Bosnia & Herzegovina - Y-tax Balkan

Supporting Strategic Investments in Bosnia and Herzegovina

BananaBlitz — Wed, 23 Oct 2024 10:45:02 +0000

Supporting Strategic Investments in Bosnia and Herzegovina: Incentive Policies Overview

Strategic investment incentives in Bosnia and Herzegovina aim to attract foreign and domestic investors through financial benefits in reliefs, providing regulatory support for various industries such as manufacturing, energy, information technology, tourism, and agriculture. These industries have the potential to encourage economic growth and job opening. The government of Bosnia and Herzegovina, hence, has developed a tax framework involving custom duties exemptions, reduced corporate income tax, and grants for capital investments in underdeveloped areas. This is further supported by Bosnia’s favorable trade agreements, skilled workforce, and proximity to the European Union.

Numbers to Look At

Bosnia and Herzegovina offers a liberal trade regime and boasts one of the lowest and most simplified tax structures in the region, with a 17 percent VAT and a 10 percent flat income tax. From 2010 to 2023, the country attracted approximately $7.38 billion in foreign direct investment (FDI), with Austria, Croatia, Serbia, Slovenia, and Germany ranking as the top investors. The following table provides a comparative overview of the FDIs in the last decade, in USD value:

Source: World Bank

Encouraging Investments in Bosnia and Herzegovina

The Law on the Policy of Foreign Direct Investments of Bosnia and Herzegovina ensures equal treatment for foreign investors, granting them the same rights and obligations as residents. It allows investors to open bank accounts in any commercial bank using domestic or convertible currencies and to hire foreign nationals, following local labor and immigration laws. Investors can freely transfer profits abroad without restrictions and own real estate with the same property rights as local entities. The law protects foreign investors from nationalization or expropriation, allowing such actions only in the public interest with prompt and fair compensation. Furthermore, investor rights cannot be overridden by future regulations, and if new laws offer more favorable conditions, investors can choose which legal framework will govern their investments.

The Foreign Investment Promotion Agency of Bosnia and Herzegovina (FIPA), an ad-hoc agency established to promote foreign investments in the country, serves as a bridge facilitating the connection between public and private sectors, providing customized and thorough information on the potential investment policies.

Free Trade Zones in Bosnia and Herzegovina

Free trade zones in Bosnia and Herzegovina are part of the customs territory, and at the same time, they are legal entities. According to the Law on Free Trade Zones, these may be founded by one or more domestic or foreign legal entities or individuals. Businesses within the zones have tax exemptions on VAT and import duties on equipment used for production.

Investment, profit repatriation, and the mobility of capital are free in the zones. The setting up of a Free trade zone is approved provided a feasibility study shows that at least 50% of the goods produced within the zone will be exported within 12 months.

To read more about taxation in Bosnia and Herzegovina, click here.

Tax Incentives for Foreign Investors in the Federation of Bosnia and Herzegovina

There are several incentives in the Federation of Bosnia and Herzegovina aimed at foreign investors. Under the Law on Corporate Income Tax, for instance, companies that invest over 50% of their annual profit in the purchase of equipment for production are allowed a 30% reduction in income tax in the year they made such an investment. In addition, every company that invests at least €10 million within five successive years, with a minimum investment of €2 million for the first year, receives a deduction of 50% of their income tax for the year such investment is made.

Employers may also deduct the doubling of gross wages for new employees if the employee agreement was for at least 12 months full-time and the employee has not worked for them or affiliated companies during the previous five years.

To read more about Bosnia and Herzegovina click here.

Tax Incentives for Investment in the Republic of Srpska

In the Republic of Srpska, several tax incentives are available to encourage investment. Companies that invest in property, plant, or equipment for registered manufacturing activities can reduce their tax base by the amount of the investment. Employees in the textile, clothing, and leather sectors earning below the previous year’s average gross salary benefit from a reduced contribution base, calculated as 25% of the average gross salary from the previous year. Additionally, the region has abolished the dividend tax and introduced favorable rules for taxing income from foreign sources. Qualified investors can also receive tax benefits on their annual income under specific conditions.

If you are interested in investing in Bosnia and Herzegovina, it is advisable to consult with a professional on investment opportunities that best suit your needs. Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Bosnia and Herzegovina. Please feel free to contact us.

