Treatment of Service Exports under Law No. 92/2014

If you provide services to clients outside Albania, it is essential to understand the rules set out in Law No. 92/2014 “On Value Added Tax in the Republic of Albania.” Below is a structured summary to help you determine whether your service is subject to VAT and under what conditions it may be exempt.

The fundamental principle: Place of Supply

According to Article 24 of the Law, the place where a service is considered to be supplied determines whether Albanian VAT applies. This principle is the foundation of the tax treatment of services.

Rules based on the type of client

1. Services to Businesses (B2B)

Article 24, paragraph 1 states:
If an Albanian entity provides services to a business client outside Albania, the place of supply is the country of the client.

Result is no VAT applies in Albania → 0% VAT (service export)

Examples in this case:

• Software development services for a company in Germany
• Graphic design services for an agency in the USA

2. Services to Individuals (B2C)

Article 24, paragraph 2 states:
If a service is provided to a person who is not a business, the place of supply is Albania.

Result is that the service is subject to Albanian VAT → 20% VAT

Example in this case should be online training provided to an individual in Italy → 20% VAT applies

Exceptions based on the nature of service (Article 24)

Type of Service	Place of Supply
Services related to immovable property	Where the property is located
Cultural, artistic, sporting, entertainment activities	Where the activity takes place
Telecommunications, electronic services to consumers	Recipient’s location
Consulting, legal, IT, design, translation, advertising	Client’s location (if business)

When does 0% VAT apply for Service Exports?

0% VAT applies when:

• The client is a business or economic entity located outside Albania
• The service is professional in nature: consulting, translation, marketing, cloud services, software development, etc.

Invoice Requirement must include the statement: “Service provided to foreign client – VAT 0%, based on Article 24 of Law No. 92/2014”

When does 20% VAT apply?

VAT at 20% applies when:

• The client is an individual (non-business), even if located abroad
• The service is consumed in Albania → subject to VAT at the standard rate

Supporting Documentation for 0% VAT

To justify VAT exemption:

• Invoice showing 0% VAT with proper legal reference
• Contract or agreement with the foreign client
• Proof the client is a business (foreign tax ID or registration documents)
• Evidence of payment from abroad (bank, PayPal, Stripe, etc.)

Summary Table

Client Type	Location	VAT Treatment
Business	Outside Albania	❌ 0% VAT (export)
Individual	Outside Albania	✅ 20% VAT applies
Any client	Within Albania	✅ 20% VAT applies

If you’re a freelancer, agency, or offer digital services to foreign companies, you may benefit from VAT 0% treatment as a service exporter.
However, you must ensure all required documentation is properly maintained.