Tax when you sell shares in AlbaniaALTax
The legal reference, which sets the tax that should be calculated and paid for this type of transaction in Albania is linked to the capital tax, treated as withholding tax and is based in Article 33 of the Law on Income Tax in Albania (LTA).
Based on the LTA there’s no difference between a sale process or gift process, regarding to the tax treatment. The transfer of shares from one partner to another buyer (whatever the residence of the buyer) is a taxable transaction and is not exempted.
To meet the sales procedure of shares from one partner (owner of shares) to another person / company (tax resident or not) need to realize sales through affidavit of a notary office. Meanwhile, the National Business Center offer also this service.
To realize this notarial registration, it is required by the Civil Code, that except the decision for the sale of Partner shares necessarily should be also attached the financial statements. These financial statements should reflect the situation of the working capital, equity, share value, income and expenses sheet, cash flow and the assets and liabilities.
The period to be presented will be the beginning of the fiscal year until to the end of the nearest month to the date of affidavit keeping in mind that after this date no changes affecting the capital.
In the Liabilities part of the financial statements, the total amount of capital shows how the company is currently worth on the market. At the time of sale of shares the total capital value is divided by the corresponding percentage of the value of shares that the owns the seller.
Income derived from the difference between the selling price of shares (at the date of sale under the act) and the purchase price of shares (at the time of start-up of the company) are subject to 15% tax on the gross amount of the transaction. Tax should be withheld and calculated by the seller and is an individual action. This tax should be declared and paid before holding of affidavit from the notary (a tax consultant could performs the calculations).
This tax belongs to be paid by the income beneficiary (seller of shares). Once paid individual income tax the procedure continues with registration steps and should be accompanied by an order of payment on account of the tax office, where the company and the seller have the jurisdiction to submit the taxes.
The order of payment should be named as the personal income tax, with the name of the seller and the Personal identity card number.
In the beginning of the following year (2017) the seller of the shares is potentially subject to the Declaration of income individual form (based on Article 13 of the LTA), as the value of sales is likely to exceed the threshold of income over ALL 2 million per year.