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11. BUSINESS TRANSFORMATION AND RE-ORGANIZATION

In case of sale of shares or assets during a re-organization, capital gains derived from the sale of shares or assets by a company are included in the annual profit and loss statement of the transferor company and are subject to tax at the standard corporate tax rate, i.e. 15%. If the transferor is a non-resident, the provisions of the tax treaty apply where available, and if no treaty exists then the non-resident is required to pay the capital gains tax on the profits derived from the sale at the standard corporate tax rate (see Sec. 5.).

Where the transferor is a non-resident, but the transferee is a resident of Albania, the transferee should withhold taxes on the purchase price at the standard corporate tax rate.  

Effective 15 February 2021, new rules regarding re-organizations are introduced that provide for the partial transposition of the EU Merger Directive. Under the new rules, capital gain tax that arise from the transfer of assets and liabilities in a re-organization are deferred until their disposal by the acquiring company. The deferral is subject to certain conditions and applies to mergers with absorption, transfer of a branch or a of branch activity, and mergers and divisions, where the transactions occur between Albanian tax resident companies.

The new rules also define terms such as a merger with absorption, transfer of a branch or a branch of activity, exchange of shares or quotas, merger, amalgamation and division. It also includes specific rules on the valuation of shares and/or quotas received by an Albanian shareholder as a result of such re-organization.