The Republic of Albania is located in Southeast Europe bordering North Macedonia and Greece. The country holds large potential in business due to various contributing factors such as access to European and Balkan markets, trade terms with the region, open market policy, low cost of doing business, variety of business choices, availability of skilled labor, etc.
For foreign investors, the biggest attraction is the lack of legal requirements and permits to do business. This means that foreign investors can invest in whichever sector and industry they deem profitable. The percentage of business the foreign investors can hold in Albanian companies is also not limited – foreign owners can own 100% of the company shares in Albania without any restrictions.
Types & costs involved in various business structures
Albania offers several options for investors to choose from. The chart below displays the type of business mostly favored by investors, along with the minimum required paid-up capital.
| S# | Type of company | Albanian name | Min. paid-up capital |
| 1. | Sole Proprietorship | — | No min. requirements |
| 2. | General Partnership | — | No min. requirements |
| 3. | Limited Liability Company (LLC) | (Shoqëri me Përgjegjësi të Kufizuara- Sh.p.k.) | €700-800 approximately |
| 4. | Joint Stock Company | Sh.A | €15,000 approximately |
Sole Proprietary business
A sole proprietary business is owned and managed by a single person. It is the simplest form of business that requires no minimum paid-up capital. A bank account in an Albanian bank along with a registration form must be submitted to the National Business Center. The application can be submitted physically or through the government portal.
There is a symbolic fee (€0.8 approx.) to be paid by the owner while submitting the required documents and the entire registration process may take up to 24 hours. The Albanian law applies a simplified tax based on the profit of a small business which is applicable to the profits earned within the country.
General Partnership
A partnership is a formation of two or more persons or entities coming together to promote common economic interests. It can either be a general partnership; where all partners are equally responsible for debts, losses, and other liabilities collectively to the extent of their percentage share in the company. Or it can be a limited partnership; where a set of general partners (at least 1) assume complete responsibility for the debts and losses, going beyond their contribution share, while the limited partners or sleeping partners are responsible to the extent of their participation in the company.
There is no minimum paid-up capital required according to Albanian law, however, the partners must contribute a percentage of the capital to run the business.
Incorporating a partnership company may involve the costs given below:
- Obtaining a tax identification number for the company
- Legal fees
- State fees
- Rent for office address, etc.
Limited Liability Company (Sh.p.k)
An LLC is operated by a board of managing directors. These directors are appointed from within the owners to form a board which is headed by the chairman. The Board of Directors or BoD is responsible for making decisions, operations, and production. No director or BoD collectively is responsible for losses, debts and other liabilities personally, it is the company that assumes all liabilities. In fact, an LLC is recognized as a legal person by the law, thus freeing the owners from any personal responsibility.
The commercial law in Albania requires that an LLC must have a minimum paid-up capital of €800 at the time of incorporation. An article of association that serves as the constitution of the company appointed BoD, and a legal representative is compulsory to incorporate an LLC.
The formation and registration of an LLC may involve below-mentioned costs:
- Notarization of documents – €90 (approx.)
- Filing documents with the Office for the Registration of Companies – €13 (approx.)
- Registration at the Chamber of Commerce & Industry of Albania – €180 (approx.)
- Local and state fee and tariff at the Albanian Post SHA – €350 (approx.)
- Establishing company seal – €44 (approx.)
Joint Stock Company
A joint stock company or SHA in Albania is a public limited company that creates capital by the public holding of its shares. The capital is raised through the general public by offering shares in the company stocks, traded on the stock exchange. The minimum paid-up capital required to incorporate an SHA company in Albania is €15,000. The formation requires the company to fulfill a certain criterion before, during, and after its formation.
A Joint stock company can be of two types; a) Private offer or b) Public offer. In a private offer JSC, the shares are bought by the owners or at the direction of the owners, by selected persons. The minimum paid-up capital for private offer JSC is €15,000. A public offer JSC is one whose shares are offered to the public through the stock exchange, the minimum paid-up capital required for such JSC is €72,000 (approx.).
The costs involved to incorporate a JSC in Albania are to a large extent similar to that of an LLC, differing in that a JSC requires additional steps, documents, and requirements to be satisfied.
Cost of doing business in Albania
The major costs involved in any business enterprise regardless of its size, type, or activities can be categorized into 6 components:
- Labor (employees, machines, etc.)
- Raw material (skills for services, material to manufacture goods, etc.),
- Premises (office, shop, warehouse, etc.)
- Utilities (telephone, electricity, water, heating, etc.)
- Logistics (vehicle, movers, etc.)
- Legalities (state & local fees, tax, VAT, etc.)
We will explore the cost of each of the components to project an overall picture to the reader. Labor or skilled staff is easily available in Albania – Foreign companies need not import trained manpower from abroad and incur high costs, instead, they can hire locally. The minimum daily wages for Albania are set at less than €2 per hour, which by European standards may be the cheapest in the region.
Skills are abundant in Albania as the majority of the workforce has or is still working in the European developed nations. This skilled workforce can be hired at the fraction of the cost that the company might otherwise have to pay elsewhere.
A decent office premise in Tirana, the trade center of Albania, can be acquired between €300 to €800 per month rent easily. Rents in the city center are higher than in distant parts, here the rents may go up to €1200/month.
Utilities including electricity, heating, water, garbage collection, etc. may cost up to €80/month (depending on the size of the office, employee strength, working hours, etc.). Internet services with high-speed connectivity may cost up to €20/month.
Logistics in Albania are very streamlined and accessible. Goods and materials can easily be transported within the country at a reasonable charge; approximately €1300 for moving goods via an SUV anywhere within the country.
Lastly, due to open and liberal business policies, there are very few fees, state charges, and local levies that businesses have to look for. Besides the set-piece charges at the time of incorporation, the business’s main costs revolve around its production, operation, and delivery.
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