Under Albanian law, a construction contractor is solely responsible for its commercial liabilities towards third parties (ie, its subcontractors). However, in certain circumstances, the contractor's employees or subcontractors which are engaged in the performance of works or services for the benefit of the principal may make direct claims to the principal for the payment of moneys.
The Law on Local Taxes, one of two laws providing for construction-related taxes in Albania, has now been abolished – although it is not yet clear whether this is a planned tax reduction for construction-related activities or simply an administrative oversight. Either way, developers should consider whether they can accelerate procedures for obtaining construction permits and thus benefit from the reduction.
Before obtaining a construction permit, applicants must pay the local authority a tax equal to 1% of the value of the investment for the project. These funds are used to finance urban studies by the local government. However, under new Law 10119/2009 - which has yet to come into force - this tax will be repealed.