Employer Tax Contributions

Tax Type	Rate	Base
Social Security (Employer)	11.2% - 15%	Gross Salary (ALL 45,000 - ALL 310,000 monthly)
Health Insurance (Employer)	1.7%	Gross Salary (no upper limit)
Personal Income Tax (Withheld by Employer)	Progressive (0% - 23%)	Employee's Gross Salary (after social/health deductions)

Filing & Compliance

• Monthly payroll declaration and payment of withheld PIT and social/health contributions are due by the 20th of the following month.
• Employers must electronically submit the monthly payroll declaration.
• Annual personal income tax returns for individuals are due by March 31 of the following year.

In Albania, employee tax deductions encompass various areas, including social security contributions, income tax, and specific allowances for children and education.

Social Security and Healthcare Contributions

• Employee Contributions: Employees contribute 11.2% of their salary for social security, split into 9.5% for social insurance and 1.7% for health insurance.
• Employer Contributions: Employers contribute an additional 16.7% of the employee's salary, divided into 15% for social insurance and 1.7% for health insurance.

Income Tax

• Progressive Rates: A progressive income tax system is in place with two tax brackets. As of January 1, 2025:
  • 13% for annual income up to ALL 2,040,000
  • 23% for annual income exceeding ALL 2,040,000.

Deductions and Allowances

• Standard Deductions: Annual standard deductions are applied based on income levels:
  • ALL 600,000 for annual income up to ALL 600,000
  • ALL 420,000 for annual income between ALL 600,001 and ALL 720,000
  • ALL 360,000 for annual income exceeding ALL 720,000.
• Education Expenses: An annual deduction of ALL 100,000 is available for children's education expenses if the family's annual income is less than ALL 1,200,000.
• Child Allowance: An annual deduction of ALL 48,000 is available for each dependent child under 18.
• Voluntary Pension Contributions: Deductible up to limits defined by the Law 'On Voluntary Pension Funds'.

Additional Considerations for Employers

• Tax Withholding: Employers are responsible for withholding employee income tax and social security contributions.
• Payroll Reporting and Payment: Employers must declare and remit payroll taxes by the 20th of the following month.
• Multiple Employers: If an individual has multiple employers, only the primary employer applies deductions. Other employers calculate tax without deductions.

Income Declaration

• Threshold and Deadline: Individuals with annual gross income exceeding ALL 1,200,000 must file an annual income declaration by March 31st of the following year (e.g., March 31, 2026, for the 2025 tax year).
• Penalties: Late filing penalties apply.

Disclaimer: This information is current as of February 5, 2025, and is subject to change. Consult with a tax professional for personalized advice.