Sole proprietorship status in Albania is available to individual citizens seeking to operate their own business without forming a separate legal entity. This article sets out the latest tax and regulatory conditions for the status known locally as Person Fizike (Physical Person) or Tregtar i Vetëm (Sole Trader), providing a straightforward overview with applicable rates for 2025.
Sole Proprietorship Status in Albania: Overview
In Albania, the sole proprietorship—referred to as Person Fizike or Tregtar i Vetëm—is the principal vehicle for individuals who wish to conduct business independently. Registration is managed by the National Business Center (QKB). The process is accessible to regular citizens, and this business status is widely used throughout the country.
The sole proprietorship does not create a separate legal entity. This means that profits are taxed as personal income, and the individual holds direct responsibility for business liabilities. Below, you’ll find the main conditions and tax requirements for 2025.
Main Features and Registration
- Available to: Albanian citizens (individuals).
- Legal structure: No separate legal entity; business activity is considered personal activity.
- Where to register: National Business Center (QKB).
- Common uses: Freelance work, small trade, professional services.
Taxation for Sole Proprietors in Albania (2025)
Sole proprietors in Albania are subject to personal income tax based on their business profits. The current tax regime is simple, featuring a substantial zero-rate threshold for small businesses and only one main progressive tier above that level.
| Annual Turnover (ALL) | Tax Rate (%) | USD Equivalent* |
|---|---|---|
| Up to 14,000,000 ALL | 0% | Up to $145,000 (rate: 1 USD = 96.5 ALL) |
| Above 14,000,000 ALL | 15% | Above $145,000 |
*USD conversion uses the rate 1 USD = 96.5 ALL (approximate for 2025).
In addition to income tax, both social and health contributions are mandatory for all registered sole proprietors. Current official figures for these contributions are available from the National Business Center and the Albanian tax authorities; readers should refer directly to their websites for current rates as they may be subject to updates annually.
Practical Conditions
- Business Activity: Sole proprietors may invoice clients directly, sign contracts, and conduct a wide range of commercial activities within the scope of their registered purpose.
- Tax Filing: Tax is assessed on net business profits. Standard compliance includes annual reporting and maintenance of financial records.
- Social/Health Contributions: Mandatory; payable regardless of annual turnover.
How to Register as a Sole Proprietor
Registration is centralized through Albania’s National Business Center, which provides an efficient process for individuals. The portals at qkb.gov.al and e-albania.al are the primary resources. Basic identification documents, personal data, and business activity information are required for application. Most registrations are processed rapidly, with the applicant able to begin operations soon after approval.
Comparison Table: Key Conditions for Sole Proprietors in Albania
| Condition | Requirement / Rate |
|---|---|
| Legal Status | Person Fizike / Tregtar i Vetëm (Sole Trader) |
| Separate Legal Entity | No |
| Income Tax (Turnover ≤ 14,000,000 ALL) | 0% |
| Income Tax (Turnover > 14,000,000 ALL) | 15% |
| Social/Health Contributions | Mandatory |
| Registration Authority | National Business Center (QKB) |
Official Resources
Pro Tips for Sole Proprietors in Albania
- Take advantage of the 0% tax rate: As long as annual turnover remains under 14 million ALL, no personal income tax is due on business profits. This makes clear recordkeeping and careful turnover monitoring especially valuable.
- Stay compliant with contributions: Social and health contributions are mandatory regardless of income tax liability. Be prompt with payments to avoid penalties or interruptions.
- Choose the correct registration: When applying as a Person Fizike, ensure your official business purpose covers all planned activities to streamline future compliance.
- Monitor annual updates: Tax rules and contribution rates can be adjusted each year. Regularly check the National Business Center website before filing annual returns.
To summarize, Albania offers an accessible and straightforward path to sole proprietorship status (Person Fizike / Tregtar i Vetëm), with a highly favorable 0% tax on profits for most small operators and only moderate requirements once turnover exceeds the threshold. Registration is quick, and compliance is governed mainly by personal income tax rules and mandatory social contributions. Staying attentive to annual filings and official guidance will help maintain good standing with Albanian authorities.