of business.

Foreign Exchange and Remittances

Foreign Exchange

The BoA formulates, adopts, and implements foreign exchange policies and maintains a supervisory role in foreign exchange activities in accordance with the Law on the Bank of Albania No. 8269 and the Banking Law.  Foreign exchange is regulated by the 2009 Regulation on Foreign Exchange Activities no. 70 (FX Regulation).

The BoA maintains a free-floating exchange rate regime for the domestic currency, the Lek. Albanian authorities do not engage in currency arbitrage, nor do they view it as an efficient instrument to achieve competitive advantage.  BoA does not intervene to manipulate the exchange rate but only to increase/decrease the monetary reserves, counteract excessive volatility in the domestic exchange market and implement monetary policy objectives.  Interventions in the domestic exchange market are regulated by the BoA’s decision no. 80 approved in December 2020. In 2023, the BoA increased its interventions in the forex market to mitigate the negative effects on the domestic economy of the rapid appreciation of the domestic currency against the euro. The BoA bought USD 270 million euros in 2023, almost 70 per cent more than in 2022. The domestic currency has further strengthened against the euro during 2023 by about 10 percent.

Foreign exchange is readily available at banks and exchange bureaus.  Preliminary notification is necessary if the currency exchange is several million dollars or more – the law does not specify an amount but provides factors for determining the threshold for large exchanges – as the exchange market in Albania is shallow. BoA’s foreign reserves reached about 6 billion USD at the end of 2023, covering 7.5 months of imports.

Remittance Policies

The Banking Law does not impose restrictions on the purchase, sale, holding, or transfer of foreign currency.  However, local law authorizes the BoA to temporarily restrict the purchase, sale, holding, or transfer of foreign exchange to preserve the foreign exchange rate or official reserves.  In practice, BoA rarely employs such measures.

The Law on Foreign Investment guarantees the right to transfer and repatriate funds associated with an investment in Albania into a freely usable currency at a market-clearing rate.  Only licensed entities (banks) may conduct foreign exchange transfers and waiting periods depend on office procedures adopted by the banks. Both Albanian and foreign citizens entering or leaving the country must declare assets in excess of 1,000,000 lek (USD 9,000) in hard currency and/or precious items.  Failure to declare such assets is considered a criminal act, punishable by confiscation of the assets and up to two years of imprisonment.

Although the Foreign Exchange (FX) Regulation, decision no. 70 on Foreign Exchange Transactions, which dates to 2009, provides that residents and non-residents may transfer capital within and into Albania without restriction, capital transfers out of Albania are subject to certain documentation requirements.  Persons must submit a request indicating the reasons for the capital transfer, a certificate of registration from the National Registration Center, and the address to which the capital will be transferred. Such persons must also submit a declaration on the source of the funds to be transferred.  In January 2015, the FX Regulation was amended and the requirement to present the documentation showing the preliminary payment of taxes related to the transaction was removed. The waiting period for the transfer is usually up to 60 days.

Albania is a member of MONEYVAL, a Financial Action Task Force-style regional body. In October 2023, FATF removed Albania from the category of jurisdictions under increased monitoring, also referred to as the grey list for money laundering, after more than three years since it was included in February 2020.  Albania had previously been on this list and was taken off in 2015.  The 2023 International Narcotics Control Strategy Report (INCSR) kept Albania in the “Major Money Laundering Jurisdictions” category following its inclusion for the first time in 2017.  The category implies that financial institutions of the country engage in currency transactions involving significant amounts of proceeds from international narcotics trafficking.  Furthermore, the U.S. Treasury ranks Albania as “High Risk” (Rank D) for its political and economic situation, defined as high corporate default probability, unavailable corporate financial information, unpredictable debt collection, and risks for intercompany transactions. Albania and the United States do not have a bilateral MLAT, but cooperation is possible through multilateral conventions.

Sovereign Wealth Funds

Albania does not have a Sovereign Wealth Fund. However, in October 2019 the Albanian Parliament approved a law to establish the Albanian Investment Corporation (AIC) which would develop, manage, and administer state-owned property and assets, invest across all sectors by mobilizing state owned, private domestic and foreign capital, and promote economic and social development by investing in line with government-approved development policies.  More information on the AIC is here:   https://aicorporation.al/our-profile .

Privatization Program

The privatization process in Albania is nearing conclusion, with just a few major privatizations remaining. Entities that might represents opportunities for privatization in the future include OSHEE, the state-run electricity distributor, and state-owned oil company Albpetrol. Other sectors might provide opportunities for privatization in the future.

The bidding process for privatizations is public, and relevant information is published by the Public Procurement Agency at     www.app.gov.al    Foreign investors may participate in the privatization program. The Agency has not published timelines for future privatizations.

Climate

Albania has a National Strategy on Climate Change, associated with two Action Plans on Climate Change Mitigation and Adaptation respectively, which are aligned with the UN Policy on Climate Change. Albania signed and ratified the Paris Agreement in 2016 and the Solidarity and Just Transition, Silesia Declaration in 2018.

Albania’s environmental taxes stood at 2.6 percent of GDP in 2022 or 10 percent of total tax revenue. According to the IMF, exemptions in Albania are limited compared to peers. Carbon taxes are applied mostly to fuel for road transport. However, there are no carbon taxes for large industrial polluters. Albania manages its emissions mostly through regulations, imposing a flat tariff by type of activity which is not linked to the carbon content of emissions, and is not part of the European Emission Trading Schemes (EU-ETS). Albania has postponed until January 1, 2026, the entry into force of the increase of the tax on coal.

According to BNEF’s Climatescope, Albania ranks the 17th most attractive market for renewable energy investment   https://www.global-climatescope.org/results/  . Emissions in Albania are among the lowest per capita in Europe in part due to hydropower-dominant electricity generation and in part due to limited levels of industrial manufacturing.

RESOURCES TO REPORT CORRUPTION

Interested parties can file a complaint related to corruption directly to the coordinators embedded in the various institutions or by writing directly to them in the following e-mail,    koordinatori.ak@drejtesia.gov.al    . They can also use the anti-corruption platform by filing a complaint at   shqiperiaqeduam.al   

In addition, businesses can file corruption complaints with any Police Commissariat or Prosecution Office in the district they operate or with the Special Structure Against Organized Crime and Corruption (SPAK) when corruption cases involve high level officials.