Located in Southeastern Europe, Albania is renowned for its breathtaking Adriatic and Ionian coastlines. Offering more than just beautiful landscapes, the country has spent the last decade accelerating the growth of its economy.
Foreign investors, entrepreneurs and digital nomads alike have flocked to this Balkan country for a number of reasons. Not only is it more affordable than other European countries, it is also highly business-friendly. So if you are considering starting a business there, here is a step-by-step guide on how to do it successfully.
Why Consider Albania For A Startup Location?
According to StartupBlink, Albania ranks 18th in Eastern Europe as an ideal startup location and plenty of innovative ones have emerged in recent years.
The country’s biggest advantage is its location. Not only is it well connected to Europe including ferries to Italy and sharing borders with Greece, Kosovo and Montenegro, but it also has access to the Middle East and North Africa. This is a major drawcard for startups looking to innovate in exporting or logistics.
Albania is also a candidate to become a member of the European Union. Once it is aligned with European standards, it will make the legal processes of starting a business more simplified.
Which Industries Have The Most Opportunities?
There are several sectors that boast exciting opportunities for new ventures, but these ones stand out in particular:
Tourism and hospitality: Albania is home to a number of historical sites and beaches that are almost untouched. As its number of international visitors continues to rise, so is the demand for hotels and tourism-related activities like restaurants or tours.
Information technology: The country is becoming a popular destination for outsourcing and software development, especially for new startups.
Agriculture: Albania has long been an agricultural spot for wine, olive oil and dairy products so opportunities in food processing, exporting or organic farming are very present.
Renewable energy: A large portion of the country’s electricity is generated from hydropower. This has harnessed interest in other forms of renewable energy like solar and wind.
Tax Regulations In Albania
Companies who have an annual turnover of €75,000 are exempt from corporate tax, but those who exceed that amount are required to pay 15%.
The standard Value Added Tax (VAT) rate is 20% while reduced rates of 6% to 10% apply to certain industries.
In terms of social security contributions, employers are required to pay 15% while employees will pay 9.5%.
Albania has also signed double taxation agreements with a range of countries which reduces the risk of foreign investors being taxed twice.
Visa And Residency Requirements For Foreigners
Those who are part of the European Union are able to enter Albania for up to 90 days. It’s also relatively easy for those to apply for residency.
Non-EU citizens can apply for a Short-Stay Visa for up to 90 days and a Long-Stay Visa if their intention is to stay for longer than three months.
Those who are self-employed or employed by a company in Albania will be required to have a work permit. For those who want to start a business in the country or invest, they can apply for an Investor Visa.
Albania also recently introduced a Digital Nomad Visa for remote workers and freelancers to legally work there.
Their residence permits are usually valid for one year and renewable for five years, after which permanent residency can become an option.
Are There Any Challenges To Starting A Business In Albania?
While every country has its own unique opportunities, each one will also present its own set of potential challenges. Albania is no different, and these are some of the hurdles that you could encounter while starting a business:
Corruption: This is an ongoing challenge that exists in both the public and private sectors.
Language barrier: Although the younger population is bilingual and can speak English, official documentation will be in Albanian so an understanding of the language is necessary.
Finance access is limited: Foreign investors often need to bring in their own funding. This is because access to credit and investment funding is harder to acquire.
How To Start A Business In Albania
If you are strongly considering starting a business in Albania, here is a step-by-step guide on how to do it.
Choose A Business Structure
The first step is to select your legal structure. In Albania specifically, these are the most common options to choose from:
- Sole proprietorship.
- Limited liability company.
- Joint stock company.
Small to medium size enterprises (SMEs) are typically suited to a limited liability company.
Reserve A Business Name
If you visit Albania’s National Business Centre website, you can check the availability of your desired name. If it is available, you will then have the option to reserve it.
Prepare The Documentation
For this step, you will need identification of your directors and shareholders as well as your Articles of Incorporation. If you have a physical business location, then you will also need to provide the lease agreement.
Register The Business
You can visit the National Business Centre in person or apply online for your business registration. Here you will also receive your tax and social security registration.
Open A Business Bank Account
The last step is to open up a corporate bank account at one of Albania’s banks to manage your company’s finances.
Should You Start A Business In Albania?
Albania is, without a doubt, a hidden gem for entrepreneurs and new startups. The country’s entrepreneurial spirit, coupled with affordable living and a growing economy, makes it an appealing destination.
While some hurdles like corruption and language barriers may be present, these can be mitigated with considerate planning and forming strategic local partnerships.
For those willing to take on the challenge, it can certainly be a rewarding and fruitful experience.
Good luck!
