Albania Ratifies the OECD Pillar Two “Subject to Tax Rule” (STTR) Multilateral Convention
The Albanian Parliament has approved Law No. 45/2026 (adopted 23 April 2026 and promulgated by Presidential Decree No. 315 of 14 May 2026), ratifying the Multilateral Convention to Facilitate the
Implementation of the Pillar Two Subject to Tax Rule the “STTR MLI” concluded in Paris on 15 September 2023 under the OECD/G20 Inclusive Framework on BEPS. The law enters into force 15 days after its publication in the Official Gazette. Through this instrument, Albania incorporates the STTR into its existing network of double tax treaties without the need to renegotiate each one bilaterally.
The STTR is a treaty-based rule that restores a taxing right to the source jurisdiction on certain cross-border,
intra-group payments between connected persons – principally interest, royalties and a defined set of other covered payments – where that income is subject to a nominal tax rate below 9% in the recipient’s jurisdiction. In those cases, the source state may impose an additional “top-up” tax that brings the rate on the covered income up to 9%, subject to materiality and de minimis thresholds. Importantly, once incorporated, the STTR applies notwithstanding the ordinary relief limits of the underlying treaty.
For taxpayers, the practical reach is significant. Albania has notified 21 of its double tax treaties as covered: Belgium, Czechia, Egypt, Estonia, Hungary, Israel, Kuwait, Latvia, Malaysia, Malta, the Netherlands, Poland, Qatar, Romania, Saudi Arabia, Serbia, Singapore, Spain, Switzerland, Türkiye and the United Arab Emirates. Groups with related-party interest, royalty, or other covered flows to or from these jurisdictions should review their financing and IP arrangements, identify any low-taxed recipient entities, and reassess withholding and source-taxation positions. Actual application also depends on the counterparty jurisdiction having the STTR in effect for the relevant treaty, so each treaty relationship needs to be assessed individually
For taxpayers, the practical reach is significant. Albania has notified 21 of its double tax treaties as covered: Belgium, Czechia, Egypt, Estonia, Hungary, Israel, Kuwait, Latvia, Malaysia, Malta, the Netherlands, Poland, Qatar, Romania, Saudi Arabia, Serbia, Singapore, Spain, Switzerland, Türkiye and the United Arab Emirates. Groups with related-party interest, royalty, or other covered flows to or from these jurisdictions should review their financing and IP arrangements, identify any low-taxed recipient entities, and reassess withholding and source-taxation positions. Actual application also depends on the counterparty jurisdiction having the STTR in effect for the relevant treaty, so each treaty relationship needs to be assessed individually
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 specialised advice tailored to your particular situation.