How to Calculate VAT in Albania (TVSH Explained)
Ever stared at a receipt in Albania and wondered what “TVSH” means? Or perhaps you’re a new business owner trying to figure out your pricing. You’ve come to the right place. “TVSH” (Tatimi mbi Vlerën e Shtuar) is Albania’s Value Added Tax, a consumption tax applied to most goods and services.
It might seem complicated, but calculating it is actually very straightforward once you know the rules. This guide will break down everything you need to know—from the current rates to simple formulas—so you can calculate Albanian VAT with confidence. No complex jargon, just clear, actionable answers.
Table of Contents
What Exactly is TVSH (VAT) in Albania?
Think of TVSH (VAT) as a sales tax. It’s collected by businesses at each stage of production and sale and ultimately paid by the final consumer. When you buy a coffee, a souvenir, or book a hotel room, the price you pay almost always includes this 20% or 6% tax.
For businesses, it’s a bit more complex. They charge VAT to their customers but can also claim back the VAT they *paid* on their own business expenses. This system ensures the tax is only applied to the “value added” at each step.
Current VAT Rates in Albania (2024/2025)
Unlike some countries with dozens of exceptions, Albania’s system is relatively simple. There are two main rates you need to know.
The Standard Rate: 20%
This is the most common rate. It applies to almost everything you can buy, including:
- Most goods (electronics, clothes, souvenirs)
- Restaurant meals
- Car rentals
- Professional services (lawyers, consultants)
- Telecommunications
The Reduced Rate: 6%
This lower rate is specifically designed to support the tourism industry and other key sectors. As a visitor or resident, you’ll encounter the 6% rate most often with:
- Accommodation services (hotels, guesthouses, campsites)
- Accommodation services that are part of “package tours”
- Certain types of advertising services
- Supply of books
Important Note: While your hotel room might be taxed at 6%, the food you order at the hotel’s restaurant will still be taxed at the 20% standard rate.
The 0% Rate (Zero-Rated)
This isn’t the same as “tax-exempt.” It means the final good is sold with 0% tax, but the producer can still reclaim the VAT they paid on their supplies. This mainly applies to:
- Exports of goods
- International transport services
- Certain medicines and medical equipment
How to Calculate Albanian VAT: The Easy Way
This is the “calculator” part of the article. Here are the two simple formulas you’ll ever need. Let’s use a standard 20% rate for these examples.
Formula 1: Adding VAT to a Net Price (For Businesses)
Use this if you have a pre-tax price (Net Price) and want to find the final price (Gross Price).
Formula: Net Price × 1.20 = Gross Price
Example:
- You want to sell a product for 10,000 ALL before tax.
- Calculation: 10,000 ALL × 1.20 = 12,000 ALL
- The final price for your customer is 12,000 ALL. The VAT amount is 2,000 ALL.
(If using the 6% rate, you would multiply by 1.06).
Formula 2: Finding the VAT from a Gross (Total) Price (For Consumers)
This is the most common calculation. You have a final receipt and want to know how much tax you actually paid.
Warning: You cannot just multiply the total price by 20%. That’s incorrect. You must use this formula.
Formula: Gross Price ÷ 1.20 = Net Price
Example:
- Your restaurant bill is 3,600 ALL (Gross Price).
- Calculation: 3,600 ALL ÷ 1.20 = 3,000 ALL (Net Price)
- This means your meal cost 3,000 ALL, and the VAT you paid was 600 ALL (3,600 – 3,000).
(If using the 6% rate, you would divide by 1.06).
Who Needs to Register for VAT in Albania?
This is crucial if you’re planning to work or start a business in Albania. You are generally required to register for VAT (TVSH) if your business’s annual turnover (total sales) exceeds 10 million ALL (approx. €100,000, but this can fluctuate).
However, some professions (like lawyers, notaries, accountants, and doctors) must register for VAT regardless of their annual turnover. It’s always best to consult a local accountant to ensure you are compliant.
What About VAT for Tourists? (Tax-Free Shopping)
Many countries offer a “VAT refund” scheme for tourists who buy goods and export them. In Albania, this scheme exists but is not as widely used or automated as in the EU.
As of recent regulations, non-resident visitors can claim a VAT refund on goods purchased if the total value on a single invoice is over 120,000 ALL. You must get a specific “Tax-Free” invoice from the shop, have the items unused, and get the invoice stamped by customs when you leave the country. Honestly, for most typical tourist purchases, this is often more hassle than it’s worth, but it’s good to know for large purchases (like high-end jewelry or electronics).
Quick Facts
- Standard Rate: 20% (most goods & services)
- Reduced Rate: 6% (mainly for hotels & accommodation)
- Acronym: VAT = TVSH (Tatimi mbi Vlerën e Shtuar)
- To Find Tax Paid: Total Price ÷ 1.20 = Pre-Tax Price
- To Add Tax: Pre-Tax Price × 1.20 = Total Price