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Albania Incentives Luxury Accommodation Structures

Guido Tomatis's picture

Through the Fiscal Package of 2018 named “local tax incentives”, the Albanian Government has set to intervene significantly on the economic tourism policies. During the last years, tourism has considerably grown in Albania and the relevant income was very important for the economy of the Country. According to a report from Albania’s Central Bank, in the 2015 tourism brought 1.35 billion euros, and in the 2016 brought 1.5 billion euros with an overall increase of the last years around 13%.  

The Government try to obtain economic tourism increase through 3 tax benefits, especially for the hotels with a “brand luxury name”:

  • Abolition of the property tax on the investments of accommodation structures;
  • Tax exemption for 10 years for “brand luxury name” hotels
  • VAT Reduction for hotel chain services

Property tax

Actually, the property tax in Tirana on real estates for non-residential use is 4% on the amount of the investment, and 1% - 3% on the amount of the investment in the other part of the Country. With the local tax law, the Government has allocated the complete reset of this tax on property destined to hotel or accommodation structures in general. It must however be structures with a “brand international name” with 4 or 5 stars recognized by the Economic ministry. The incentives will apply to developers only if they do not sell the units, since the government wants to avoid that wealthy Albanians would build villas at the seashore and using them as second homes.

The initial minimum investment must be of 8 million for the four stars hotels, and 15 million for the five stars hotels.

Tax exemption

Starting from 1 January 2018, the 4 and 5 stars accommodation structures with special status holding an international trade mark known as “brand name” will be exempted from corporate income taxes for a period of 10 years, provided to obtain the special status until the year 2024. The exemption period is effective upon starting the operations of the accommodating structures, as defined by the Tourism Law, but not later than 3 years from being awarded with the special status.

VAT Reduction

Finally, another important tax advantage consists of VAT reduction at 6% on B&B structures and on accommodation services in general for the other operators.

The reduction it will be applied also on the restaurant services, if the price of this service is included in the price of the lodging service. The accommodation service benefiting from the reduced VAT rate of 6% must be shown separately on the VAT invoice. In cases where tourist accommodation operators also offer different activities, they must keep separated their commercial operations, creating a new entity to deal exclusively with the tourism accommodation aside of their business. The Hotels with a “brand luxury name” benefit from the VAT decrease on all services in general.

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Guido Tomatis's picture

• Auditing, Due Diligence and personnel training for foreign and Italian international Company in Singapore, China, Hong Kong and South America since 2005.
• Auditor for Italian private companies.
• Tax advisor since 1999 for Italian companies, business and investment planning, M&A, tax returns, payroll and contribution compliance.

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Economic Sectors