Over the last decade, Albania has made significant progress towards a modern market economy and still has excellent development potential.

The country does not present any particular critical issues in terms of security and public order, which are suitably insured by the state.

In 2018, the Gross Domestic Product grew by 4.2%, probably slightly down in 2019, but in any case it is an expanding market.

Albania offers many investment opportunities due to the low cost of labor and low property prices and therefore represents a great potential market for European countries.
It should be emphasized that Albania has joined free trade agreements with the Balkan countries, increasing the opportunities for trade with the Region.

In 1994 Albania approved the law on foreign investments which offers various guarantees for foreign investors; the most important benefits are the following:

• No prior authorization is required in any sector for foreign investment;
• there are no restrictions on the percentage of foreign capital that the Companies participate in (100% ownership is permitted);
• foreign investments cannot be expropriated or nationalized either directly or indirectly, except in special cases of public interest defined by law;
• foreign investors have the right to transfer any financial resources related to investments from the Albanian territory;
• the most favorable treatment provided for in international agreements is applied.

Local law does not include any limitations based on the distinction between foreign and national investors, both in terms of legal activities and structures, and in the application of the tax system.

At the European Council in March 2020, the opening of negotiations for the country’s entry into the European Union was unanimously approved.
In June 2020 the possible date for the actual opening of negotiations will be discussed.
Albania obtained candidate country status in the EU in June 2014.
Since 2009, Albania has been named a NATO member.

The first sector of greatest investment interest in Albania is the energy sector (electricity and gas). In the last twenty years this sector has been the subject of major developments, both thanks to the opening to the market of concessions for the renewal and / or construction of new plants, and thanks to the promotion and investment policies on renewable energy.
To date, although most of the electricity comes from hydroelectric sources , there is also an increase in renewable energy sources such as photovoltaic and wind.
Albania also has a large hydrocarbon reserve.
Furthermore, it is part of the Trans-Adriatic gas pipeline project (called TAP) which will allow the inflow of natural gas throughout Western Europe.

The other ever growing and most interesting investment sector is the textile and clothing sector, given the long tradition of textile and manufacturing processes in the country.
In addition, the low cost of labor, as well as the exemption from VAT and customs duties for some products have meant that this sector has attracted strong interest from foreign investors. Just think of the fact that the footwear and textile sectors make up most of the exports between Albania and Italy.

Another important investment sector is real estate, relating to the construction and improvement of existing infrastructures.

The improvement of all public (and private) structures has been one of the main objectives of the government under the “One billion project financing” program and, to date, after the November 2019 earthquake that hit the districts of Durres and Tirana , the Albanian government has adopted new reconstruction plans providing numerous tax breaks (and not only) aimed at the reconstruction of the aforementioned cities.

Furthermore, with regard to the Albanian coastal areas, in the near future an increase in requests for concessions from foreign investors for the construction of tourist resorts and luxury structures is expected.
In this regard, it should be noted that as of January 2018, the ten-year tax exemption of infrastructure taxes on new construction of 4 * and 5 * hotels are provided as incentives.

In the recent strategic plan drawn up by the Albanian Ministry of Tourism, certain priorities are listed for the development of the tourism sector in Albania during the period 2018-2022, namely: the diversification of the tourist offer, the improvement of services through the development of human resources, the promotion of Albania as an ideal destination during all periods of the year and, finally, the attraction and stimulation of private and public investments.

Finally, another interesting investment sector is the agricultural and agro-industrial one . It is one of the most significant of the Albanian economy, in fact it plays a crucial role in the economic and social development of the country, contributing to the formation of the GDP with about 20%.

Italy competes with a leading role in the economic development of Albania.

Official data confirm that Italy has traditionally been, and continues to be, the first trading partner of Albania (37% of Albania’s trade with the ‘abroad).

The demand for Made in Italy products is huge and is characterized by a constant tendency of the Albanian consumer to turn their attention to the Italian food and technological product, often purchased in the context of businesses conducted in collaboration with Italian companies.

