Americans in Albania: A Guide for US Expats and Retirees on Benefits, Tax and Living Costs

With the Italian and Portuguese governments having removed their appealing expat tax deals, the latter amid skyrocketing real estate prices, US expats and retirees looking to retire around the Mediterranean may feel like their dreams have been crushed. However, these changes make Albania shine even brighter on the retirement radar.

Not only does this less-known gem offer a picturesque setting with a cost of living that is a fraction of its European neighbours, but it also extends an unexpectedly warm welcome to foreigners looking to make it their new home. Follow Magic Towns in a deep-dive of the benefits Albania reserves to American expats, retirees and digital nomads.

Economic And Political Stability

When the phrase “I’m moving to Albania” is met by raised eyebrows, our interlocutor is often thinking about 1990s scenes about Albanian migrants leaving the country on rusty ships, and violent crime gangs rampaging through the country “as seen on TV”.

Albania has seen a remarkable transformation since the end of communism in 1991. A country once hampered by political turmoil and economic stagnation, it has emerged into a thriving democracy with an economy that has quadrupled in output over the last two decades. A significant milestone in Albania’s transformation was its acceptance into the World Trade Organization (WTO) and North Atlantic Treaty Organization (NATO). The prospect of EU membership presents promising possibilities for further improvements and opportunities. Everyday crime is low by international standards, and visitors have generally little to fear, barring common sense practices which are equally valid in Tirana as in New York City, London or Athens.

No Visa Required For US Citizens

Albania is remarkably hospitable to expats and retirees. Upon arrival, US citizens are granted an automatic 12-month visa-free stay, a gesture that underscores the country’s openness to newcomers. While we hate to rub it in, this simply isn’t possible in Italy, Spain or practically any other European Union country, where 90 days is an American’s maximum stay in each six-month period. Even better, the process of getting a long-term visa is straightforward, ensuring long-term residency is accessible and hassle-free.

Taxes in Albania: Zero Tax On US Pensions, Low On All Other Income

Financially savvy retirees are choosing Albania not only for its beauty and culture but also for its advantageous tax policies. One of the most enticing benefits is zero tax on foreign pensions, allowing retirees to enjoy their full pension income without deductions.

Moreover, Albania boasts a low tax rate on all other income – generally speaking, 8% on dividends and 15% on most other income, resulting in more disposable income for enjoyment and exploration of your new surroundings. For expats and digital nomads, you can expect to pay around 15% of profit in tax, and there are several exemptions available. [You can ask TAX AI all your Albanian tax questions at Expatax.al] Note that all tax matters have a great subjective components and it is therefore essential to consult with an expert.

IRS Provisions for US Expats in Albania

As you are probably aware, American citizens must file their US taxes no matter where they reside in the world. This practically only applies to US expats – it is one of only two countries in the world that taxes based on citizenship, not residence (the other one is Ethiopia, in case you were wondering). However, filing in the US doesn’t necessarily mean paying taxes in the US! There are several provisions to mitigate double taxation and reduce the tax burden for expats, such as:

• Foreign Earned Income Exclusion: Allows you to exclude up to $120,000 of foreign earned income for the year 2023.
• Foreign Housing Exclusion/Deduction: Offers the ability to exclude or deduct certain foreign housing expenses.
• Foreign Tax Credit (FTC): Enables you to credit taxes paid to the Albanian government against your US tax liability.

This is just a brief list. You can find out more about tax matters for US citizens in Albania at our friends at Expatax.

Residency, Driving and Running a Business: Say Goodbye to Italy and Spain’s Bureaucracy Nightmares

Albania offers a refreshing contrast to other European nations such as Italy or Spain where dealing bureaucracy can be life-consuming, full-time job.

One prime example is the ease of exchanging foreign licenses for Albanian ones. Unlike in Italy or Spain where one has to go through rigorous tests and lengthy procedures, in Albania, most foreign driver’s licenses can be freely exchanged without taking a test.

Similarly, running a business in Albania is significantly more straightforward due to the minimal bureaucratic interference. From the company’s registration process to acquiring essential permits, the overhead is quite low compared to many other countries. This enables entrepreneurs to focus more on their business operations and less on red tape.

Furthermore, property registration in Albania is remarkably easy and quick, attracting more foreign investors to the real estate market. The tax system in the country is also comparatively straightforward, with flat rates that eliminate the need for complicated calculations.

Mediterranean, Rural or Alpine? Albania’s Got It All

Albania presents a fascinating diversity of climates that rivals much larger countries – US expats might be wondering how it such a small country can be stuffed with such incredible diversity to remind them of their native country. The coastal regions of Albania display a typical Mediterranean climate characterized by hot, dry summers and mild, wet winters. This climate creates an idyllic setting for the breathtaking beaches that line the Ionian and Adriatic Seas, attracting countless visitors each year.

