The Albania - Italy Social Security Agreement (2024)1 (“the Agreement”) and its administrative arrangement, ratified by both parties, respectively on 16 May 2024 and on 10 April 2025, will enter into force on 1 July 2025.

On 21 March 2025, the Italian law authorising approval of the Agreement was published in the Gazzetta Ufficiale della Repubblica Italiana, as Law No. 29.2

The Agreement deals with a number of critical topics for impacted workers – in particular, it deals with IVS (old age, sickness, and survivor) insurances, sickness, maternity coverage, as well as special ‘substitute’ and ‘exclusive’ insurance schemes established for certain categories of workers.  

WHY THIS MATTERS

The Agreement between Italy and Albania prevents dual social security contributions, establishes equal treatment under the social security laws of the host country, allows for the totalisation of periods, and for exportability of benefits.  It also includes specific rules for posted workers who remain covered by their home social security system for up to 36 months.

Knowing that their income will be subject to social taxes in one country only, rather than double taxed, and that their working time and accrued social security benefits will be “totalised,” may aid potential international assignees in their decisions as to whether to take an assignment in the other country. 

Let’s Focus on Pensions

A crucial point of the Agreement concerns the treatment of pensions.  The Agreement provides for two methods of calculation for the recognition of pensions for workers who have worked in both states.

(1)   Autonomous Regime (Article 12)

If a worker has accrued the minimum contributions required by the legislation of one state without having to make reference to the totalisation with the other state, the pension is calculated exclusively on the basis of the contributions paid in that country.  In this case, the Italian or Albanian social security institution independently pays the pension to the beneficiary.

(2)   International Totalisation and Pro-rata Regime (Article 13)

If a worker has not accrued sufficient contributions in one country to be entitled to a pension, the insurance periods accrued in both countries are cumulated.  The pension is calculated according to the totalisation of benefits, the theoretical amount of the pension that would be due if all the contributions had been paid in the country in which the benefit is requested.  The actual amount is calculated on the basis of the contributions paid in that country only, applying the pro-rata formula.

 

STUDIO ASSOCIATO INSIGHTS    

The Agreement recalls the general principle of territoriality, according to which a person who performs an activity as an employed or self-employed person in the territory of a contracting state is exclusively subject to the legislation of the state in which the activity is performed.

However, an exception to the territoriality principle is provided for certain categories (employees, self-employees, workers employed on board ships and traveling personnel in the air, road, and rail transport sectors and public employees, as well as diplomatic personnel), who will continue to be subject to the social security legislation of their home country for a maximum period of 24 months.

The Agreement is expected to enhance cross-border business and promote mobility of workers between Italy and Albania by eliminating double social security taxation of the same earnings and by facilitating the process of claiming benefits.

Employers and employees that have concerns or questions about eligibility, conditions, and practical steps for availing of the benefits of the Agreement may wish to reach out to their usual social security and global mobility professional or a member of the GMS team with KPMG/Studio Associato in Italy (see the Contacts section).  

FOOTNOTES:

1  (In Italian)  The text of the Agreement can be found reproduced in the Italian statute approving the ratification of the Agreement at: LEGGE 11 marzo 2025, n. 29 Ratifica ed esecuzione dell'Accordo tra la Repubblica italiana e la Repubblica di Albania in materia di sicurezza sociale, fatto a Roma il 6 febbraio 2024. (25G00038) (GU Serie Generale n.67 del 21-03-2025).  Entrata in vigore del provvedimento: 22/03/2025.

2  (In Italian) LEGGE 11 marzo 2025, n. 29 Ratifica ed esecuzione dell'Accordo tra la Repubblica italiana e la Repubblica di Albania in materia di sicurezza sociale, fatto a Roma il 6 febbraio 2024. (25G00038) (GU Serie Generale n.67 del 21-03-2025).  Entrata in vigore del provvedimento: 22/03/2025. 

Contacts

pierluigi-zucchelli
Pierluigi Zucchelli

Associate Partner, KPMG Italy

KPMG in Italy

Alba Paparisto
Alba Paparisto

Associate Partner

KPMG in Albania

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The information contained in this newsletter was submitted by the KPMG International member firm in Italy.

GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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