What are the Employment Contributions in Albania?

Albania operates under a more traditional payroll system where both employers and employees contribute to taxes and social security. As of 1 January 2026, an important regulatory change has been introduced that directly affects payroll costs and employee net salaries.

Key Update for 2026: Increase in the Maximum Salary for Social Security Contributions

Effective 01.01.2026, Albania has increased the maximum salary base used for calculating social security contributions:

• Previous cap: ALL 176,416
• New cap: ALL 186,416

This increase directly impacts payroll calculations for employees earning at or above the contribution ceiling.

Impact of the Change:

• Employees: Experience a lower net salary, as social security and health contributions are calculated on a higher base.
• Employers: Face higher total employment costs, due to increased employer-side social security and health contributions.

Income Tax Overview

Albania applies a progressive personal income tax structure:

• 13% on annual income up to ALL 2,040,000
• 23% on annual income exceeding ALL 2,040,000

Income tax is withheld directly from the employee’s gross salary and remitted through payroll.

Social Security and Health Contributions

Social security and health insurance contributions are mandatory and shared between employers and employees:

• Employer contributions:

  • 16.7% (social security + health insurance)

• Employee contributions:

  • 11.2% (social security + health insurance)

• Mandatory health insurance:

  • Covered through the national social security system

These contributions are calculated based on the applicable salary base, up to the maximum contribution cap.

Employer Cost Implications

Due to the shared contribution model and the 2026 increase in the contribution ceiling:

• Employer costs rise proportionally for higher salaries.
• The approximate total employer cost typically ranges between 28% and 32% of the gross salary, depending on compensation level.

Summary of Employer Considerations

• Higher employment costs due to mandatory employer contributions.
• Increased payroll expense in 2026 resulting from the higher social security calculation cap.
• Reduced employee net pay for salaries affected by the increased threshold.
• Greater payroll complexity, as both tax brackets and contribution caps must be actively monitored.