New payroll codes unlock social security treaty exemptionsA practical payroll change with potential savings for employers and internationally mobile employees
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KEY TAKEAWAY Albania has introduced payroll categories 42 and 43, enabling employers to report employees covered by bilateral social security agreements and apply treaty-based treatment directly in monthly payroll declarations. |
WHAT CHANGED?
Instruction No. 16, dated 8 August 2026, amends Instruction No. 23/2014 on the collection of mandatory social and health insurance contributions. The amendment takes effect upon publication in the Official Gazette and introduces two new employee categories in the monthly payroll declaration. Implementation on e-filing tax portal is still pending.
For individuals holding a valid Certificate of Coverage under a bilateral social security agreement. They are exempt from Albanian social and health insurance contributions.
For individuals holding a Certificate of Coverage where the relevant agreement allows an election. The individual chooses to pay Albanian social insurance contributions under domestic law or the treaty.
WHY THIS MATTERS
The treaty exemptions already existed—but employers lacked a clear way to report them in Albanian payroll. The new categories close that administrative gap. They may reduce unnecessary contribution costs, improve payroll accuracy, and give formal effect to treaty elections.
Employers with inbound assignees should now map their foreign-national population, verify that each Certificate of Coverage is valid and correctly scoped, update payroll configuration to use the new codes.
DISCLAIMER
This alert is provided for general information purposes only and does not constitute tax, legal or other professional advice. It does not address the specific circumstances of any individual or entity. Before acting on any matter referred to above, you should obtain specialized advice tailored to your situation.