VAT Declaration for Businesses in Albania

Value Added Tax (VAT) is an indirect tax applied to the supply of goods and services in Albania. It is governed by Law No. 92/2014 "On Value Added Tax in the Republic of Albania", as amended.

VAT operates on the deduction principle — a business collects VAT from its customers (output VAT), deducts the VAT paid to suppliers (input VAT), and remits the difference to the state. If input VAT exceeds output VAT, the business holds a VAT credit that can be offset or refunded.

VAT rates in Albania:
- 20% — standard rate (most goods and services);
- 6% — reduced rate (tourism/accommodation, agritourism services);
- 0% — zero-rated supplies (exports, international supplies);
- Exempt — financial services, insurance, education, healthcare (Articles 51-60).

Source: Law No. 92/2014, Articles 1-5 and Articles 49-60.

Under Law 92/2014 (Article 117), VAT registration is either compulsory or voluntary:

Compulsory registration:
- Every taxable person whose annual turnover exceeds ALL 10,000,000 (ten million lek);
- The business must register within 15 days of crossing the threshold;
- Registration is made at the regional tax directorate.

Voluntary registration:
- Businesses below the threshold may register voluntarily;
- Benefit: they can deduct input VAT;
- Obligation: they must maintain purchase/sales ledgers and file D2 every month.

Failure to register when turnover exceeds the threshold results in:
- A penalty of 100% of the VAT that should have been paid for the unregistered period;
- Retroactive registration.

LLCs (SHPK) are usually registered for VAT automatically when turnover is expected to exceed the threshold — but even low-turnover entities may register voluntarily.

Source: Law 92/2014, Articles 117-120.

Form D2 is the official monthly VAT declaration in Albania. It summarises:

• Output VAT — VAT calculated on the month's sales;
• Input VAT — VAT paid on the month's purchases;
• Difference — VAT payable (if output > input) or VAT credit (if input > output);
• Exempt supplies — turnover without VAT (exports, exempt supplies);
• Reverse charge — for services received from non-residents.

Filing process:
1. Close the purchase and sales ledgers (by the 10th);
2. Verify totals — input VAT, output VAT;
3. Complete Form D2 online (e-Filing);
4. Electronically sign and submit (by the 14th);
5. Pay the difference (if any) by the 14th.

Source: Law 92/2014, Articles 113-116; GDT guidelines.

Every VAT-registered taxpayer maintains electronic purchase and sales ledgers in the GDT system. Under Law 9920/2008, Article 46:

Sales ledger: Records every sales invoice with:
- Invoice number (serial);
- Invoice date;
- Buyer's NUIS (tax ID);
- Value excluding VAT;
- VAT rate;
- VAT amount.

Purchase ledger: Records every purchase invoice with the same details.

Monthly closing deadlines:
- By the 10th: Voluntary closing — the business can still make corrections;
- The 11th: Automatic closing — the system locks the ledgers, no further changes allowed;
- After closing, Form D2 is generated from the ledger totals.

Note: Invoices not entered in the ledgers cannot be included in D2. If a purchase invoice is missed, the deductible VAT is lost for that month — correction requires an amended declaration.

Source: Law 9920/2008, Article 46; GDT guidelines.

Input VAT is not deducted automatically — specific conditions must be met (Law 92/2014, Articles 69-82):

Conditions for deduction:
- The supply must be for business purposes (not personal);
- The business must be VAT-registered;
- A valid fiscalised invoice must exist with NUIS, date, and specified VAT;
- The invoice must be entered in the purchase ledger.

Limitations — VAT is not deductible on:
- Representation and entertainment expenses;
- Vehicle purchases (unless the core activity is transport/leasing);
- Fuel for non-operational vehicles (with exceptions);
- Supplies related to exempt supplies (pro-rata).

Pro-rata deduction (Article 76): If the business makes both taxable AND exempt supplies, input VAT is deducted only in proportion to taxable turnover.

Accurate calculation of deductible VAT requires regular monthly bookkeeping and thorough knowledge of the legislation.

Source: Law 92/2014, Articles 69-82.

When input VAT exceeds output VAT for three consecutive periods, the business is entitled to request a refund. Under Law 92/2014 (Articles 79-80):

When the right to a refund arises:
- VAT credit accumulates for 3 consecutive months;
- The business files a refund request with the regional directorate;
- Exporters are entitled to an immediate refund (without waiting 3 months).

Procedure:
1. Submission of the request with supporting documentation;
2. Tax audit (the administration verifies declarations and invoices);
3. Decision — full approval, partial approval, or rejection;
4. Refund is credited or transferred within 60 days (Article 80).

Common problems:
- Lengthy audits — the administration may extend the verification;
- Questionable invoices — if the supplier has tax issues, the VAT may be disallowed;
- Incomplete documentation — missing original invoices delay the process.

