Registration, documents, declaration, taxes and deregistration of NPOs

What legal status can I choose for NPO registration?

There are three forms of organization of an NGO: Association, Foundation and Center.

The documentation that NPOs prepare and file for their registration?

Based on Law No. 8788, dated 7.5.2001 “For non-profit organizations”, the main documents necessary for registration are the act of establishment and the statute, in which the decision-making and executive bodies must be defined, according to the chosen form of organization.

Non-profit organizations, after they are established, must be registered in the Court of First Instance of Tirana, in accordance with the conditions and procedures provided for in the law, to be registered later with the tax authorities. The registration with the tax authorities and the provision of the NIPT is done by appearing in the regional tax offices where the NGO will develop its activity[1].

The documentation submitted for registration in the Tax Administration[2], is as follows:

• Court Decision, Statute and Notarized Act-Establishment;
• Photocopy of the Identity Card or Passport of the administrator or legal representative;
• Data on the ownership of the headquarters (lease contract or property deed);
• Completed registration form.

Tax obligations of an NPO?

Tax obligations for an NPO are:

• Social insurance contributions are an obligation for every employee and employer. They are paid partly by the employer and partly by the employee, according to legal provisions.
• Health insurance contributions are an obligation for every employee and employer. This type of tax is also paid partly by the employer and partly by the employee according to the legal provisions.
• Tax on Income from Employment (part of personal income tax) – is held for the benefit of income from salary and bonuses, which derive from employment relationships.
• Withholding Tax – Withholding tax is related to the taxation of individuals’ personal income. Mainly, this tax payment technique applies to withholding tax for payments related to various types of services performed by third parties, not registered with the tax authorities, in the capacity of a trader. Such may be payments for rented premises, benefits from membership in a supervisory council, etc..

– (Optional) Value Added Tax – A NPO is obliged to register for VAT if it carries out a taxable economic activity, supplies goods or offers services against payment according to the provisions of VKM No. 953, dated 29.12.2014 On the implementing provisions of Law.

– (Optional) Profit Tax – An NPO is obliged to register for the tax responsibility for Profit Tax, in case it performs economic activity and realizes taxable income according to the provisions in Law.

What should the NPO report after its registration in the Court and tax offices?

After receiving the NIPT certificate, the subject is provided with the password that will serve for online declaration.

The declaration for all tax declarations as mentioned above is done electronically ONLY.

Regardless of when it was registered during a calendar year, the NPO has the obligation to submit the financial statements that make up the balance by March 31 of the following year.

Based on Law No. 25/2018, dated 10.05.2018 “On accounting and financial statements”, the constituent parts of financial statements for NGOs are subject of annually declaration of:

• statement of financial position;
• overview of activities;
• cash flow statement;
• explanatory notes

Notice! From January 1, 2019, with the entry into force of Law no. 25/2018 “On accounting and financial statements”, all NPOs that exceed the value of 30 million lek in terms of assets or income in the financial statements, have the obligation to publish financial statements on their official website.

According to Law No. 10 091, dated 5.3.2009 “On the legal audit, the organization of the profession of the registered accounting expert and the approved accountant”, NPOs are not part of the entities that are obliged to perform a legal audit of the annual financial statements.

The annual income declaration

This form is completed by the individual who bears the obligation to declare no later than April 30 of the following year. Individuals are obliged to complete and submit the Individual Annual Income Declaration, if they realize annual gross income from all sources (inside and outside the Republic of Albania), in the total amount over ALL 2 million.

The declaration is completed by the individual himself, who has the obligation to complete and submit the annual individual declaration of personal income, but he also has the right to appoint, by proxy, his legal representative to complete or submit his declaration.

Non-declaration and non-payment of the tax liability on time is penalized according to the provisions of Law No. 9920, dated 19.05.2008 “On Tax Procedures in the Republic of Albania”.

What deregistration procedures apply to an NPO?

If the NPO does not declare for a period longer than 12 consecutive months, or has decided to stop the activity for a period longer than 12 months or indefinitely, it goes into passive status.

The transition to passive status of NPOs is done at the request of the entity or by the Tax Administration when the legal conditions are met:

At the request of the subject – when the latter decides to stop the activity for a period longer than 12 months or indefinitely;

From the Tax Administration – in case the entity submits declarations without activity (with zero) or when it does not declare for a period longer than 12 consecutive months.

For the entire period that the entity is in “Passive” status, it does not have the obligation to submit tax returns (the generation of returns is stopped automatically).

To de-register an NPO, follow the steps below:

• The NPO applies to the Court for the initiation of the deregistration procedure;
• After receiving the notification from the Court, the Tax Administration verifies the taxpayer’s situation regarding the fulfillment of legal obligations on his part (declarations and payments);
• the Tax Administration notifies the Court of above (confirms or denies deregistration).

What is the cost involved in registering and maintaining compliance, and de-registering the NPO?

Costs of registration can vary from 7,000 to 30,000 Lek (this includes printing costs, notarizations, transportation, labor costs, etc.).

Costs for accounting registration and tax declaration and dealing with tax and labor audits vary from 40,000 – 60,000 lek per month

[1] https://www.tatime.gov.al/c/5/77/86/regjistrimi

[2] according to Law No. 9920, dated 19.5.2008 “On tax procedures in the Republic of Albania” as amended