On January 1, 2019, Albania modified its Income Tax Act to establish new regulations addressing indirect asset transfers within the country.

What Changed

The amendment targets situations where ownership of an Albanian company changes hands indirectly. Rather than purchasing assets directly, a buyer acquires shares or quotas in the company holding those assets.

Key Provision

The law states that when “direct and indirect ownership of a legal entity’s share capital, quotas, or voting rights changes by more than 20%,” the entity is deemed to have sold a proportionate share of all assets. This applies to companies with average annual turnover exceeding approximately 4.1 million euros over the preceding three years.

Tax Implications

Companies experiencing qualifying ownership changes must report this to Albanian tax authorities within 45 days. Disclosure requirements include transaction terms, sale proceeds, and any ownership changes exceeding 10%.

Under the new rules, gains from indirect asset transfers now face Albanian taxation. Tax may be assessed either against the company holding the assets or based on gains from the transferred shares themselves.