From the point of view of Italian companies, interest in neighboring Albania is strong because it is perceived as the “Gateway to the Balkans”, also with reference to the opening of a territorial marketing that goes beyond the borders of Albania itself.
Moreover, commercial penetration in neighboring countries where the Albanian language is widespread is also easy for entrepreneurs operating in Albania, especially in Kosovo and Macedonia.

The main elements of attraction towards Albania, which animate the internationalization choices of Italian companies towards the aforementioned country, are therefore: the very high diffusion of the Italian language , the geographical proximity < / strong>, an efficient logistics of maritime transport , land and air , the low cost of labor , the low fiscal cost of the companies incorporated in the area and the favorable climatic conditions that benefit tourism .

The Italian presence in Albania has about 400 small and medium-sized enterprises, active in various sectors of the economy (by way of example, in the fields of energy, construction, infrastructure, textiles and footwear, agro-food).
There is also the presence of large Italian banks, such as Intesa San Paolo.

Both natural and legal persons can establish companies in Albania. Both Albanian and foreign subjects can be members.

According to the Albanian legislation on commercial companies, the figure of the “trader” emerges, as well as that of “commercial companies”; the latter articulated as follows:

• “collective company”;
• “limited partnership”;
• “limited liability company”;
• “joint stock company”.

The following are considered by law as “merchants”:

• “natural persons who carry out an independent economic activity”;
• “natural persons exercising a free profession”;
• “agricultural enterprises”.

The most widespread company form in Albania is the local limited liability company (sh.p.k.).
To set up a s.r.l. (sh.p.k.), the minimum amount of the share capital required by law is 100 Leke (about 0.72 Euro). The procedures for making a sh.p.k. (constitution, registration and VAT number) are very streamlined and quick (even in just one day).

In order to pursue a legislative exemplification model that contributes to facilitating and encouraging the establishment of new businesses, in 2007, “The National Registration Center” (QKR) was established.
The cost of registering the commercial company with the QKR is 100.00 Leke (equal to approximately 0.72 Euros).

The legal person is incorporated under the Albanian legal system with the act of its registration with the QKR.

Legal representative of an Albanian company can also be an Italian citizen. The share capital can also be held by a single shareholder, be it Italian or Albanian.

A tax on profit (tatim fitimi) of 5% is applied to companies duly established in the territory of the Republic of Albania with a turnover of up to approximately 113 thousand euros (14 million Lek). While companies with turnover exceeding this sum are subject to a 15% profit tax.

If the company were to accrue dividends, an additional tax of 8% will be applied to them as a personal income tax.

The minimum wage, according to Albanian law, is 21,000 Leke (about 150 Euros).

The rate of value added tax (T.V.SH.) amounts to 20% (in particular sectors, such as accommodation and catering services within tourist facilities and agritourism businesses, amounts to 6%).
Furthermore, since 2019 the import of some products such as agricultural machinery and products, photovoltaics, refrigerators and electric buses is exempt from VAT.

The Albanian tax regime consists of a bipartition between taxes and fees (national and local).

The companies are divided, based on their turnover, in two categories:

• a. companies with an annual turnover of less than 8 million Leke (about 57,200 Euros), called “business i vogel” (small businesses);
• b. companies that invoice more than 8 million Leke annually (about 57,200 euros), qualified as “business i madh” (large companies).

In the Republic of Albania, excise duty is applied to the following products:

• coffee;
• fruit juices, water, non-alcoholic drinks;
• beer, wine, alcoholic beverages and non-alcoholic beverages;
• tobacco and tobacco derivatives;
• oil and derived products;
• cosmetics, perfumes and colognes .

Customs tariffs, where applicable, vary according to the goods from 2% up to a maximum of 15%.

It should be noted that agreements to avoid double taxation are in force between Italy and Albania.