Albania Taxes for US Expats: How to File Taxes Abroad

Albania Taxes for US Expats: How to File Taxes Abroad

Living as an Expat in Albania

From the Accursed Mountains to colorful buildings lining the capital city of Tirana, Albania has a rich and fascinating culture. It’s no surprise many US citizens may find themselves deciding to stay in this charming Mediterranean country. Nestled across the Adriatic sea, Albania offers quick access to most of Europe’s most famous countries, making it a perfect place for US travelers to set up a home base.

Albania’s tax structure for US expats is relatively simple, but since the country does not have a tax treaty with the US, there are some key benefits Americans may miss out on.

We know taxes can feel overwhelming, so we’ll walk you through everything you need to know to stay tax compliant in both the US and Albania

Here’s everything you need to know about expat taxes in Albania:

Albania taxes for US Expats at a Glance

  • Primary Tax Forms: Annual income declaration
  • Tax Deadline: April 30
  • Currency: ALL (Albania lek)
  • Population: 2.8 million
  • Capital City: Tirana
  • Primary Language: Albanian
  • Tax Treaty: No
  • Totalization Agreement: No

US Expat Taxes in Albania

Americans living overseas in Albania will need to file both their US taxes and Albanian taxes. In Albania, income is taxed on a progressive scale, similar to the US, thought this country’s tax structure is much simpler.

Here’s everything you need to know about taxes for foreigners in Albania:

Who Has to File Taxes in Albania?

You must file taxes in Albania whether you’re a resident or non-resident. Typically, you’re required to file taxes in Albania if you earn more than ALL 2 million a year. For context, that currently averages around $353 in USD.

How do I know if I’m a Resident of Albania?

Your income tax rate in Albania hinges on whether or not you’re a resident of the country. 

Here’s how to know your residency status when living in Albania.

Qualifying as a Resident in Albania

The two main ways US expats can be considered a resident of Albania are if:

  • You live in Albania for more than 183 days in a given tax year; these days can be consecutive or intermittent as long as they fall in the same year.
  • You rent or own a permanent home in Albania during the tax year.

If either of the above applies to you, you’ll likely be taxed as an Albanian resident. If you have lived in Albania for 183 days or fewer, and do not have a permanent home in the country, you will likely be considered a non-resident.

Pro Tip

US expats can live in Albania for up to one year as a non-resident. After that, you’re required to apply for residency.

The IRS tax code is 7,000 pages. Want the cliff notes version for expats? Let us help.

Income Taxes in Albania

Both residents and non-residents are charged income tax on a progressive scale ranging from 13% – 22%. Albania utilizes the standard calendar year as it’s tax year — the same as the US — and returns must be filed by April 30th. Taxes are also due by this date.

If you make under ALL 40,000 a month, you will not owe income taxes.

Here’s what Albania charges for income tax, depending on your monthly income:

Albania income tax rate if you earn ALL 40,001 – 50,000 Monthly

Income tax bracketTax rateTaxes owed
ALL 0 – 30,0000%No taxes owed on first 30,000
ALL 30,001 – 50,0006.5%6.5% of the amount over ALL 30,001

Albania income tax rate if you earn over ALL 50,001 monthly

Income tax bracketTax rateTaxes owed
ALL 0 – 30,0000%No taxes owed on first 30,000
ALL 30,001 – 200,00013%13% of the amount over ALL 30,001
ALL 200,001 and higher23%ALL 22,100 and 23% of the amount over ALL 200,001

US expats who are considered residents in Albania would pay Albania taxes on all income earned that year. Nonresidents would only owe taxes on income made in the country.

Other Tax Situations in Albania

Self-employment Tax

If you earn self-employment income in Albania, it’s taxed the same way as employer-earned income (minus any eligible self-employment deductions). So, if you earn over ALL 200,001 a month, you’re subject to 23% income tax.

Corporate Tax

Companies in Albania pay a flat income tax (CIT) of 15%. Some companies like software companies receive tax breaks and only are required to pay 5% CIT.

Value-added Tax (VAT)

Consumers in Albania are required to pay taxes when purchasing goods or services. Known as value-added tax, VAT costs 20% in Albania.

Wealth Tax

There is no wealth tax in Albania.

Inheritance Tax

Individuals are taxed a flat rate of 15% for gifts and inheritances. The transfer of a property’s rights ownership between family members is exempt from this tax.

Real Estate Tax

If you own property in Albania, you’ll pay real estate tax based on the value of your building each year. 

For new construction in Tirana, you’ll pay a property tax of 2% to 4%. Outside of Tirana, you’ll pay a property tax between 1% and 3%.

Property tax rates for buildings range depending on the square meters. The rate you’re charged will depend on the location, building use, year of construction and other factors. 

Social Security

Albania requires employees to pay 11.2% of their gross monthly salary in Social Security contributions. Employers contribute 16.7%. 

Do the US and Albania have a tax treaty?

No, Albania does not have a tax treaty with the United States. This means you may be subject to double taxation, but may be able to reduce your tax burden with US tax credits.

Does Albania have a Totalization Agreement with the US?

No, Albania does not have a totalization agreement with the US. A totalization agreement helps clarify a US expat’s Social Security obligations to prevent them from paying into Social Security for both countries. This means US expats living in Albania will likely be required to pay in Social Security in both countries. 

What Tax Forms do US expats in Albania Need to File?

If you’re an American citizen living in Albania, you must file both Albanian and US taxes. 

Albania requires residents and non-residents who make over ALL 2 million annually to file an income declaration each year. This must be turned in to the central tax administration by April 30 of the year following the income tax year.

What US Tax Deductions are Available to Americans?

Since there’s no tax treaty set up with Albania, you’ll want to be sure you claim any eligible credits or deductions to minimize your tax liability.

Foreign Earned Income Exclusion

The Foreign Earned Income Exclusion (FEIE) is a US tax credit that lets you exclude a portion to all of your foreign income from taxation. For 2022, you can exclude up to $112,000 (but the amount changes each year). If you qualify for this exclusion and made less than this amount in 2022, you could end up without a tax bill. 

To claim the Foreign Earned Income Exclusion, you’ll file IRS Form 2555.

Foreign Tax Credit

If you don’t qualify for the Foreign Earned Income Exclusion, the Foreign Tax Credit (FTC) may help lower your tax burden. This credit lets you any income taxes you’ve already paid to Albania, dollar for dollar, from your US tax bill.

For example, if you qualify for the FTC and paid $6,000 in income taxes to Albania in 2022, you can deduct this from your US tax bill.

To claim the Foreign Tax Credit, you’ll file IRS Form 1116.

Foreign Housing Exclusion

If you’re a bona fide resident of Albania, you may be able to claim the Foreign Housing Exclusion to deduct specific housing expenses from your US tax bill. However, you can only claim this exclusion if you’re also claiming the Foreign Earned Income Exclusion.

You’ll also file this on Form 2555.

Need help with your expat taxes?

We hope you learned more about your tax requirements as a US expat living in Albania. If you still have questions about your tax liabilities in either country or need help understanding if you’re an Albanian resident, we can help you.

Knowledge is power. Get personalized advice from one of our expat expert accountants.

Whether you need tax advice to prepare for a move abroad, to buy property or even retire, Greenback can help. Consults upfront can help avoid costly mistakes and stress later.

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