Payroll Declaration and Social Contributions in Albania

The payroll declaration is a mandatory monthly document that every employer in Albania submits to the Social Insurance Institute (ISSH) and the General Directorate of Taxes (DPT), declaring:

• Names of all active employees;
• Gross salary of each employee;
• Social insurance contributions (employee + employer);
• Health insurance contributions;
• Personal income tax (PIT);
• Net salary (what the employee receives).

Legal basis: Law No. 9136/2003 "On the collection of mandatory social and health insurance contributions" and Law No. 8438/1998 "On income tax" (Articles 8-12 for PIT on wages).

The declaration is filed electronically through the DPT e-Filing platform, every month, by the 20th of the following month.

Source: Law 9136/2003; Law 8438/1998, Articles 8-12. Review date: 9 October 2026.

Every entity with an employment relationship with at least one employee, including:

• LLC (SHPK) — even if it has only the administrator on salary (legal obligation);
• JSC (SHA) — joint-stock companies with employees;
• Sole traders with hired employees;
• Branches of foreign companies with staff in Albania;
• NGOs with employees;
• Public institutions (with specific rules).

Sole traders without employees: No payroll obligation, but if they pay social contributions as self-employed, they declare via the self-employment form.

LLC administrator: Even if the sole partner is the administrator, they must be declared on the payroll at minimum wage or above. Failure to declare results in fines.

Source: Labour Code, Articles 1-12; Law 9136/2003, Article 4.

Payroll calculation follows several steps:

Gross salary — the amount agreed in the employment contract (minimum 40,000 ALL/month).

Deductions from gross salary:
1. Social insurance contributions (employee): 9.5% of gross salary;
2. Health insurance contributions (employee): 1.7% of gross salary;
3. Personal income tax (PIT): according to the progressive scale.

Net salary = Gross salary - employee contributions - PIT.

Employer contributions (additional cost on top of gross salary):
- Social insurance: 15% of gross salary;
- Health insurance: 1.7% of gross salary.

Total contributions: 24.5% social + 3.4% health = 27.9% of gross salary (sum of both parties).

Minimum wage: Currently 40,000 ALL/month — no employee may be declared at a salary below this threshold. The maximum salary ceiling for contribution calculations is set annually by government decree.

Source: DCM No. 809/2023 (minimum wage); Law 9136/2003. Review date: 9 October 2026.

Personal income tax (PIT) from employment is calculated according to the progressive scale:

| Monthly gross salary | PIT rate |
|---------------------|----------|
| 0 — 40,000 ALL | 0% |
| 40,001 — 50,000 ALL | 13% of the amount above 40,000 |
| Above 50,000 ALL | 1,300 ALL + 23% of the amount above 50,000 |

Calculation example (gross salary 80,000 ALL):
- 0% x 40,000 = 0 ALL;
- 13% x 10,000 (difference 40,001-50,000) = 1,300 ALL;
- 23% x 30,000 (difference above 50,000) = 6,900 ALL;
- Total PIT = 8,200 ALL.

Social and health insurance contributions are deducted BEFORE the PIT calculation — the taxable base for PIT is: gross salary minus employee contributions.

Source: Law 29/2023 (replaces Law 8438/1998 from January 2024). Review date: 9 October 2026.

Form E-Sig 025/a is the monthly payroll declaration. It contains:

For each employee:
- Personal identification number (NID);
- Full name;
- Employment start/end date;
- Working days in the month;
- Gross salary;
- Social insurance contributions (employee + employer);
- Health insurance contributions;
- PIT;
- Net salary.

Form totals:
- Total number of employees;
- Total salary fund;
- Total contributions payable;
- Total PIT.

The form is submitted electronically via e-Filing. Electronic signature is mandatory.

Important: Each employee must be identified with the correct personal number — errors in the NID cause problems with the employee's social insurance record.

Monthly payroll calendar:

| Deadline | Action |
|----------|--------|
| 20th | Submission of form E-Sig 025/a (payroll declaration) |
| 20th | Payment of social insurance contributions |
| 20th | Payment of health insurance contributions |
| 20th | Payment of PIT on wages |

All payroll obligations share the same deadline — the 20th of the following month.

When the 20th falls on a weekend/holiday: The deadline extends to the next business day (Law 9920/2008, Article 67).

