ALBANIA: An Introduction to Corporate/Commercial

Chambers Global 2022 Practice Area Overview (Corporate / Commercial)

I. Overview 

Albania is an upper middle-income country in South Eastern Europe, with an estimated population of 2.9 million people. Albania has been a member of NATO since 2009, and in 2014 was awarded candidate status by the EU. In 2018, the European Commission issued an unconditional recommendation to open accession negotiations, and in its conclusions the Council set out the path towards opening accession depending on progress made in areas of key importance such as judiciary, anti-corruption, intelligence services and public administration. Albania is looking forward to the negotiations to be launched during 2022.

In late 2017, following some important constitutional changes in 2016, a judicial vetting process for all magistrates started. It comprises three pillars of assessment for some 800 judges, prosecutors and legal advisors of the Supreme Court and Constitutional Court of Albania: appraisal of assets, background and proficiency. By the end of 2021, some 500 judges and prosecutors have been vetted, with 180 being fired, 70 others withdrawn from their position and only about 190 having passed.

The earthquake of November 2019 and the COVID-19 pandemic were the two main factors that impacted Albania's economic trends in the past two years. Consequently, the Albanian economy shrank by 3.5% in 2020, although this contraction was softened by both public and private investments, mainly in the construction and agriculture sectors.

The Albanian economy showed positive growth and recovery in 2021 on the back of a strong rebound in domestic trade as well as continued growth in the industrial and construction sectors. The tourism sector rebounded with the number of foreign tourists equalling the pre-pandemic figures in June–August 2021. The growth rate for 2021 was estimated at 7.2%.

In 2022, Albania’s GDP is expected to grow by 3.7% according to the EBRD, while Albania’s budget is based on a projected GDP growth of 4.1%. Albania is preparing for a medium-term revenue strategy to finance its development spending of an estimated 2.2–3.00% of GDP over five years.

II. Market Opportunities 

Albania's economy is constantly becoming more involved with global markets, presenting noteworthy investment opportunities in various sectors.

In recent years, significant public and private investments were made in the energy sector, especially renewables, while the oil and gas sector continue to develop with ongoing onshore explorations. Albania aims to invest in the modernization of other sectors, especially healthcare and infrastructure. Additionally, the government intends to accomplish significant technological advances, including digital public services. Last but not least, Albania offers excellent prospects in the tourism sector, given the country's coastline, climate and its rich archaeological and cultural heritage.

III. New legislation 

Law on strategic investments: Albania adopted a law on strategic investments in 2015 in order to boost foreign investments in the country. Mining and energy, transport, IT communication infrastructure, urban waste industry, tourism, agriculture (large farms) and fishing, economic zones, and development priority areas, are defined as strategic sectors. Investments in strategic sectors may obtain assisted procedure and special procedure, based on the level of investment, which varies from EUR1 million to EUR100 million.

Law on foreigners: In June 2021, the Albanian Parliament adopted the new law on foreigners. The new law, which particularly approximated the EU acquis, provides for a new single permit, comprising both labour and residence permits, and defining some new categories eligible to reside in Albania such as: permits for digital workers, residence permit for “au pairs”, residence permit for use of immovable property, and for retiree. The first residence permit for citizens of EU member states, the USA and Kosovo shall be 5 years.

Law on UBO register: In August 2020, Albania approved the law for the establishment of the register of the Ultimate Beneficiary Owners. The law aims to ensure transparency on the ultimate beneficiary owners, who directly and indirectly own more than 25% of shares, voting rights, or ownership interests in all entities registered to do business in Albania, and was adopted following the recommendations of MONEYVAL.

Fiscalization tax reform: Following the adoption of a new law on the invoice and circulation monitoring system, Albania introduced in 2020 a new tax reform called fiscalization. It introduced a transaction control system, which requires clearance of invoices by the tax authorities prior to issuance. Taxpayers must use certified software to transmit e-invoices to a centralized invoicing platform in real time. The new online system includes online reporting of all issued invoices and their receipts. All cash and non-cash invoices and the accompanying invoices are now recorded in the database of the Tax Administration in real time, and e-invoicing for non-cash transactions (B2B and B2G) is introduced.

Startup Support Law: The Albanian Parliament has recently adopted a new law that aims to provide the right legal framework and regulations in support of startups and innovation ecosystem development. The new law aims to facilitate startup creation and market integration, talent attraction and retention, innovation in legal framework and procurement proceedings, facilitating access to finance, and social inclusion and diversification.

IV. Market Trends 

Renewable PV auctions: In 2020 and 2021 the Albanian Government announced and successfully completed two auctions for the development of two photovoltaic power plants totalling 240 MW of installed power. The EBRD provided technical assistance for both auctions, and the auctions attracted high quality foreign investors, delivering a highly competitive tariff below EUR30 per MWh.

Wind power auctions: As part of Albania’s energy and climate change action to diversify renewable energy sources, deliver secure energy and attract sufficient investment in sustainable low-carbon technologies, the Ministry of Energy launched in late 2021 a two-stage tender for the selection of several onshore wind power projects with a capacity between 10 MW to 75 MW, for a total capacity of 100 MW. This auction represents a unique approach for renewable energy project tenders in Albania. Each successful bidder will be offered a physically settled PPA for a 15-year term which guarantees the purchase of the supported output at a fixed electricity price, equal to the financial bid.

Marina ports: In 2021, the Albanian Government announced a EUR2 billion investment project by Dubai-based Emaar Group for the construction of the tourism port of Durrës, which is projected to be one of the largest tourist ports in the Mediterranean. Two other projects for the construction of tourism marinas in the two other tourist destinations of Vlora and Saranda are under way.

With the development of the new tourism port, the largest port of Albania, Durrës Port, will be relocated to the northern part of Durrës.

Development of large hydro power plants: Albanian Power Corporation and the US Bechtel signed in 2021 an agreement for the construction of a 210 MW hydro power plant in Skavica, Drin River, under a fast-track delivery approach. Skavica is considered a critically important hydro power plant, which will play a significant role in Albania reaching its ambition of energy sufficiency, and increase generation by renewable sources.

Improvement of road infrastructure: The Albanian Government has planned in 2022 to announce the opening of an international bidding procedure for the construction and operation of a 115 km highway from Milot to Fier, part of the Adriatic–Ionian corridor. The project will include the improvement of 62 km of existing highway and the construction of an additional 52 km segment, as well as alternative secondary roads. The project is likely to be a PPP structure, and investment value is expected to be EUR1.81 billion. A new bid is also due to be launched for the improvement, extension and concession of the Tirana–Durrës highway which connects Albania’s two busiest cities, the capital Tirana and Durrës, where the largest port of the country is located.

New airports infrastructure: Following the opening of Albania’s second international airport, located near the north-east border with Kosovo in 2021, and the signing of the concession agreement for the construction of the third airport of the country to be located in the coastal southern city of Vlora with an estimated EUR104 million investment in 2021, Albania is expected to launch in 2022 a new bid for the design, construction and operation of a fourth airport in the coastal southern city of Saranda with an estimated investment value of approximately EUR35 million.