הפוסט Supporting Strategic Investments in Bosnia and Herzegovina הופיע לראשונה ב-Y-tax Balkan.

Opening a Bank Account in Bosnia and Herzegovina

BananaBlitz — Thu, 18 Jul 2024 13:17:21 +0000

Opening a bank account in Bosnia and Herzegovina is a simple process for individuals and businesses, but choosing the right bank requires attention to fees and the services offered. Each bank has its own set of necessary documents, which vary due to Bosnia and Herzegovina’s strict financial regulations. In this article, we will guide you through the steps of opening a bank account in Bosnia and Herzegovina ensuring a user-friendly banking experience.

Banking Services in Bosnia and Herzegovina

In Bosnia and Herzegovina, banks primarily focus on the following sectors: business banking, universal banking (a single institution offering a diverse range of financial services, including commercial and investment banking, under one roof) and retail banking.

Most common services that Bosnian banks offer include:

24/7 online banking and telephone support in English.
Comparatively low banking fees.
Acceptance of international credit cards.
Facilitation of international deposits and transfers.
Ability to manage accounts in foreign currencies.
E-trading.

Types of Bank Accounts in Bosnia and Herzegovina

Current Accounts (Personal, Payroll, Teen)
Savings Accounts
Fixed Deposit Accounts
Foreign Currency Accounts
Business Accounts
Mutual Funds

Many banks provide online and mobile platforms for convenient account access, transactions, and financial monitoring. These digital solutions offer features like domestic/international transfers and bill payments, integrating many services in one single system. Exploring account types is advisable, as it helps individuals to make informed financial decisions.

For more information about the services that different banks offer in Bosnia and Herzegovina, click here.

The Largest Banks in Bosnia and Herzegovina

Raiffeisen Bank dd Bosna – Hercegovina
ASA bank d.d. Sarajevo
Sparkasse Bank dd
NLB Razvojna Banka
Bosna Bank International d.d. Sarajevo

Opening a Personal Bank Account in Bosnia and Herzegovina

Opening a personal bank account in Bosnia and Herzegovina requires a set of standard documents and steps, which might vary slightly between banks. Typically, residents need a national ID or passport, and a local proof of address, such as a utility bill or tenancy agreement.

To meet international banking standards, non-residents must provide their passports, proof of address from their home country, and any additional documents required, such as a visa or work permit. Both groups need to fill out an application form and, in many cases, appear in person for identity verification.

Non-residents may face stricter requirements and additional review over their financial information to comply with anti-money laundering laws. They should also be aware of any minimum balance requirements, potential extra fees, and specific bank policies for international clients.

Opening a Business Bank Account in Bosnia and Herzegovina

Opening a business bank account is a critical step for any entrepreneur, requiring a careful selection of essential documents to meet both national regulatory requirements and the specific needs of the banks, which can differ significantly from one bank to another and from residents to non-residents.

Key documents usually include the company’s formation papers like the Article of Incorporation or Organisation, ownership agreements and any applicable business licenses. A Tax Identification Number and personal identification from the important stakeholders or legal representatives are also required.

The Importance of Choosing the Right Bank in Bosnia and Herzegovina

In Bosnia and Herzegovina, where the banking sector has evolved significantly since the 1990s, choosing the right bank is crucial for individuals and businesses. The country’s unique structure, comprising the Federation of Bosnia and Herzegovina and other entities, adds complexity to its banking landscape, characterized by a mix of domestic and international banks. Therefore, understanding the different account options and safety measures provided by these banks is vital.

To read more about Bosnia and Herzegovina click here.

Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Bosnia and Herzegovina. Please feel free to contact us.

הפוסט Opening a Bank Account in Bosnia and Herzegovina הופיע לראשונה ב-Y-tax Balkan.

Personal Income Tax in Bosnia and Herzegovina

BananaBlitz — Thu, 18 Jul 2024 12:56:47 +0000

Understanding personal income tax regulations it is important for anyone who currently even lives in Bosnia and Herzegovina or is planning to move to the country. The Federation of Bosnia and Herzegovina is composed of three separate jurisdictions, including two governing entities – the Federation of Bosnia and Herzegovina and the Republika Srpska, and an autonomous administrative unit – the Brčko District. Each entity within Bosnia and Herzegovina imposes its own personal income tax rates and criteria for taxation, reflecting the unique administrative and legal frameworks present in this diverse nation. This article aims to provide a comprehensive overview of personal tax in Bosnia and Herzegovina.

