Albania is offering a 10-year tax holiday and new incentives for defence, dual-use, and high-tech companies. These reforms create unique opportunities for international investors, and Kylla is ready to help structure, finance, and co-invest in ventures that seize them.
Albania has taken a bold step by introducing a new legal framework that positions the country as an attractive base for defence, dual-use, and advanced technology companies. For international firms in aerospace, cybersecurity, and advanced manufacturing, this creates new opportunities not only to enter the Albanian market but also to access one of the most generous incentive packages in the region.
A New Era of Incentives
The Law on the Military Industry (No. 87/2024) grants licensed defence manufacturers a 10- year corporate tax holiday, exemption from property taxes and customs duties, and a reduced VAT rate of 10% on key supplies. The Albanian government is also committed to subsidising infrastructure and utilities for such projects. To qualify, foreign investors must partner with a local company and meet specific criteria, including licensing requirements and minimum investment thresholds.
Beyond defence, Albania continues to offer incentives through its Technological and Economic Development Areas (TEDA), including reduced corporate tax, VAT exemptions, and enhanced deductions for training and R&D. Strategic investment projects in other priority sectors can also benefit from government facilitation, fast-track procedures, and access to state-owned land.
Opportunities for Defence-Adjacent Sectors
Cybersecurity, aerospace, and advanced manufacturing firms can also benefit from these regimes. IT and software development companies, for example, currently enjoy a reduced 5% corporate tax rate until the end of 2025. Export-oriented manufacturers in TEDA zones benefit from duty-free imports and generous tax deductions, positioning Albania as a competitive base for regional operations.
Navigating Criteria and Compliance
To benefit, companies must meet clear eligibility criteria. Defence firms must be licensed by the Ministry of Defence, maintain robust compliance with export controls, and meet minimum investment thresholds. Other incentive regimes require substance in Albania: local operations, new investments, and job creation are all central to qualifying and retaining benefits.
This is where structuring matters. The choice between a subsidiary, branch, joint venture, or zone-based operation can directly determine eligibility and the scale of incentives accessed. Strategic legal and financial planning is crucial to ensure that companies both qualify for and maintain these benefits.
How Kylla Can Assist
At Kylla Corporate Transactions, we work closely with companies to ensure that their entry into Albania is structured in the most effective way. By carefully aligning legal and financial structures with the specific requirements of the incentive regimes, we help firms qualify for the full range of available benefits while remaining fully compliant with both Albanian and international regulations. Our support extends beyond structuring: we guide companies through licensing and regulatory procedures, including the complex approvals needed for defence production, export controls, and other sector-specific obligations. In addition, we draw on our extensive investor network to raise the additional capital required to meet investment thresholds or to support expansion plans, ensuring projects are adequately financed from the outset. Where we see strong potential, we are also prepared to co-invest alongside our clients, reinforcing our commitment and strengthening confidence among other investors. With this combination of advisory, capital-raising, and co-investment, Kylla provides a comprehensive partnership to help companies not only enter the Albanian market but also position themselves for sustainable growth.
A Regional Context
Compared to its neighbours, Albania’s regime is especially aggressive in targeting defence and high-tech industries. While North Macedonia and Montenegro focus on free zones and low corporate tax, and Bulgaria adheres to EU state-aid rules, Albania’s 10-year tax holiday for defence manufacturers is unique. This places the country in a strong position to attract companies looking for both cost efficiency and strategic location within the NATO alliance.
“During my more than 15 years with Kylla focusing on the Balkan region, I have seen first-hand how investor interest in the defence sector has grown sharply in recent years,” says Stergios Stogios, Kylla’s Investment Manager. “At Kylla, we have already executed several transactions in this market, and this new stimulus package will only increase appetite from international defence companies. The combination of Albania’s strategic location and the newly introduced tax holiday creates a powerful opportunity for firms looking to establish a presence in the region.”
Why Greece Also Belongs on Your Map
Given Stergios Stogios’ roots in Greece and his role from Kylla’s headquarters in the Netherlands, it is worth noting that Greece also presents a solid platform for defence, dual-use, and high-tech investments. While it does not offer the same headline tax holidays now available in Albania, Greece provides well-structured, EU-aligned incentives through its Development Law and Strategic Investments framework, including corporate tax exemptions on approved projects, accelerated depreciation, cash grants under regional aid rules, and generous super-deductions for R&D. Defence-adjacent sectors such as aerospace, cybersecurity, and advanced manufacturing can qualify for these schemes, and major projects benefit from fast-track licensing and long-term tax stability. For groups weighing a Balkan hub, Albania can deliver speed, cost efficiency, and targeted relief, while Greece offers EU market access, a deeper industrial base, and programme funding for collaborative R&D. Kylla can help compare both routes.
Albania’s recent reforms open the door for defence and advanced technology companies to establish a strong foothold in the Balkans. With the right structuring, financing, and partnerships, foreign firms can leverage these incentives to scale their operations and contribute to Albania’s growing role as a hub for strategic industries.
Kylla is ready to help international companies explore these opportunities, structure their entry, secure the investment needed, and even co-invest in projects with strong potential for long-term growth.
Investment Manager
Kylla Corporate Transactions
