On 08.11.2011 the Albanian Ministry of Finance introduced some clarifications to Instruction no. 17 on Value Added Tax regarding the application of “reverse charge mechanism” for services provided to albanian resident taxpayers by foreign suppliers, as follows:
Resident taxpayers that provide both deductible and exempt supplies should apply partial VAT deduction as per the above mentioned instruction.
Resident taxpayers that are VAT exempt may not deduct reverse charge input VAT.
Resident taxpayers should not apply the reverse charge mechanism if the service provided to them by a foreign supplier is VAT exempt in Albania.