25 thousand free professionals, how will the installments be handled?

The decision of the Constitutional Court, which partially repealed the income tax law, resulting in the non-application of the 15% tax immediately, ie. since January 1, 2024 for the self-employed who provide professional services has created a slightly confusing situation for the subjects affected by this decision.

According to Taxes, there are 25,000 entities that are classified as free professions.

The decision of the Constitutional Court was taken on June 27. Meanwhile, July 1 (since the 30th was a Sunday) was the deadline for subjects to pay the preliminary installments of the simplified tax for the first 6 months of the year.

Many of them had not paid as they were waiting for the decision of the Constitutional Court. While the Constitution's decision was in favor of free professions, the dilemma is related to the fact that it has not entered into force, as it has not yet been published in the Official Gazette.

"Without publication, the decision has not entered into force, therefore the law is in force with all its effects. So it must be paid", says Jordan Daci, lawyer for constitutional issues.

However, he clarifies that at the moment, when the official decision will be made, the principal will fall. As a result, it is not worth paying. "For me, it is not worth paying and getting fined if the fine is less than the installment."

Fines do not appear in the system for businesses

Exactly the other problem lies in the fine, in case the principal is not paid. Article 114/1 of the tax procedures provides that non-payment of advance installments on time is punishable by a fine of "0.06 percent of the amount of the unpaid obligation for each day during which the payment was not made, but not more than 365 days calendar".

From the verifications of Monitor in the field, it appears that today, all businesses (not only those of free professions) have not received fines in the system. The same thing happened earlier in April as work is being done to implement a new system.

For free professions such as lawyers, accountants, etc., the installments for the month of July have not been generated in the system either.

What will happen to those who have paid, will they get their money back?!

There are some businesses that have paid the prepayment installment of the simplified income tax for the first 6 months of the year.

Taxation and finance have affirmed that they cannot comment until the decision of the Constitutional Court is clarified, as they are waiting for its release, so as not to burden businesses. In any case, the law will be applied.

Lawyer Jordan Daci says that the decision has no retroactive effect only if the court expressly orders this, according to the law of the Constitutional Court. "But there are only a few cases when they gave it a retroactive effect."

However, lawyer Sajmir Laçej asserts that the installments paid are advances and therefore no tax liability has arisen.

"The obligation arises when the declaration itself is made after the end of the exercise year", he asserts, citing Law No. 8577, dated 10.2.2000 (amended by Law No. 99/2016), ON THE ORGANIZATION AND FUNCTIONING OF THE CONSTITUTIONAL COURT OF THE REPUBLIC OF ALBANIA , according to which:

The decision has retroactive effect

c) to the still unexpired consequences of the repealed law or normative act.

As a result, Laçej explains:

1. Tax liability is annual and arises after the submission of financial statements March 31, 2025

2. Tax Payers pay installments in advance (without exhausting the legal provisions 

3. The Constitutional Court has annulled the legal provisions that provided for a 15% tax for freelancers as unconstitutional.

Laçej claims that based on a survey he conducted with about 160 freelancers, it turned out that about a third of them have paid the installments.