Professional preparation of the refund file increases the chances of swift approval.

Source: Law 92/2014, Articles 79-80; Law 9920/2008, Article 74.

Monthly VAT calendar in Albania:

| Deadline | Action |
|----------|--------|
| 1st-10th | Enter invoices in the purchase and sales ledgers |
| 10th | Voluntary ledger closing — last chance to make corrections |
| 11th | Automatic ledger closing by the system |
| 14th | File Form D2 (monthly VAT declaration) |
| 14th | Pay the VAT due for the preceding month |

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

Late payment: Even if D2 is filed on time, non-payment triggers late-payment interest of 0.06% per day (approx. 21.9%/year) on the unpaid amount.

Non-filing: Penalty of ALL 10,000 (income-tax payers) or ALL 5,000 (others) under Article 113, plus interest.

Source: Law 92/2014, Article 116; Law 9920/2008, Articles 67 and 73.

The law prescribes specific penalties for various VAT violations:

Failure to register when turnover exceeds the threshold:
- 100% of the VAT that should have been paid from the moment the threshold was crossed.

Failure to file D2 within the deadline (Article 113):
- ALL 10,000 (income-tax payers) or ALL 5,000 (others) for each period.

Failure to issue an invoice:
- Penalty of 100% of the uncalculated VAT;
- Suspension of activity for 1-30 days (repeat violations).

Fictitious invoice (invoice without a real supply):
- Penalty of 100% of the fictitiously invoiced VAT;
- Criminal prosecution in serious cases.

Unjustified VAT deduction:
- Reversal of the VAT plus a penalty of up to 100% of the difference;
- Late-payment interest from the date of the declaration.

Failure to record invoices in the ledgers:
- Penalty of ALL 10,000 for each unrecorded invoice.

These penalties are cumulative — they can add up quickly if the business has systematic discrepancies.

Source: Law 9920/2008, Articles 116-122; Law 92/2014, Articles 131-134.

Importing goods into Albania is subject to 20% VAT on the customs value plus customs duties. Under Law 92/2014 (Articles 20-22):

• Taxable base: Customs value + customs duties + excise (if applicable);
• Payment: VAT is paid at customs at the time of import;
• Deduction: Import VAT is deductible on D2 if the goods are used for business purposes;
• Document: The customs declaration (DAV) serves as the invoice for VAT deduction.

Exempt imports:
- Machinery and equipment for investments (under specific investment laws);
- Imports for internationally financed projects;
- Personal imports below customs thresholds.

Accurate recording of customs VAT in the purchase ledger ensures the business deducts it correctly.

Exports are treated at a 0% VAT rate (zero-rated), which means:

• The business does not charge VAT on the export supply;
• But it retains the right to deduct input VAT (purchases, materials, services);
• This automatically creates a VAT credit — deductible or refundable.

Required documentation:
- Export invoice (without VAT);
- Export customs declaration (DAV export);
- Transport document (CMR, BL, AWB);
- Confirmation of exit from the customs territory.

Without complete documentation, the supply does not qualify as an export and the standard 20% rate applies.

Exporters are entitled to a VAT refund without waiting 3 months — an expedited procedure under Law 92/2014, Article 79.

Source: Law 92/2014, Articles 24-26.

When an Albanian business purchases services from a non-resident company (e.g. software, consultancy, digital advertising), the reverse charge mechanism applies:

• The Albanian business calculates VAT on the purchase (as output VAT);
• Simultaneously deducts it as input VAT;
• Net effect: zero — but both sides must be recorded in D2.

When it applies:
- Services from non-residents (Article 19, Law 92/2014);
- Purchase of goods under specific EU schemes (if applicable);
- Subcontracted construction works (in specific cases).

Common mistake: Businesses forget to record the reverse charge — this results in under-reporting output VAT, which the tax administration identifies during an audit.

Our service covers the complete monthly VAT cycle:

1. Invoice collection — every month we collect purchase and sales invoices;
2. Ledger entry — we enter every invoice into the purchase or sales ledger;
3. Invoice verification — we check NUIS numbers, validity, and fiscalisation;
4. Ledger closing — we close the ledgers by the 10th;
5. VAT calculation — output VAT, input VAT, pro-rata, reverse charge;
6. D2 completion — the form is completed accurately with all required fields;
7. Filing — electronic signature and submission by the 14th;
8. Payment — we notify you of the amount and payment method;
9. Refunds — if you carry a credit, we prepare the refund file;
10. Reporting — monthly report on your VAT position.

Pricing depends on transaction volume — contact us for a quote.

Our outsourced accountant service integrates VAT declarations with monthly bookkeeping and all other monthly tax filings.