Investors can set up a sole proprietorship in Albania if they want to carry out a business activity in their own name. The sole proprietorship is also known assole trader or, in Albanian, thePerson Fizik. This entity can be registered only by an individual who develops a business activity for himself/herself, with the mention that there isn’t any legal distinction between the business and the owner.
Still, it must be noted that the sole trader must be properly registered with local authorities for taxation, the issuance of various registration documents, etc., and for this, our team of specialists in company formation in Albania can provide personalized legal assistance.
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The main characteristics of the sole trader in Albania
From the beginning, we mention that this entity can only be set up by one founder, therefore it can’t be used as a way to partner up with other individuals or businesses for the purpose of engaging in a certain economic activity. This means that the founder has full control over the business when he/she will set up a sole proprietorship in Albania.
The downside of having full control of the sole trader is that the founder also bears full legal responsibility for the debts of the company, given that the law does not distinguish between the two (the sole trader is treated as a natural person and taxed accordingly).
An advantage of the sole trader is that the process of company incorporation in Albania is simpler compared to the steps that must be taken for other business forms, given that the Person Fizik is the simplest way of starting a business. It also benefits from the simplest reporting obligations, but we still advise you to receive specialized assistance (for registration, accounting, tax compliance, etc.).
Please mind that it is possible to set up a company in Albania as a sole trader, as long as the foreigner has a residence permit issued by the Albanian authorities. Our consultants can provide legal advice on the immigration formalities foreigners must meet, in accordance with their nationality.
Highlights of the registration process
In order to open a company in Albania as a sole trader, interested parties must gather the required paperwork and submit it to the National Business Center. The process entails the following:
- the process to set up a company in Albania for this entity can be completed in 1 business day;
- the registration must be completed in accordance with the rules and requirements stipulated by Law no. 9901 On Entrepreneurs and Commercial Companies.
The registration with the National Business Center can be completed online or in person and is subject to specific fees.
Tax rules for sole traders in Albania
Individuals who will set up a sole proprietorship in Albania are liable to the payment of various taxes, given that they start their activities with the purpose of engaging in commercial operations. Considering that the sole trader and the owner are the same entity, the company is taxed in accordance with the personal income tax rules, applicable to the owner (the sole trader does not have legal personality).
As such, some of the highlights of the taxation system applicable in this case are:
- the sole trader is taxed at a rate of 15% for an annual taxable profit of up to ALL 14 million;
- income exceeding the ALL 14 million threshold will be charged with a tax rate of 23%;
- however, up until 31 December 2029, specific categories of self-employed individuals will benefit from a tax of 0% for turnover below ALL 14 million;
- those who will pay the 15% tax rate until the end of 2029 are defined under the stipulations of the Decision of Council of Ministers no. 753.
Sole traders can also be liable for the payment of VAT, employment taxes and others. For further advice on the tax obligations arising when operating a business under a sole trader, we invite you to contact our specialists in company formation in Albania.