Individual Tax Residency in Bosnia and Herzegovina

In Bosnia and Herzegovina, the requirements for individual tax residency differ between regions. In the Federation of Bosnia and Herzegovina, Republika Srpska and Brčko District, an individual is considered a tax resident if they either hold residency in the country or spend 183 days or more within the region in a calendar year. Additionally, in Republika Srpska an individual is qualified a resident for tax purposes if their primary home and life interests are in the region. For the Brčko District, residency will apply as well to those living in the district but earning income from its budget for work done elsewhere, or those living in either entity but earning income from an employer in the Brčko District.

Tax Rates of Personal Income Tax

Federation of Bosnia and Herzegovina

In the Federation of Bosnia and Herzegovina, the personal income tax on residents is levied on their worldwide income, whereas non-residents are liable only for the income generated in Bosnia and Herzegovina. Income tax includes income earned from independent business ventures via a permanent establishment, earnings from employment, as well as revenues from both movable and immovable property. Additionally, revenues flowing from royalties, patents, licenses, and capital investments situated in the Federation are also taxable. The personal income tax is levied at a tax rate of 10%.

Republika Srpska

In Republika Srpska, both residents and non-residents who generate income within its borders are subject to the personal income tax equally. Personal income tax rate is levied at a flat rate of 10%. Small entrepreneurs benefit from a reduced tax rate of 2% on their total annual revenue.

Brčko District

The personal income tax rate in the Brčko District is a levied at a flat rate of 10%.

Deductions

In Bosnia and Herzegovina, individual taxpayers can benefit from various deductions and allowances to reduce their personal income tax base, with specific provisions varying across the Federation of Bosnia and Herzegovina, Republika Srpska, and Brčko District. In the Federation of Bosnia and Herzegovina, individuals can deduct the full amount of interest paid on mortgage loans and premiums paid on life insurance, along with receiving monthly allowances for themselves and dependent family members.

Republika Srpska offers similar deductions for mortgage interest and life insurance premiums, with the addition of deductions for contributions to voluntary retirement insurance and provides annual personal and dependent family member allowances.

In the BD, alongside deductions for mortgage interest and life insurance premiums, educational expenses for children are also deductible, with annual personal allowances and specific deductions for dependents, including those based on disability, available to taxpayers.

Foreign Tax Relief

In Bosnia and Herzegovina, across all its entities, taxpayers are eligible for a tax credit for taxes paid on income earned outside their respective territories. The amount of this tax credit is limited to the amount of tax that would be due if the same income were earned within the respective entity. Additionally, if Bosnia and Herzegovina has a Double Tax Treaty (DTT) with another country, the provisions of that treaty take precedence, potentially offering different or additional relief measures.

Bosnia and Herzegovina has a complex tax structure and it is important to have the correct information while you plan on living or investing in the country. Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Bosnia and Herzegovina. Please feel free to contact us.

הפוסט Personal Income Tax in Bosnia and Herzegovina הופיע לראשונה ב-Y-tax Balkan.

Real Estate in Bosnia and Herzegovina

BananaBlitz — Tue, 16 Jul 2024 15:22:33 +0000

The property market has grown significantly in Bosnia and Herzegovina over the past few years, which has attracted not only local but foreign investors as well. Located in the western Balkan, Bosnia and Herzegovina Bosnia and Herzegovina is composed of two entities, the Federation of Bosnia and Herzegovina and the Republic of Srpska along with a third unit under local governance known as the Brčko District. The country has a strategic location and competitive property prices, enhancing real estate transactions, particularly in the commercial and tourism sectors. This article provides an analysis into the main characteristics of real estate sector in Bosnia and Herzegovina.

The Eligibility of Foreign Citizens to Acquire Real Estate in Bosnia-Herzegovina

In Bosnia and Herzegovina, there are no restrictions on the sale of real estate to foreigners; individuals can buy, lease, and trade both residential and commercial properties. Foreign investors who have just established a company, are eligible to buy property without restriction, even with 100% ownership. They assume the same legal rights and obligations as local Bosnia and Herzegovina entities.

In the Federation of Bosnia and Herzegovina, an individual must first secure a permission for the acquisition of agricultural land from the local government authorities. Special consent has been abolished for all other transactions such as commercial, investment and funds.

