Tax-Free for a Decade: Albania’s Mountain Incentives Raise EU Red Flags

Albania’s new Law No. 20/2025, popularly branded the “Mountain Package,” is being sold as a long-overdue fix for one of the country’s most stubborn problems: vast stretches of mountainous land occupied for decades without formal title. The state’s answer is dramatic. If you can prove at least 10 years of continuous “non-owner” possession in a designated mountain zone—and you commit to a “sustainable” investment project—the government can transfer state-owned land to you for a symbolic €1, paired with sweeping tax exemptions for up to 10 years. The promise is rural revival. The risk is that Albania may be institutionalizing a legal bargain that rewards whoever gets there first, and whoever knows how to work the system best.

From a formal standpoint, the law is not a legislative accident. It was adopted through parliament under constitutional provisions governing lawmaking and fiscal measures, including the constitutional requirement that taxes and exemptions must be established by law. In other words, the state has tried to give the incentives a proper legal foundation, especially because the benefits are unusually generous.

But legality on paper is not the same as legitimacy in practice—and this law will live or die in the gap between the two.

A law built on a simple trade: title for investment

The law’s engine is straightforward: convert informal possession into formal ownership, but only if it produces development. That development is meant to boost tourism and other economic activity in highland areas and, politically, to signal that the state is finally willing to recognize realities that have existed for generations.

The safeguards look reasonable at first glance. The land must be verified as state property. Parcels with private ownership claims or pending restitution processes are supposed to be excluded. Municipalities and the cadastre are tasked with confirming status, and there is a 45-day public notice period during which third parties can object and present ownership documentation. If a valid claim appears, the transfer should be rejected.

That’s the theory. The real-world question is whether Albania’s institutions—especially at the local level—can enforce these checks consistently, or whether the process becomes another high-value distribution scheme vulnerable to political pressure, nepotism, and quiet dealmaking.

The hidden legal trap: what happens to the “real” owner who shows up late?

The most sensitive weakness is also the most predictable: what happens when a rightful owner (or heirs) surfaces after the 45-day notice window, after a transfer has already been completed? The law leans heavily on notice-and-challenge as its due process firewall. Yet Albania knows its own reality: heirs live abroad, property files are fragmented, and public notices can be easy to miss in practice. A diaspora family might learn years later that land tied to their history was treated as “state land,” sold for €1, and folded into an investment plan.

The law does not clearly spell out a compensation pathway for these post-factum claims. That silence matters because property rights are not only constitutional; they are also protected by the European human-rights framework that Albania is expected to respect. Adverse-possession-type systems can be lawful if they serve a legitimate public interest and follow fair procedures. But the fairness test collapses if the process is realistic only for those who are physically present, locally connected, and able to monitor municipal notices.

If the state transfers land on the assumption it owns it, and later turns out to be wrong, the legal conflict doesn’t evaporate—it shifts into years of litigation, compensation demands, and distrust. The law’s “certainty” could end up creating a new category of uncertainty.

A second legal fault line: bypassing local planning, centralizing power

The law also accelerates development permissions by empowering the National Council of Territory and Water (KKTU) to approve projects even where local spatial plans are missing—or would ordinarily block development. That is not a technical tweak; it is a political reallocation of power from local planning to a centralized body.

Supporters will argue this is necessary because local planning is uneven and often paralyzed. Critics will counter that Albania is substituting one dysfunction for another: replacing local bottlenecks with a national gatekeeper that can override community-level land-use priorities. The more exceptions a system allows, the more valuable the exceptions become—and the more tempting it is to sell influence around them.

The EU problem hiding in plain sight: state aid by another name

Even though Albania is not an EU member, it is trying to align with EU standards. This law is a stress test. The incentives are not modest: land transferred for €1 plus broad tax holidays that reportedly include relief from taxes such as profit tax and even VAT for a decade, capped to a limited pool of beneficiaries.

In EU terms, transferring public assets below market value and granting selective tax advantages is the classic shape of state aid. In an EU member state, measures like these would normally trigger scrutiny, notification requirements, and legal constraints designed to prevent unfair market distortion. Albania may frame the package as regional development—and that objective is common across Europe—but the method is exceptionally blunt. It risks locking Albania into an incentive model that becomes harder to defend the closer accession gets, especially if beneficiaries include large projects or politically exposed investors.

Corruption and financial crime risks: the “perfect storm” combination

Land allocation, construction permitting, and tax breaks in one package is the kind of governance cocktail that invites abuse. The law relies on municipalities to verify who truly qualifies as a long-term possessor. Evidence may include utility bills, tax records, witness statements, and photos; the law even suggests the absence of documentation is not automatically disqualifying if no competing claim emerges. That flexibility is humane in remote areas with weak records—but it is also an open door for fabrication, collusion, and “professional” claims-building.

Then comes the permitting phase, where KKTU approvals can unlock projects that might otherwise be blocked. Any system that can override normal planning rules creates a premium on access.

Finally, there is the money problem. Real estate and construction are globally recognized as high-risk sectors for money laundering. A scheme that enables rapid land regularization, development approvals, and generous tax exemptions can become attractive not just to investors but to capital looking for a clean narrative. The fact that foreign legal entities can participate adds another layer of complexity if beneficial ownership is opaque or due diligence is weak.

Environment: the law says “sustainable,” but the incentives say “build”

The law speaks the language of ecosystem protection and sustainable development, yet it also opens the door to construction on land categories like forests, pastures, and meadows by treating them as transferable under this scheme. If implementation is aggressive, Albania could end up trading its most valuable long-term asset—intact mountain landscapes—for short-term investment headlines.

The law does not explicitly waive environmental assessments, so in principle environmental impact assessments should still apply. But fast-track political projects have a habit of turning legal requirements into box-ticking exercises. Mountain rivers, biodiversity corridors, and protected landscapes are not easily restored once damaged. If Albania is serious about EU alignment, it cannot afford a “development first, assessment later” culture—especially in its most sensitive territories.

What this law really tests

The Mountain Package is not just a development policy; it is a rule-of-law test. It asks whether Albania can run a high-value program transparently, fairly, and cleanly in regions where records are weak and governance is often personal rather than institutional.

If implemented with rigorous verification, public transparency, meaningful avenues for appeal, and strong anti-corruption and AML scrutiny, the law could finally bring order to a chaotic property reality and unlock legitimate investment.

If implemented in the familiar Albanian way—quiet decisions, selective enforcement, and political favoritism—it risks becoming a state-backed mechanism for legalizing land capture, laundering reputations along with money, and permanently scarring the very mountain regions it claims to revive.