Verified Facts
The tax rates in Bosnia and Herzegovina range from 10% to 36% for personal income tax, with a corporate tax rate of 10% and a standard VAT rate of 17%.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Bosnia and Herzegovina has a territorial taxation system, where residents are taxed on their worldwide income, while non-residents are taxed only on their Bosnian-sourced income. The country's tax residency rules state that an individual is considered a tax resident if they have a permanent home in Bosnia and Herzegovina, or if they stay in the country for at least 183 days in a calendar year. This means that individuals who meet these conditions will be subject to taxation on their worldwide income, regardless of where it is earned.
The tax system in Bosnia and Herzegovina is governed by the Tax Administration of the Federation of Bosnia and Herzegovina, the Republic of Srpska, and the Brcko District, each having its own tax authority. The tax laws and regulations are based on the European Union tax directives, with some modifications to suit the country's specific needs. The tax system is designed to be fair and transparent, with a focus on encouraging foreign investment and economic growth.
Personal Income Tax
| Income Bracket (BAM) | Tax Rate |
|---|---|
| 0 - 3,600 | 10% |
| 3,601 - 7,200 | 15% |
| 7,201 - 12,000 | 20% |
| 12,001 - 24,000 | 25% |
| 24,001 and above | 36% |
| The tax rates for personal income tax in Bosnia and Herzegovina are progressive, with higher income brackets subject to higher tax rates. Taxpayers are entitled to various deductions and allowances, such as a basic allowance of BAM 2,400, as well as deductions for charitable donations, mortgage interest, and education expenses. Tax returns must be filed by March 31st of each year, and taxpayers can file their returns online or through a tax agent. |
Corporate & Business Tax
- The corporate tax rate in Bosnia and Herzegovina is 10%, which is one of the lowest in Europe.
- Small businesses with an annual turnover of less than BAM 50,000 are exempt from corporate tax.
- Foreign companies can take advantage of free zones, which offer tax exemptions and other incentives.
- Companies must register with the Tax Administration and obtain a tax identification number.
- Companies are required to file their tax returns by March 31st of each year.
VAT / Sales Tax
- The standard VAT rate in Bosnia and Herzegovina is 17%, which applies to most goods and services.
- A reduced VAT rate of 5% applies to certain goods and services, such as food, medicine, and books.
- Some goods and services, such as financial services and real estate, are exempt from VAT.
- Tourists can claim a VAT refund on certain purchases, such as souvenirs and clothing.
For Expats & Foreign Workers
- Expats are considered tax residents in Bosnia and Herzegovina if they stay in the country for at least 183 days in a calendar year.
- Bosnia and Herzegovina has double taxation treaties with over 40 countries, which can help reduce tax liabilities for expats.
- Expats are required to register with the Tax Administration and obtain a tax identification number.
- Expats are entitled to social security benefits, such as pension and healthcare, if they have made contributions to the social security system.
- Expats must comply with remittance rules, which require them to declare and pay tax on their worldwide income.
- Expats can claim tax credits for taxes paid in other countries, which can help reduce their tax liability in Bosnia and Herzegovina.
Crypto & Investment Income
- Investment income, such as dividends and interest, is subject to a 10% withholding tax.
- Capital gains from the sale of securities are subject to a 10% tax rate, or are included in the individual's taxable income.
- Cryptocurrency is considered a commodity and is subject to a 10% tax rate on gains from its sale.
- Dividends received from foreign companies are subject to a 5% withholding tax, which can be reduced or eliminated under a double taxation treaty.