High-Demand Areas for Investment

The capital city of Sarajevo has investment opportunities which are very attractive and draws interest from foreign investors because of its growing demand for both commercial and residential real estate. The real estate sector is particularly relevant in cities such as Zenica, Tuzla, and Mostar which showed a significant increase in the construction of new buildings. Housing prices in the Municipality of Sarajevo, located within the Federation of Bosnia and Herzegovina, remain high, at 3,500.00 BAM/m2.

Property Taxes and Rates

Property Taxes

Property taxes in Bosnia and Herzegovina are different in the specific administrative regions, so they vary in accordance with the different models used in the municipalities. In the Federation of Bosnia and Herzegovina, taxes on real estate are set at the cantonal level, each of the ten cantons setting its own tax rates and categories of taxpayers. In this area, the tax rates range from BAM 0.5 to BAM 3 per square meter.

Republika Srpska property tax rates are uniform, which implies that they were set at 0.20% of the property’s current market value annually. The Brčko District chooses the property tax rate through the assembly on an annual basis and then decides between 0.05% and 1% of the property’s market value, which is based on the proposed annual budget.

Transfer Taxes

Land and real estate transfer taxes are not the same for all regions in Bosnia and Herzegovina. In the Federation of Bosnia and Herzegovina, the tax’s allocation is done through the cantonal level, and each canton shall establish its own tax rates, which however should not be over 5%. Even so, in the Republika Srpska and the Brčko District, no tax is applied to the transaction of land and real estate.

Are you interested to invest in real estate market in Bosnia and Herzegovina? Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Bosnia and Herzegovina. Please feel free to contact us.

הפוסט Real Estate in Bosnia and Herzegovina הופיע לראשונה ב-Y-tax Balkan.

Corporate Tax in Bosnia and Herzegovina

BananaBlitz — Sun, 23 Jun 2024 18:33:29 +0000

Navigating corporate tax laws can be challenging, particularly in regions with unique political and administrative structures like Bosnia and Herzegovina. The Federation of Bosnia and Herzegovina is composed of three separate jurisdictions, including two governing entities – the Federation of Bosnia and Herzegovina and the Republika Srpska, and an autonomous administrative unit – the Brčko District. The laws and taxation can vary depending on the jurisdiction. This article will provide an overview of corporate taxation in Bosnia and Herzegovina.

Residency for Tax Purposes in Bosnia and Herzegovina

The regulations for determining tax residency in Bosnia and Herzegovina are quite similar across the jurisdictions.

Within the Federation of Bosnia and Herzegovina, a legal entity is considered a tax resident if it is registered within the jurisdiction’s court registry or if the management and supervision of its business activities are situated within the territory of the jurisdiction.

Similarly, a legal entity is considered a resident for tax purposes in Republika Srpska upon its registration in the business entities registry of the jurisdiction or if the place of actual management and supervisory operations concerning the entity’s business undertakings is located within the jurisdiction.

Regarding Brčko District, a legal entity’s tax residency is determined by its registration within the district.

Rates and Obligation of Corporate Income Tax

Federation of Bosnia and Herzegovina

In the Federation of Bosnia and Herzegovina, companies and other legal entities engaged in continuous business activities, selling goods and services locally and internationally to make profits, must pay corporate income tax. Legal entities registered in Republika Srpska and Brčko District but generating income within the borders of the Federation of Bosnia and Herzegovina, must also comply with this obligation. The corporate income tax rate in the Federation of Bosnia and Herzegovina is 10%.

Republika Srpska

Resident legal entities in Republika Srpska are subject to taxation on their income from all sources, regardless of whether such income is generated within Republika Srpska, the Federation of Bosnia and Herzegovina, Brčko District, or from international activities. The corporate income tax rate that applies within Republika Srpska is 10%.

Brčko District

Legal entities that are tax residents of Brčko District are liable for corporate income tax on their earnings from any source, including both domestic sources within Bosnia and Herzegovina and international revenues. The corporate income tax rate in Brčko District is 10%.

Other Corporate Taxes

Value Added Tax (Vat) – The standard VAT is collected uniformly across the country at 17%, applying broadly to goods and services with notable exemptions, including residential leases over 60 days and specific services such as financial, educational, and postal, expressing a strategic combination of generating revenue and supporting specific sectors.

