The General Directorate of Taxes, in a statement on "Monitor", explains how the scheme for collecting VAT from international companies that generate income through Albanian users is working. Effects on platform users and owners who rent out homes on Booking and AirBnb.
What does the initiative for registering tax representatives of international companies that generate income in Albania from local users foresee?
Within the framework of the implementation of the priorities and measures of the Medium-Term Revenue Strategy 2024–2027, as well as the Tax Administration Strategy 2024–2028, one of the main priorities is to reduce the VAT gap, one of the measures to achieve this objective is the formalization of online trade and services. In this context, the Tax Administration has undertaken an initiative to identify international companies that operate in Albania, without being registered with the tax administration. A number of taxpayers, both registered and unregistered, have been identified, with the aim of treating them.
In order to create a more competitive and equal environment for businesses, a number of taxpayers have been identified from open sources of information (including the media and the internet) that are not registered with the tax administration with a tax representative. These entities generate income in the Republic of Albania, but do not pay tax obligations.
Since 2024 onwards, the tax administration has addressed these companies with personalized letters and notifications, communicating the legal obligation to register in Albania. So far, the results have been positive. Some international companies have registered, have appointed tax representatives in Albania and have started declaring VAT. There are also taxpayers who have notified the administration and have requested time to register with a tax representative, but there are also taxpayers who have not yet responded. The Tax Administration will continue to insist on this process, as all entities that provide income in the Republic of Albania have the obligation to register and pay VAT, especially international companies that have full knowledge of the functioning of the laws.
How are international companies with local individual users recorded by the tax administration and what is their number?
To date, the Tax Administration has identified from open sources of information, including the media and the Internet, about 24 international companies that carry out various digital activities and generate income from Albanian users. These companies cover a wide range of activities, from tourism and technology to digital entertainment, independent employment and online education. Due to the lack of a tax representative office in Albania, the Tax Administration has taken steps to oblige these entities to register for tax purposes, with the aim of increasing formalization and collecting income derived from their economic activity on Albanian territory.
During this process, positive results have been achieved, especially in the registration of tax representatives of international companies that deal with renting out apartments. Companies such as Booking.com and Airbnb are already registered with tax representatives in Albania. Among the first to register was AirBnb. Booking.com was registered two years ago. Netflix also has a tax representative in Albania and carries out regular activity. Recently, the administration has also approached the company TripAdvisor for registration.
We also have taxpayers who have notified us and are requesting that they be given time to register with a tax representative in Albania, but there are also taxpayers who have not yet responded.
How does the VAT collection scheme work? Does it affect tariffs for consumers?
For services provided by international companies, Albanian individuals pay a fee or commission. The Tax Administration requires 20% VAT on the total of this commission paid, which constitutes the income that the company provides in Albania. The commission or fee is paid by individuals within the country.
VAT is calculated monthly by the tax representatives registered in the country, based on the income collected from Albania on the basis of commissions or subscription fees. Will this affect the monthly subscription price for Netflix customers? No. Customers will not pay more. The monthly subscription fee (e.g. for Netflix) will continue to be 9.99 euros. The VAT collected from taxes is included in this fee and the liability is paid by the international company, not by the customer. No increase in fees is expected in the future, as this VAT is predetermined and deposited by the company.
Has this scheme succeeded in identifying the number of individuals who rent out apartments on international platforms?
Initially, in the entire chain of this process, the goal is for international platforms to register with tax representatives. Then, the aim is to identify the Albanian individuals through whom the income is provided. At the moment, due to personal data protection laws, companies do not make available data on the number of users or individuals providing services. This is a challenge not only for Albania, but also for the countries of the European Union. However, this situation will be regulated by the DAC7 Directive adopted by the EU, which establishes the obligation for reporting by platform operators. According to this directive, operators will have to provide tax authorities with information on sellers using the platforms, including their income.
The Directorate of Investigation is drafting a pilot project to document this data with tax representatives in Albania, in order to further verify whether income earned by local individuals (e.g. from renting through online platforms) has been declared in the Annual Income Declaration as rental income that is declared on March 31.
This is a process that will be followed in the future, which is also being consulted with the tax administrations of the region and the International Monetary Fund, with the aim of interaction and exchange of experiences on the formalization of online trade. How does Albania compare to the region? Compared to the countries of the region, the number of international companies contacted and registered in Albania is higher. This shows the commitment of the tax administration to build a fairer, transparent and efficient system in fulfilling tax obligations in an increasingly digital economy.
NOTE: The article is the intellectual property of Monitor.