Moving inland, you’ll encounter the magnificent lakes of Albania, such as Lake Ohrid and Lake Prespa. These areas boast a temperate continental climate, with warm summers and cold, snowy winters — an inviting environment for diverse flora and fauna. Further into Albania’s interior, the rugged, high-altitude regions of the Dinaric Alps exhibit an alpine climate. Here, summers are cool and winters are freezing, with substantial snowfall. This stark alpine landscape is a haven for adventurous souls seeking to explore its unspoiled beauty.

Variety of Landscapes in Albania: Coastal, Countryside, and Mountain Cities

Whether you are drawn to the tranquillity of the seaside, the idyllic countryside, or the majestic mountains, Albania offers a range of settings to suit your retirement dreams. Better still, property outside the main touristic cities (practically all of which are on the coast) and the capital, Tirana, is quite affordable, especially by Western standards.

Seaside Serenity in Sarandë and Durrës

Sarandë, with its stunning Ionian coastline, is often referred to as the “Pearl of the South”. Its crystal-clear waters and proximity to the ancient city of Butrint make it a unique blend of natural and historical richness. Durrës, one of Albania’s oldest cities, presents a more urban beachfront experience, complete with a vibrant boardwalk and a rich tapestry of cultural landmarks.

Countryside Charm in Korçë and Gjirokastër

For those who prefer the tranquillity of the countryside, the town of Korçë offers a peaceful retreat with a rich cultural life, including the famous Korçë Beer Festival. Gjirokastër, a UNESCO World Heritage site, is a marvel of Ottoman architecture and stone-cobbled streets, where traditional houses cling to the mountainside, offering breathtaking views.

Mountain Majesty in Tirana and Shkodër

Nestled against the backdrop of the Dajti Mountain, Albania’s capital, Tirana, provides a perfect balance of city amenities and natural beauty. Shkodër, known for its castle and historical centre, acts as a gateway to the Albanian Alps, offering a cooler climate and a haven for outdoor enthusiasts. [In-depth info in our Tirana city profile]

Breakfast in Tirana, lunch in Rome, dinner in Corfu?

Not to sound cheeky, the Eternal City being a 50-minute flight away – ditto for Venice and Milan -, your friends back home won’t blame you for skirting the Italian bureaucracy, taxes and visa red tape, when you can pop over to that beautiful country whenever you feel the urge, with incredibly cheap daily flights. Fancy a taste of Greece? A quick pop over the border to beautiful Ioannina, or a ferry from Saranda to Corfu, will quench that desire.

Moving To Albania: Tax Check-Up, Healthcare and Planning

When moving internationally, even an easy move to an expat-friendly country isn’t a walk in the park. Some topics all US expats should deal with before leaving the US for Albania include:

Pre-Move Tax Check-Up and Planning

1. Pre-Move Tax Check-Up. Understand the tax implications before you move. Are you selling your home before leaving? Do you have retirement funds in the US? Are you up to speed with the US citizen tax obligations when residing in another country? Our friends at Expatax can link you to professionals for a detailed tax strategy.
2. Relocating Household Goods: How much “stuff” will you bring with you? Will you bring suitcases or 40-foot containers? Determine what to take and find reliable movers. (We’ll be happy to help you with this)
3. House Hunting in Albania: Explore extensive listings and expert advice on our platform to find your dream home in the perfect Albanian setting.
4. Integration and Cultural Adaptation: Discover language courses and cultural orientation sessions through our special guides on integrating into Albanian society.
5. Healthcare System and Health Insurance Learn about navigating Albania’s healthcare system, including quality of services and insurance tips, in our comprehensive healthcare guide.

We’re not here to do hard sells, but to help expats just like us to make the most of their move to a new country. If you WOULD like the help of people who’ve been there and made an actual map of mistakes to avoid when moving to Albania, talk to us. We offer a 30-minute free phone consultation.

Conclusion: You Should Really Think About Albania

Albania stands as a compelling choice for US expats and retirees. With its welcoming visa policies, favourable tax environment, and a range of beautiful locales to call home, it’s no surprise that this Balkan nation is quickly emerging as a top contender for retirement abroad. Dip your toes into the clear Adriatic waters, sip on local wine amidst rolling hills, or wander through historical mountain towns – in Albania, retirement is not just a new chapter; it’s an adventure waiting to be written.

Remember, you can talk to us anytime, or ask Magic AI at the bottom of this article for any extra information you may need.