Tirana, 29 August 2025 — Albania is entering a new phase in its fiscal policy as the government and municipalities turn their focus toward strengthening local taxation, particularly property tax. Recent reporting in Albanian media highlights a surge in revenues, the introduction of a new market-value-based methodology, and broader questions about the sustainability of municipal finances.
Record Revenues From Property Taxes
According to Gazeta SOT, municipalities collected about 5.3 billion lek (≈€53 million) in property-tax revenues between January and July 2025. This marked a noticeable increase compared with previous years, with the Ministry of Finance projecting an additional €20 million in receipts by the end of the year. The boost is tied to the introduction of a functional fiscal cadastre that allows municipalities to better identify taxable properties .
Gazeta Shqip echoed this report, noting that the reforms are expected to widen the tax base and prepare the ground for a more comprehensive reform from 2026, when property valuation will shift from size-based calculations to a market-value system .
Linking Taxation to Wages and Income
The property-tax debate comes alongside a surge in personal-income-tax revenues. Gazeta Tema reported that income-tax collections reached 48.2 billion lek (≈€482 million) in the first seven months of 2025, a 26.5% increase year-on-year. The government attributed this rise to higher public-sector wages, stricter anti-informality measures targeting undeclared salaries, and an expansion in the number of taxpayers .
Together, these figures suggest that Albania’s fiscal system is increasingly capable of mobilizing domestic resources, a shift that could reduce reliance on external borrowing and international assistance.
Public Reaction and Political Debate
Not all outlets are supportive of the reforms. The opposition-aligned Rilindja Demokratike carried opinion pieces critical of new and planned local levies, particularly those applied to second homes. Critics argue that these measures risk discouraging investment and overburdening households already facing high living costs .
Meanwhile, Koha Jonë spotlighted wage disparities, publishing lists of the highest-paid professions in Albania. Such coverage underscores public sensitivity to fairness in taxation, especially as the government moves toward linking property taxation to actual market values .
Regional Context: Albania and Its Neighbors
Albania’s push to modernize property taxation reflects a broader regional trend. Several Western Balkan countries have either reformed or are debating reforms to local tax systems:
- North Macedonia introduced a market-value component for property tax in recent years, though implementation remains uneven across municipalities.
- Serbia relies heavily on size and location formulas but faces similar calls for modernization to align with EU standards.
- Montenegro and Kosovo are also under pressure to update their local revenue frameworks as part of fiscal decentralization strategies.
Within the European Union, property taxes are a central part of local budgets. In neighboring Greece, municipalities derive over 30% of their revenues from property-related levies, while Italy has long used the IMU (municipal property tax) as a key local revenue stream. Albania’s reform thus brings it closer to EU norms and could strengthen its case for deeper integration.
The Challenge of Implementation
While Albania’s fiscal cadastre is hailed as a major step forward, implementing a market-value property-tax system will be challenging. Valuations require reliable real-estate data, transparent methodologies, and safeguards against political manipulation. In a country where informal construction and unregistered property remain widespread, the shift may expose gaps in governance.
Moreover, municipalities will need to balance the desire for higher revenues with public tolerance. Albania’s citizens already express skepticism about local government spending efficiency, and any perception of unfair taxation could spark political backlash.
What’s Next?
Officials at the Ministry of Finance have signaled that 2026 will be the watershed year for property-tax reform, when the market-value approach is expected to take effect nationwide. In the meantime, 2025 is being used as a transitional period to expand the tax base, consolidate cadastral records, and prepare municipalities for implementation.
For Albania, the stakes are high: successful reform could provide a stable revenue base for municipalities, strengthen fiscal decentralization, and bring the country in line with European standards. Failure, however, could deepen public mistrust and stall broader governance reforms.
Fact Box: Albania’s Property Tax Shift
- Revenue Jan–Jul 2025: 5.3 billion lek (≈€53 million)
- Projected increase 2025: €20 million (linked to fiscal cadastre)
- Planned reform: Market-value-based property-tax system starting 2026
- Income tax Jan–Jul 2025: 48.2 billion lek (≈€482 million), up 26.5%
Source/s: Gazeta Tema, Gazeta Shqip, SOT
Image source: Canva Pro
