How does Albania payroll tax work in 2026?
Albania's employer social security rate is 16.7%, applied on salaries up to a monthly ceiling of ALL 186,416/month. There is no personal allowance. Income tax starts at the first ALL earned, at 13%, then rises to 23% above ALL 2,040,000 a year. That two-band structure, with no zero-rate floor, is the single biggest Albanian payroll surprise for employers used to UK or EU frameworks.
· Albania guide
Illustration · Tirana, Albania
Albania employer social security is 16.7% of gross salary. Employee social security is 11.2%. Both apply on monthly earnings up to ALL 186,416/month. Earnings above that ceiling attract no further contribution.
Albania has two income tax bands. The rate is 13% on annual income up to ALL 2,040,000. Above that it is 23%. There is no personal allowance. Taxation begins at the first ALL earned.
Payroll runs monthly. Employers must remit withheld tax and social contributions to the tax authority by the 20th of the following month. The national minimum wage is ALL 50,000/month.
What does an employer pay in Albanian social security?
Employer social security is 16.7% of each employee's gross salary. This covers old-age pension, disability, survivor benefits, and health insurance in one combined rate.
The rate applies up to a monthly salary ceiling of ALL 186,416/month. Salary above that ceiling is not subject to further contributions.
| Contribution component | Employer rate |
|---|---|
| Social insurance (pension, disability, survivor) | 15% |
| Health insurance | 1.7% |
| Total employer rate | 16.7% |
Both components are paid by the employer to the State Social Insurance Institute (ISSH) and the Health Insurance Fund (ISKSH). The monthly contribution ceiling of ALL 186,416/month is set annually and updated with the minimum wage. Salary above the ceiling carries no further social security cost.
No separate occupational pension layer
Albania does not have a mandatory occupational pension scheme separate from the State Social Insurance system. The 15% social insurance component is the old-age provision. There is no auto-enrolment mechanism and no additional employer pension contribution on top of the social security rate.
Minimum wage and employer cost
The national minimum monthly wage is ALL 50,000/month from 1 January 2026 (Council of Ministers Decision No. 776, 2025). At minimum wage, the employer's total monthly social security cost is 16.7% on ALL 50,000/month, with no ceiling complication at this salary level. Run the Employer Cost Calculator to see the full picture for any salary.
What does an employee pay in Albanian social security?
Employee social security is 11.2% of gross salary. The employee pays this directly through payroll deduction.
The same monthly ceiling of ALL 186,416/month applies to the employee contribution. Salary above the ceiling is not deducted.
| Contribution component | Employee rate |
|---|---|
| Social insurance (pension, disability, survivor) | 9.5% |
| Health insurance | 1.7% |
| Total employee rate | 11.2% |
Social security contributions are withheld by the employer from each payslip and remitted to ISSH and ISKSH by the 20th of the following month. Employees do not file separately for social insurance. The contribution record builds toward state pension entitlement over the employee's working life.
At the national minimum wage of ALL 50,000/month, the combined employer and employee social security cost is 16.7% plus 11.2% on the same base salary. The effective total labour cost per employee is the gross salary plus the employer share of 16.7%.
Albania income tax bands for 2026
Albania has two income tax bands. The rate is 13% on annual income up to ALL 2,040,000. Above ALL 2,040,000 the rate is 23%.
There is no personal allowance. Tax is due on the first ALL of income earned. Employers deduct income tax from each payslip.
| Annual income band | Rate |
|---|---|
| ALL 0 to ALL 2,040,000 | 13% |
| Above ALL 2,040,000 | 23% |
The bands apply to employment income for tax-resident individuals. The rates were introduced effective 1 January 2025 and remain unchanged for 2026 (PwC Worldwide Tax Summaries, Albania).
No personal allowance: the key difference from UK and EU payroll
Most European countries exempt a band of income from tax entirely. Albania does not. The 13% rate starts from the first ALL earned. For an employee earning the minimum wage of ALL 50,000/month, income tax applies from the first payslip at 13%. This is a common point of confusion for employers moving from higher-allowance frameworks.
Tax residency and withholding
Tax-resident employees (those present in Albania for 183 or more days in a calendar year) are taxed on worldwide income. Non-residents are taxed only on Albanian-source income. The employer withholds income tax from each monthly payslip and remits it to the Albanian Tax Administration by the 20th of the following month.
How does Albanian payroll withholding and filing work?
Albanian payroll runs monthly. Employers calculate, withhold, and remit income tax and social contributions every month.
Withheld amounts must reach the Albanian Tax Administration by the 20th of the month after the payroll month. Late remittance attracts penalties and interest.
The employer withholds personal income tax and social security contributions from each monthly salary payment. Both must be remitted to the Albanian Tax Administration by the 20th day of the following month. Social contributions go to ISSH and ISKSH via the same deadline.
Source: PwC Worldwide Tax Summaries: Albania Individual Tax Administration
The Albanian payroll filing obligations each month:
- Income tax withholding declaration: monthly, filed and paid by the 20th of the following month
- Social insurance contributions declaration: monthly, filed with ISSH and paid by the 20th of the following month
- Health insurance contributions declaration: monthly, filed with ISKSH by the same deadline
Annual employer declaration
Employers must also file an annual summary declaration with the Albanian Tax Administration covering all employees paid during the year, with year-to-date income, tax withheld, and contribution totals. The deadline for the annual employer declaration is 31 March of the following year.