The VAT system is complemented by a nuanced excise duty framework targeting consumables like petroleum products, with rates ranging from BAM 0.3 to BAM 0.4 per litre, and tobacco products, which are taxed at 42% of the retail price plus an additional BAM 0.75 per pack. Additional duties apply to alcoholic beverages, non-alcoholic drinks, and coffee, showing an aim to influence consumption for both health and revenue purposes.

Personal income tax (PIT) – Across Bosnia and Herzegovina stands at a flat rate of 10%, supplemented by mandatory social security contributions for pensions, health, and unemployment insurance, differing by entity in rate and structure but unified in purpose to provide a safety net for employees.

For instance, social security contributions in the Federation of Bosnia and Herzegovina are split between employer and employee, encompassing pension and invalid insurance, health insurance, and contributions towards unemployment insurance, with rates thoughtfully designed to balance the burden between the employer and the employee.

Deductions

In the Federation of Bosnia and Herzegovina, Republika Srpska, and Brčko District, corporate tax deduction rules mainly permit businesses to deduct essential expenses that help generate profit and are well-documented. These can include most operational costs, asset depreciation (with specific rates and conditions for different types of assets), start-up expenses, interest costs under certain conditions, and provisions for bad debts.

Tax credits and incentives

In the Federation of Bosnia and Herzegovina, Republika Srpska, and Brčko District tax incentives are designed to encourage foreign investment, production investment, and employment.

Taxpayers who pay taxes on profits earned abroad can receive a credit for those taxes against their local tax liabilities.

Investment incentives offer tax relief to taxpayers who invest a significant portion of their profits into production equipment or meet specific investment thresholds, with varying conditions and benefits in each entity. Employment incentives provide tax deductions for the gross salaries of newly hired employees, encouraging businesses to create more jobs under certain conditions.

Each entity has its unique approach to these incentives, reflecting their efforts to stimulate economic growth, attract investment, and increase employment within their jurisdictions.

It is important for corporations, to be aware of the legal and financial procedures of taxes. Our firm can provide support when seeking professional tax consultancy services. Contact us, and we will be able to guide in the subject matter.

הפוסט Corporate Tax in Bosnia and Herzegovina הופיע לראשונה ב-Y-tax Balkan.

Tax Benefits in Bosnia and Herzegovina

BananaBlitz — Tue, 04 Jun 2024 12:48:34 +0000

Bosnia and Herzegovina is becoming a prime location for investors and businesses, thanks to a range of tax benefits and incentives aiming to support economic growth and development. This article highlights the main tax advantages in Bosnia, which include measures to support business activities, attract investments, and provide personal tax benefits.

Customs Benefits

Equipment imported as part of share capital, except for certain items like passenger vehicles, are exempt from customs duties on the basis of equipment. Meanwhile Production equipment that is not produced domestically and imported for new or expanded product facilities, as well as facility relocations, including farms, is exempt from import for an unlimited time and date.

Free Trade Zones

Free trade zones in Bosnia and Herzegovina are within the country’s customs territory and are recognized as legal entities. According to the Law on Free Trade Zones of B&H, these zones can be established by one or more domestic or foreign legal entities or individuals. Users of these zones are exempt from paying VAT and import duties on equipment used for production. Investments, profit transfers, and investment transfers within these zones are unrestricted.

Entity Level Incentives

Federation of Bosnia and Herzegovina

Companies will get a 30% tax cut on investments in production equipment worth over 50% of their total profit. There is an additional 50% tax cut for total investments worth at least 10 million KM (Convertible Marka) over a five-year period, with a minimum investment of 2 million KM (Convertible Marka) in the first year alone.

Republic of Srpska

The tax incentives include a reduction in the tax base for investments in manufacturing activities, set at 40%. Additionally, there are incentives for adopting new technologies and increasing salaries, with the possibility of receiving refunds on 30% or 70% of contributions paid based on the increase in salaries (subject to incentive increase limits).

Brčko District

Businesses enjoy several incentives, including no charge for company establishment except for notary services. They receive full compensation for utility connections and administrative fees, along with significant incentives for employment. These employment incentives include payments of 5,000.00 KM or 7,000.00 KM (Convertible Marka) for employees with a university or secondary degree, respectively. Furthermore, there are incentives for investments in fixed assets, with reimbursements equivalent to the determined and paid profit or income tax for the year of purchase.

