Pricing methods

Accepted methods

What transfer pricing methods are acceptable? What are the pros and cons of each method?

The law provides for an approved list of methods, namely:

  • the comparable uncontrolled price method;
  • the resale price method;
  • the cost-plus method;
  • the transactional net margin method; and
  • the transactional profit split method.

However, taxpayers are allowed to apply a transfer pricing method other than the above-mentioned in the case that it can be proved that none of the above methods can be reasonably applied to determine consistency with the market principle for the controlled transaction, and such other method yields a better result.


Are cost-sharing arrangements permitted? Describe the acceptable cost-sharing pricing methods.

There are no special provisions regarding the cost-sharing arrangements. However, those between the non-resident and its permanent establishment in Albania are considered controlled transactions.

Best method

What are the rules for selecting a transfer pricing method?

The legislation does not provide for any hierarchy of the methods. However, the taxpayer using a method other than the approved methods mentioned above should bear the burden of demonstrating that the method used yields a result consistent with the market principle.

Taxpayer-initiated adjustments

Can a taxpayer make transfer pricing adjustments?

Pursuant to the Tax Procedure Law, taxpayers are allowed to adjust any tax return within 36 months of the initial filing. The specific transfer pricing legislation provides for two types of adjustments related to transfer pricing:

  • where the financial indicators derived from the controlled transactions fall outside the market range (as defined in the Tax Procedure Law), the tax authority (with the written approval of the General Tax Director) may make an adjustment to the taxable income of the taxpayer; and
  • where an adjustment related to the conditions of a controlled transaction is made by a tax administration in another country with which Albania has a double tax treaty, an adjustment to reflect such condition may be made by the taxpayer with the written approval of the General Tax Director.
Safe harbours

Are special ‘safe harbour’ methods available for certain types of related-party transactions? What are these methods and what types of transactions do they apply to?

There is no safe harbour method available.