Introduction: Albania, the Balkan Silicon Valley in the Making
Over the past decade, Albania has quietly evolved from a low-cost outsourcing destination into one of Europe’s emerging tech ecosystems. With its young digital workforce, low operational costs, and strategic location, the country is now actively incentivizing tech startups and IT companies with generous tax benefits in 2025.
If you’re a tech founder, a freelance developer, or a foreign investor eyeing Albania as your next base, this article explains why the Albanian tax system can be a game-changer for your business.
Why Albania Is an Attractive Destination for IT Companies in 2025
Low labor costs with skilled tech talent
Government-backed tax incentives for software and IT services
Simplified small business registration
Fast-growing digital infrastructure
Member of CEFTA & applying EU-aligned economic policies
0% corporate income tax for small IT businesses
Let’s dive into how taxes (or the lack of them) can help boost your bottom line.
1. Special Tax Regime for IT Companies (2025)
Albania’s government officially classifies software development and IT services as “Innovation & Knowledge-Based Activities”, making them eligible for:
0% Corporate Income Tax (CIT)
As of 2025, IT businesses with annual revenue up to 14 million ALL (~€140,000) pay zero income tax on their profits.
| Annual Turnover | CIT Rate for IT Sector |
| Up to 14 million ALL | 0% |
| Above 14 million ALL | 15% (on profit) |
Condition:
The company must be registered with “IT activity codes” in the National Business Center (QKB).
2. Reduced VAT for Software Development
Albania introduced a 0% VAT rate on software production and development services provided by Albanian IT companies.
What this means:
- If your company builds software (SaaS, mobile apps, web tools), you are exempt from collecting VAT.
- Outsourcing companies that export IT services abroad also benefit from 0% VAT on exports.
Note: If you sell physical products or bundled hardware-software, standard VAT (20%) may still apply.
3. Dividend Tax in Albania (2025)
Even if your company pays 0% CIT, you still owe 8% dividend tax if you withdraw profits for personal use.
| Tax Type | Rate |
| Dividend Tax | 8% |
Smart Strategy: Many founders leave profit in the company or reinvest to delay dividend tax.
4. Freelance IT Professionals & Solo Founders
If you’re operating without a company and are registered as a natural person (NIPT):
| Tax Type | Rate |
| Personal Income Tax (PIT) | 15% Flat |
| Social + Health Contributions | 23% |
You’re taxed on net income (revenue minus deductible expenses).
Example:
- Gross Revenue: 3,000,000 ALL/year
- Allowable Expenses: 600,000 ALL
- Net Taxable Income: 2,400,000 ALL
- PIT: 360,000 ALL
- Contributions: ~690,000 ALL
- Net Take-home: ~1.35 million ALL/year
Tip: Many IT freelancers register as sole proprietors under IT activity codes to benefit from simplified accounting and low tax burden.
5. Eligible Activities Under the IT Tax Incentive
Your business must be engaged in one or more of the following to qualify for IT tax incentives:
Custom Software Development
Web/Mobile Application Development
Cloud-based Solutions
IT Consultancy Services
AI & Machine Learning Tools
FinTech or SaaS Platforms
Cybersecurity Services
Blockchain Development
You must classify your business correctly under “IT Activity Codes” when registering with QKB.
6. Cost of Hiring in Albania for IT Roles
| Role | Average Gross Monthly Salary (ALL) |
| Junior Developer | 60,000 – 90,000 |
| Mid-Level Engineer | 90,000 – 150,000 |
| Senior Developer | 150,000 – 250,000+ |
| UI/UX Designer | 80,000 – 140,000 |
Employer Contributions: ~16.7% extra on gross salary
Employee Contributions: ~11.2% deducted from salary
Still far more affordable than most of Europe.
7. Business Setup Process for IT Founders
Setting up an IT company in Albania is fast and inexpensive.
Required Steps:
- Choose legal form: LLC (Shoqëri me Përgjegjësi të Kufizuar – Sh.p.k) is most common
- Register with QKB (https://www.qkb.gov.al)
- Open a business bank account
- Apply for NUIS (tax ID) and VAT if applicable
- Register with tax authorities and social insurance office
Timeframe: 3–5 business days
Cost: Registration fees + legal notary (~€100–200)
8. Can Foreigners Start an IT Company in Albania?
Yes! Albania allows 100% foreign ownership of companies. You do not need a local partner, and registration is open to non-residents.
Foreign founders can:
- Register a company remotely or in person
- Apply for residence permits based on investment or employment
- Repatriate profits without restrictions
9. Digital Nomad & Remote Work Incentives (Upcoming)
Though Albania doesn’t yet have an official digital nomad visa, it:
- Allows long stays with flexible visas (tourist/residence/investment)
- Doesn’t tax foreign income unless you’re tax resident (183+ days)
- May introduce a Digital Nomad Law by 2026 (under discussion)
This makes Albania a grey-zone tax haven for many remote tech workers in 2025.
10. Risks, Fine Print & What to Avoid
Registering under the wrong NACE/IT code will disqualify you from 0% CIT
Late tax filings = heavy fines
Not separating personal and business accounts is a red flag during audits
Foreign exchange earnings must be declared properly if repatriated
Best Practice: Hire a licensed Albanian accountant who understands the IT sector.
Conclusion: Tax Smart, Code Hard
Albania’s tax framework for IT companies in 2025 is one of the most founder-friendly in all of Europe. Whether you’re launching a SaaS startup in Tirana, building a remote team in Durrës, or freelancing from Vlora’s coast, Albania rewards you for building in tech.
Between 0% corporate tax, VAT exemptions, and affordable tech talent, it’s no wonder that Albania is fast becoming the next digital frontier in the Balkans.
0 Comments