Companies expanding to Albania will find many opportunities to achieve next-level business success in the country. However, you must be prepared with best practices on how to tackle key processes like hiring employees, setting up Albania payroll, and offering compensation and benefits.
Taxation rules in Albania
Albania has a corporate income tax rate of 15% for companies earning more than ALL 14 million. Companies earning less than this are exempt from paying corporate income tax. Companies in Albania must withhold payroll taxes from employee paychecks and contribute them to social security funds.
The mandatory employee payroll contribution is currently 9.5%. Companies must also contribute 15% of their payroll to social security and 1.7 % to health insurance funds. The maximum salary for social security contributions calculations from both employees and employers as of 2023 is ALL 176,416.
Employees also pay into social security at a rate of 11.2%. Albania uses a progressive income tax system, and employees owe more as their salary and compensation increase.
Employees must pay income taxes as well. Albania uses a progressive tax system with tax rates that vary with income:
- Up to ALL 50,000: 0%
- ALL 50,001 – ALL 60,000 up to ALL 35,000: 0%
- ALL 35,001 – ALL 60,000 – 13% of ALL 35,000
- ALL 60,001 – ALL 200,000: 13% of the amount over ALL 30,000
- More than ALL 200,000: ALL 22,100 plus 23% of the amount over ALL 200,000
Albania payroll options for companies
Companies looking to start operations have 3 different Albania payroll options:
- Internal: Many larger companies with a strong commitment to Albania may choose to set up an internal payroll. If you go the internal route, you’ll need a bigger budget and larger HR team to run this type of payroll successfully.
- Outsourcing with a local company: You can also choose to work with a local Albania payroll processing company that will outsource payroll. Keep in mind that you’ll still be responsible for all issues relating to compliance with this setup.
- G-P: Working with G-P will streamline the payroll setup and management process. With us as your global Employer of Record (EOR), you can rest assured that all employees in Albania will be paid on time, freeing you to focus on other important aspects of your business.
How to set up a payroll in Albania
Before you can set up payroll, you must establish a subsidiary in the country if you’re incorporating the traditional way. As a result, it can take weeks or months before you’re officially ready to work in the country and start hiring employees, adding them to your payroll, and making important business connections. On the other hand, G-P can help you set up payroll and start building global teams in minutes, without setting up new entities.
Entitlement/termination terms
Companies should include entitlement and termination terms in every employment contract before setting up Albania payroll. Employees in the country are considered on probation for their first 3 months of work and employers are legally permitted to terminate them with 5 days’ notice. Once employees work for a company longer, they’re entitled to longer notice periods and may get a severance payment.
Streamline global payroll management with G-P.
G-P streamlines each step of the payroll management process with our market-leading Global Growth Platform™. Pay your team with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.
Contact us to learn more about how we can support you.