Double Taxation Treaty Between Albania And Iceland Becomes Effective

On 26th of September 2014, the Republic of Albania and the Republic of Iceland signed a treaty for the avoidance of double taxation and the prevention of tax evasion regarding income tax. This agreement was ratified by both countries and entered into force on the 6th of January 2016. Under the treaty provisions, its general implementation has begun as of the 1st of January 2017.

The treaty is the first of this kind between the two countries. The main objective of the legal act is to avoid income tax double taxation and tax evasion in both countries. The treaty will also be applied to any similar or identical tax that may be imposed in the future by the signing countries.

The agreement creates the legal framework for the information exchange and the cooperation between tax authorities of both countries, as a guarantee for the implementation of the agreement provisions.

The taxes covered in the treaty include personal income tax, corporate profit tax and tax on small business activities in Albania whereas in Iceland it covers the state income tax and the municipalities' income tax. The competent authorities of both countries will notify each-other for any essential change regarding their tax legal framework.

A permanent establishment, as defined by the Treaty, will include any construction/building/installation project (or related supervisory activities) the duration of which exceeds six months in a twelve month period. The same duration rule is applicable to the provision of...