This GMS Flash Alert reports on recently passed amendments to Albania’s Labour Code concerning the secondment of personnel from foreign companies to Albanian companies and the labor rights of the seconded employees.
Albania’s parliament has approved some amendments to the Albanian Labour Code which become effective starting from 23 June 2016.1 These amendments aim to regularize:
The new provisions do not intend to change the current tax treatment of a company’s seconded personnel or the agreements under which they are seconded. From a tax perspective, the most important provision introduced has to do with a limitation of the period of the secondment of these employees in Albania: it cannot exceed a 12-month period. Previously, the period was not defined. The period of secondment is calculated by taking as the reference the assignment’s start date and also takes into consideration any prior period of temporary secondment.
The amendments are important since they may affect the deductibility of expenses for those Albanian entities hosting seconded employees. In case the tax authorities verify that the secondment agreement of a specific employee exceeds the term of 12 months, they may claim that any charges from the home country company to the host company (Albanian company) can be considered as non-deductible for corporate income tax purposes.
Even though no direct provision is specified in the Albanian Income Tax Law, the tax authorities may support their assessment based on the fact that secondment agreements that last more than 12 months become invalid if the above-mentioned duration has elapsed.
In our view the framework agreements for secondments of personnel entered into between two contracting entities may be valid for a term longer than 12 months, however, the period of assignment of any individual seconded under this framework agreement should not exceed the period of 12 months.
As per the current wording of the amendments, it is not clear whether following the termination of a specific secondment agreement which may last a maximum of 12 months, the parties may enter into a new agreement for the secondment of the same individual. Uncertainties remain also for the secondment agreements of employees that have entered into force prior to the date the new provisions become effective.
1 Ligj nr. 136/2015, datë 5.12.2015, Për disa shtesa dhe ndryshime në ligjin nr. 7961, datë 12.7.1995, “Kodi i Punës i Republikës së Shqipërisë”, të ndryshuar / Law No.136/2015 dated 5 December 2015, on Some Additions and Amendments to Law No. 7961 Labour Code in the Republic of Albania dated 12 July 1995, published in the Official Gazette (Fletorja Zyrtare) No. 220 dated 22 December 2015.
To see (in Albanian) Ligj nr. 136/2015, datë 5.12.2015 / Law No.136/2015 dated 5 December 2015, click here.
For additional information or assistance, please contact your local GMS or People Services professional or one of the following professionals with the KPMG International member firm in Albania:
Tel: +355 42274524
Tel: +355 42274524
The information contained in this newsletter was submitted by the KPMG International member firm in Albania.
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.KPMG International Cooperative (“KPMG International”) is a Swiss entity.
Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.