Is it possible to do consultancy with an American company, working from Albania, without registering as a natural person?

Question
Can a consulting relationship be established with an American company, working from Albania, without registering as a natural person, but withholding taxes on the payments received from the service, with the reasoning that the project will not last long and opening the activity has additional costs?

Answer

At the heart of this issue lies the difference between a casual income and the exercise of an independent economic activity. The moment an individual enters into a consulting contract with a foreign company, assumes concrete obligations (deliverables), reports the progress of the work, and is paid on the basis of a structured professional relationship, this situation, from the Albanian legal and fiscal perspective, is considered the exercise of an independent economic activity.

In this context, Albanian law requires registration as a natural person with the Central Bank, provision of a Personal Identification Number (NIPT) and declaration of income according to the tax legislation in force. This is not related to the fact of whether the company is American or Albanian, but to the place where the activity is exercised – in this case, Albania.

The idea of ​​“withholding tax by the individual himself” does not technically work in the Albanian system. Withholding tax, according to the fiscal concept, is withheld by the payer of the income. In your case, the American company is not obliged to withhold Albanian tax and Albania does not provide for a mechanism where the unregistered individual can apply withholding tax on himself. So, there is no formal intermediate path where you can operate as a simple individual and simply pay tax on the amount received.

Theoretically, a single, sporadic income, without continuity and without a professional contractual structure could be argued as occasional income. However, the typical consultancy contract, with clear obligations, periodic payments and reporting, makes it very difficult to classify the situation as such. If the payments are monthly or recurring, there is a continuity that reinforces the economic nature of the activity.

From a practical point of view, the risk mainly materializes in two directions. First, Albanian banks, due to money laundering prevention rules, may require additional documentation when there are repeated transfers from abroad with the description “consulting” or “services”. In the absence of a NIPT and formal invoicing, this may lead to blocking or clarification requests. Second, if the tax administration considers the situation as an unregistered activity, fines, retroactive obligations for social contributions and interests may be applied.

If the project is very short-term, with a single payment and not a high value, the practical risk may be relatively limited. But if we have several months, regular payments and a significant amount, formalization becomes the most stable and safest solution.

In terms of cost, opening a natural person brings obligations such as monthly payment of social contributions and accounting services. However, the benefits are important: legal certainty, regular banking position, possibility to invoice other clients in the future and avoidance of any risk of penalties. Furthermore, the activity can be closed after the project is completed, limiting the burden in time.

In conclusion, from a legal and fiscal point of view, the structured consultancy relationship cannot operate regularly without registration. There may be cases of low practical risk in very short and sporadic projects, but this remains a choice with exposure. The safest and most sustainable solution is to register as a natural person for the period of engagement and close the activity after the end of the contract.