No thirteenth month or mandatory bonus
Albanian law does not require a thirteenth-month salary or any mandatory annual bonus beyond the regular monthly wage. Contractual bonuses are subject to normal income tax and social security contributions.
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Collect salary and variable pay
Gather base salary, bonuses, and any benefits in kind for the month before the payroll run closes.
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Calculate gross pay
Total all earnings. The monthly social security ceiling caps the base for contribution calculations but not for income tax.
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Apply income tax withholding
Deduct income tax at 13% on annual income up to ALL 2,040,000, then 23% on the excess. There is no personal allowance, so deductions begin from the first ALL earned.
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Deduct employee social security
Withhold 11.2% of gross salary up to the monthly ceiling. Record the withheld amount for remittance.
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Calculate employer social security
Add 16.7% of gross salary (up to the ceiling) as the employer's own contribution cost. This is an on-cost above the salary, not deducted from the employee.
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Remit to the Albanian Tax Administration by the 20th
Pay all withheld income tax, plus both employer and employee social contributions, to the Albanian Tax Administration and the ISSH and ISKSH by the 20th of the following month. Late payment attracts interest and administrative penalties.
Social insurance and retirement contributions in the payroll stack
Albania's retirement provision runs through the State Social Insurance scheme. There is no separate mandatory occupational pension.
The employer contributes 15% of gross salary to social insurance and the employee contributes 9.5%. Both rates apply within the monthly ceiling of ALL 186,416/month.
The Albanian Social Insurance Institute (ISSH) administers old-age pensions, disability benefits, and survivor benefits under a unified contribution framework. Contributions are part of the total social security rates already covered in sections one and two above.
Contribution summary for payroll purposes
| Item | Employer | Employee |
|---|---|---|
| Social insurance (pension, disability, survivor) | 15% | 9.5% |
| Health insurance | 1.7% | 1.7% |
| Total | 16.7% | 11.2% |
No auto-enrolment; no supplementary mandatory pension
Albania has no auto-enrolment mechanism and no mandatory supplementary pension tier. Voluntary private pension schemes exist and contributions to them are deductible by the employee up to limits set by Albanian tax law, but these are not a payroll obligation for the employer beyond normal deduction administration if the employee elects to participate.
Sick pay in the payroll stack
For completeness: Albanian law requires the employer to pay sick employees at least 80% of their regular wage for the first 14 days of any sickness absence. After that, the State Social Insurance scheme takes over. Both figures apply from day one of illness and are not subject to a waiting day.
How does Teamed handle Albania payroll for you?
Teamed becomes your legal employer of record in Albania for from $599 per employee per month, with zero FX mark-up in any currency.
Payroll, tax, and the full Albanian employment law stack run on one platform.
Real HR and legal experts handle your Albanian hires, from the first contract through every monthly ISSH and income tax filing. An actual person manages your account, not a ticket queue. There is no setup fee and no exit fee. Every employer social security and income tax cost passes through at cost, itemised on every invoice.
EOR payroll, contractor onboarding, and entity setup all live on one platform. An Albanian contractor who converts to direct employment keeps their record. That same employee can graduate from EOR to your own Albanian entity without switching systems. EOR is the right model for a first Albania hire, until it isn't. Run the Employer Cost Calculator to model total cost including social security before your first offer goes out. Start from the Albania hiring overview.
Key sources: PwC Worldwide Tax Summaries: Albania, PwC Albania Individual Other Taxes, and Council of Ministers Decision No. 776, 2025 (minimum wage).
Frequently asked questions
What is the employer social security rate in Albania in 2026?
The total employer social security rate is 16.7% of gross salary. This covers 15% for social insurance (pension, disability, survivor) and 1.7% for health insurance. The rate applies on monthly earnings up to a ceiling of ALL 186,416/month. Salary above the ceiling carries no further contribution.
What does an Albanian employee pay in social security?
Employee social security is 11.2% of gross salary, made up of 9.5% social insurance and 1.7% health insurance. The same monthly ceiling of ALL 186,416/month applies. The employer deducts this from each payslip and remits it to ISSH and ISKSH.
What are the Albanian income tax rates in 2026?
Albania has two income tax bands. Annual income up to ALL 2,040,000 is taxed at 13%. Income above ALL 2,040,000 is taxed at 23%. There is no personal allowance. Tax begins at the first ALL earned.
When must Albanian payroll taxes be remitted?
Employers must remit withheld income tax and social security contributions by the 20th of the month following the payroll month. This deadline applies to income tax paid to the Albanian Tax Administration and to social contributions paid to ISSH and ISKSH. Late payment attracts interest and administrative penalties.
Does Albania have a mandatory pension contribution separate from social security?
No. Albania does not have a separate mandatory occupational pension scheme. Old-age pension provision is built into the State Social Insurance contribution. The employer rate of 16.7% and the employee rate of 11.2% already include the pension component. There is no additional auto-enrolment obligation.
The first question we get on every Albania hire is: why is tax deducted from the first ALL? Albania has no zero-rate band. There is no personal allowance floor like the UK or France. You model the cost correctly up front, or you end up renegotiating the offer after the first payslip arrives.
Albania's employer social security sits at 16.7%, applied from the first ALL of salary with a monthly ceiling of ALL 186,416/month. No personal allowance. No zero-rate floor.
Income tax at 13% starts at day one. The 23% top band kicks in above ALL 2,040,000 a year.
Know the numbers before the offer goes out.
