Starting in 2026, new income tax declaration forms have entered into force in Albania for the reporting of the 2025 financial year. These new forms not only contain much more detailed information than previous ones but also aim to tighten control measures and prevent tax evasion.
Separation of business and employment income.
One of the most significant changes is the clear separation between personal income derived from business activities and personal income derived from employment. According to the latest amendments to the Income Tax Law, if a freelancer or a self-employed individual generates more than 80% of their income from a single client or 90% from fewer than three clients, these entities will be taxed under personal income tax rates (13% or 23%) instead of the small business tax (with a 0% rate applicable until 2029).
This is a crucial distinction for small businesses and freelancers, as it strictly minimizes tax evasion opportunities.
What does the new Law regulate?
High personal income tax rates have driven a trend where professionals incorporate as individual businesses to bypass traditional employment classifications. By reframing their work as ‘consultancy services’ and utilizing monthly billing, these workers exploit a gap in current tax law to reduce their personal liability while maintaining their existing corporate relationships.
After a thorough review by the tax authorities, the new law now effectively distinguishes between evasive cases and legitimate self-employed professionals.
The Self-Declaration Form for business income.
To draw a definitive line between genuine B2B services and disguised employment, a new reporting protocol has now been introduced. Professionals must complete a detailed declaration form that evaluates the nature of their client relationships and the specifics of their service provision. This measure focuses on high-dependency contractors. Specifically, those who generate the vast majority of their earnings, at least 80% from one client or 90% from two, must submit these declarations for review.
Need professional assistance? We are here to help!
Given the importance of this distinction, professional assistance is essential to guide you through the self-declaration process and ensure that your annual declarations are completed accurately.
Our team of professionals at Eurofast Tirana is ready to assist you in staying compliant with the law.
Book your appointment by contacting us at [email protected] and save yourself the stress of filing, delays, and penalties.