Late submission (Article 113):
- Fine of 10,000 ALL (profit taxpayers) or 5,000 ALL (others) per period;
- Late interest of 0.06% per day on unpaid contributions;
- Interest accrues automatically, without the need for a decision.

Source: Law 9920/2008, Articles 67 and 116/1; Law 9136/2003.

Before an employee starts work, the employer must:

1. Sign the employment contract — in accordance with the Labour Code, including all mandatory elements;
2. Register the employee on e-Filing — before the first working day;
3. Notify the Labour Inspectorate — electronic registration;
4. Declare on the payroll — starting from the month of employment.

Probation period: Up to 3 months (6 months for managerial positions) — but contributions are payable from day one.

Fixed-term contract: Maximum 3 years with renewals (Labour Code, Articles 140-141). After that, it is considered an indefinite-term contract.

Failure to register (informal employment):
- Fine of 200,000 ALL (VAT/profit taxpayers) or 50,000 ALL (others) per unregistered employee (Law 9920/2008, Article 119);
- Retroactive contribution obligation plus interest;
- Criminal liability risk in serious cases.

Source: Labour Code, Articles 12-21 and 140-141; Law 9920/2008, Article 119.

When an employee leaves (resignation, dismissal, contract expiry), the following steps are required:

1. Notice — according to Labour Code deadlines (typically 1-3 months advance notice);
2. Final payment — monthly salary, plus:
- Unused leave (financial compensation);
- Seniority bonus if applicable;
- Notice period pay if not respected;
3. Deregistration — the employee is removed from the payroll starting the following month;
4. Employment certificate — the employer issues a certificate covering the employment period.

Payroll note: Salary and contributions for the departure month are declared in that month's payroll. From the following month, the employee must no longer appear.

Contribution verification: The employee has the right to verify contributions paid with the ISSH.

Social insurance contributions (24.5% total) fund:

Old-age pension:
- Age: 65 years (men), 63 years (women — gradually increasing to 65);
- Minimum 15 years of contributions required for minimum pension;
- Full pension: 35+ years of contributions.

Disability pension:
- For employees who lose their ability to work;
- Requires minimum contributions based on age.

Survivor pension:
- For family members of the insured person who passes away.

Unemployment insurance:
- Temporary benefit for employees who lose their job;
- Condition: minimum 12 months of contributions in the last 3 years.

Work accident and occupational disease insurance:
- Medical treatment and compensation;
- Funded by employer contributions.

Maternity insurance:
- Maternity leave: 365 days (35 days before + 63 days after birth at 80% pay, remainder at 50%);
- Condition: 12 months of contributions.

Source: Law 7703/1993 "On social insurance", as amended. Review date: 9 October 2026.

Health insurance contributions (3.4% total) fund the Mandatory Health Care Insurance Fund:

• Employee: 1.7% of gross salary;
• Employer: 1.7% of gross salary;
• Benefits: Medicine reimbursement, specialist visits, hospital services.

Health insurance contributions are calculated on the same base as social contributions (gross salary, within the ceiling).

Self-employed: Pay health contributions by activity category — typically a fixed monthly amount.

Source: Law 10383/2011 "On mandatory health care insurance". Review date: 9 October 2026.

Outsourcing payroll to an external accountant offers:

• Accuracy — correct calculation of contributions, PIT, and overtime;
• Compliance — adherence to minimum wage, ceiling, and current regulations;
• Timely submission — by the 20th, without delays or fines;
• Confidentiality — salary information handled with discretion;
• Legal expertise — regulatory changes applied immediately;
• Employment management — correct registration of new hires, deregistration of departures;
• Reporting — monthly report with total labour costs.

The cost of outsourcing is a fraction of the fines that can accumulate from errors.

Our payroll service covers:

1. Salary calculation — gross, contributions, PIT, net for each employee;
2. Form preparation — E-Sig 025/a with all details;
3. e-Filing submission — electronic signature and submission by the 20th;
4. Employee registration — new hires, salary changes, deregistrations;
5. Overtime calculation — in accordance with the Labour Code;
6. Reporting — total labour cost, monthly analysis;
7. Audit assistance — in case of inspections by ISSH or the Labour Inspectorate;
8. Confirmation — we send you filing confirmation with the protocol number.

Pricing depends on the number of employees — contact us for a quote.