Albania breaks new ground in its energy and financial sectors as it moves towards renewable energy and market liberalization, while significant changes are afoot in payment services and tax law, according to Tashko Pustina Partner Alban Shanaj, all of which point squarely toward a coming period of dynamic growth and opportunity.
“We're witnessing an important milestone in Albania’s energy landscape,” Shanaj begins. “The Albanian Ministry of Infrastructure and Energy has recently awarded capacity to three bidders, totaling 222.48 megawatts for the country's first onshore wind power plants. In addition, the Albanian Government has launched a new renewable energy auction aiming to construct 300 megawatts of PV power plants. Combined with the previous two PV auctions, these recent developments mark a departure from our traditional reliance on hydropower and align with the country’s 2030 renewable energy targets set out by the Energy Community,” he explains. “Supported by the EBRD, these projects, totaling overall more than 760 megawatts, are reshaping our energy production.”
Shanaj reports that the country is “undergoing a significant liberalization process of the wholesale and retail market, shifting towards a market-based power sector. A pivotal moment was the successful 'go live' of the day ahead by the Albanian Power Exchange (ALPEX).” Furthermore, he says that, “from January 2024, over 2104 businesses connected to the 20-kilovolt distribution grid have begun transitioning to the liberalized market. We're assisting some of them in finding solutions for their electricity needs, both short and long-term,” he adds.
Shifting gears to finance, Shanaj says that the “payment services sector has undergone transformative changes. The Parliament oversaw a law on payment services in 2020, based on the PSD2, aiming to liberalize the payment services market and provide simpler solutions for customers. This law, in force since 2021, has been completed by regulations adopted by the Bank of Albania.” According to him, “a key regulation coming into effect this January focuses on enhancing strong customer authentication and adopting a fully open and secure communication standard which opens up exciting opportunities for both tech companies and traditional banks in open banking and payment services.”
In addition, Shanaj reports that the taxation framework has also undergone an overhaul. “A crucial law has recently entered into force, as of January 2024, tackling income tax, significantly altering how businesses and professions are taxed.” This law impacts both the business income and employment income tax. “One of the notable changes is the different taxable income for individuals based on their income sources: employment income or business,” Shanaj explains. “This law also introduces a qualification as employment income for income generated by self-employed persons if such income derives 80% from one customer or 90% from up to two customers, respectively. In addition, the new law also introduces a special regime for small businesses, with a threshold of around EUR 100,000 in annual income, offering them beneficial tax conditions.”
Finally, looking ahead, Shanaj expects a dynamic period in the immediate future. “There will be new opportunities, especially in energy sales, as we adapt to these market changes. Our role as legal advisors is to navigate these evolving landscapes, ensuring that our clients are well-positioned to capitalize on these opportunities,” he stresses in conclusion.
