US Expats In Albania: Is Double Taxation Really A Dealbreaker?

A recent discussion in an expat Facebook group raised a concern we hear often from Americans considering a move to Albania:

There is no tax treaty with the United States, so why would anyone accept the idea of being taxed twice?

At first glance, it sounds like a hard no. In reality, most US expats living in Albania are not paying “double tax” in the way many imagine.

The confusion usually starts with how the US tax system works. The United States taxes based on citizenship, not residency. This means that US citizens are required to file a tax return every year, even if they live abroad permanently (IRS – Publication 54). Filing, however, does not automatically mean owing money.

While this fact alone often sounds alarming, it doesn’t tell the whole story…

How US Taxation Works Abroad

The United States taxes its citizens based on citizenship rather than residency. This means US citizens must file an annual tax return even if they live permanently outside the US (IRS, Publication 54).

Filing, however, does not automatically mean paying US taxes.

This distinction is critical and often misunderstood.

How Albania Determines Tax Residency

Albania taxes individuals based on residency status. You are generally considered an Albanian tax resident if you:

Spend at least 183 days in Albania within a 12-month period, or
Maintain a permanent home in the country

(Albanian tax law; General Directorate of Taxes)

Residents are taxed on worldwide income, while non-residents are taxed only on income earned within Albania.

It’s also important to clarify that Albania does not apply a flat income tax to individuals. Personal income tax follows a progressive structure, with rates ranging from 0% up to 23%, depending on income level (Albanian General Directorate of Taxes; Greenback Expat Tax Guide). The flat 15% rate applies mainly to corporate income tax, not personal income.

What Prevents Double Taxation Without a Treaty

Even without a tax treaty, US tax law includes built-in mechanisms that often prevent double taxation.

The most common is the Foreign Earned Income Exclusion (FEIE). Qualifying US expats can exclude a significant portion of foreign-earned income from US federal taxation if they meet physical presence or residency requirements. For recent tax years, this exclusion exceeds $120,000 and is adjusted annually (IRS, Form 2555).

When income exceeds that threshold or doesn’t fully qualify, the Foreign Tax Credit (FTC) may apply. Income taxes paid to Albania can generally be credited against US tax liability, reducing or eliminating additional US tax owed (IRS, Form 1116).

These protections apply even in the absence of a bilateral tax treaty.

The Overlooked Issue: Social Security

Where the lack of agreements matters more is in social security.

Albania does not have a Totalization Agreement with the United States. This means US expats working in Albania may be required to contribute to the Albanian social security system, while US self-employed individuals may still owe US self-employment tax (U.S. Social Security Administration; Greenback).

For freelancers and business owners, this can be an additional cost over income tax itself.

Why Many Americans Still Choose Albania

Despite the complexity, many Americans still relocate to Albania. Lower living costs, moderate income tax rates, affordable private healthcare, and relatively simple residency rules often outweigh the administrative burden of filing in two tax systems.

For many expats, the issue is paperwork rather than a true double-tax hit.

When Albania May Not Be the Right Fit

Albania may be less suitable for Americans who earn very high incomes, have complex investment structures, or want to minimize all ongoing interaction with the US tax system. In these cases, the lack of a tax treaty and totalization agreement can feel limiting.

The Bottom Line

Albania does not have a tax treaty with the United States, as confirmed by the U.S. Embassy and Department of State. However, this does not automatically result in double taxation for US expats. In most cases, taxes are managed through US domestic tax provisions rather than bilateral agreements (U.S. Department of State, 2023; IRS).

As always, individual circumstances vary, and professional advice from a US-qualified expat tax advisor is strongly recommended.

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Autore

Sara Alimehmeti

Sara incarna la definizione di creatività nel suo ruolo di creatrice di contenuti nel nostro team. Essendo di madrelingua albanese, si concentra sulla scrittura di pezzi qualitativi, soprattutto articoli ben studiati e post informativi sul blog. Svolge inoltre un ruolo fondamentale nella creazione di post coinvolgenti sui social media per creare una comunità di amanti dell'albanese che la pensa allo stesso modo e che la tiene impegnata. Le sue qualifiche, tra le altre, includono un certificato di giornalismo accreditato dalla Reuters, una certificazione linguistica, un'esperienza di stage a Bucarest e una formazione in marketing digitale. Se Sara non è alla sua scrivania per creare contenuti, potreste trovarla a leggere un buon libro o a scrivere i suoi pensieri sul suo diario.

Potete trovare le sue parole anche su Momentum Group, Bulls Media Albania, 112hub e Ajroni.