These incentives are part of Bosnia and Herzegovina’s strategic approach to attract and retain foreign direct investment by providing financial benefits, operational flexibilities, and safeguards against changes in regulations that might disadvantage the investment climate.

Bosnia and Herzegovina provide highly competitive tax benefits to attract investment, support local businesses, and stimulate economic growth. With low corporate taxes, free trade agreements and double tax treaties, personal income tax advantages plus a highly competitive tax incentives for investors and businesses, the country has broader attraction more than ever.

Whether you are considering setting up a business in the country, or interested in capitalizing on Bosnia’s tax incentives for corporate or personal benefits, our experts in international taxation at Nimrod Yaron Albania are ready to assist. For an initial discussion, please reach out to us through the link provided.

הפוסט Tax Benefits in Bosnia and Herzegovina הופיע לראשונה ב-Y-tax Balkan.

Business Activity in Bosnia and Herzegovina

BananaBlitz — Tue, 04 Jun 2024 12:41:00 +0000

Bosnia and Herzegovina is a sovereign state located in Southeast Europe, which has undergone significant transformation, transitioning into an upper-middle-income country since the mid-1990s. This article will provide a comprehensive overview of business activity in Bosnia and Herzegovina.

Bosnia and Herzegovina’s Diverse Economy

The country’s economy is mostly oriented towards services, which constituted for 55% of its Gross Domestic Product (GDP) in 2016. This is accompanied by a notable industrial sector, contributing 23% to the GDP, and a modest agricultural sector, representing 6% of the GDP. The combination of these economic activities, along with its strategic location in the Balkans, offers a unique perspective on the opportunities of doing business in Bosnia and Herzegovina.

The economy relies heavily on the export of metals, energy, textiles, and furniture, as well as on remittances and foreign aid. Agriculture, forestry, and fishing are significant, with about one-third of the land under cultivation or in pasture. The country also has reserves of iron ore, bauxite, lignite, bituminous coal, and zinc.

Investment Advantages in Bosnia and Herzegovina

Bosnia and Herzegovina present an attractive environment for investment, characterized by its evolving transitional economy that has demonstrated notable growth in recent years, driven by both consumer spending and public investments. The nation’s progress towards European Union (EU) accession, underscored by its status as a candidate and the enforcement of the Stabilization and Association Agreement, significantly enhances its political, economic, and trade engagements with the EU, by building trust among investors.

The support extended by international organizations, including the U.S. Commercial Service, offers invaluable resources and advocacy for enterprises aiming to part of the Bosnian market. These services include market intelligence, business matchmaking, and market entry assistance, highlight the comprehensive support system available for business and investment endeavours in Bosnia and Herzegovina.

Tax advantages and rates

The Corporate Income tax rate in the Federation of Bosnia and Herzegovina is 10%, while the VAT rate is 17%. Tax incentives are available for companies with over 30% of turnover from exports or those investing in production. Foreign investors are treated the same as domestic investors, with protections and a liberal trade policy aimed at attracting investment by offering low tax rates and a secure environment.

Sector Opportunities and Emerging Industries

Bosnia and Herzegovina’s economic growth is encouraged by its vibrant tourism sector, which capitalizes on the nation’s historical, cultural, and natural assets. The agriculture industry benefits from the country’s rich natural resources, offering considerable potential and making this country an ideal place to invest in tourism with high return on investments.

Manufacturing and mining, play also an important role, with a focus on producing essential raw materials such as steel, coal, and various metals. On the other hand, the information and communication technology (sector stands out as one of the fastest-growing industries. These sectors are ideal to invest and gain significant income.

Moreover, renewable energy sources like hydro, wind, and solar present significant opportunities due to the country’s natural resources. The healthcare sector is expected to expand in response to the aging population’s needs. Additionally, there is a recognized demand for the development of transport and energy infrastructure, indicating substantial investment opportunities. This diverse economic landscape showcases Bosnia and Herzegovina’s potential for future growth and a great place to make business.

Investing in Bosnia and Herzegovina offers opportunities but requires careful consideration of the regulatory environment rights. The country’s decentralized structure means that regulations can vary significantly between entities. However, with proper planning, consultation, and understanding of local laws and procedures, businesses can navigate these challenges and capitalize on Bosnia’s potential for growth and investment.

Nimrod Yaron Albania Specializes in offering professional guidance in international taxation in Bosnia and Herzegovina. For an initial consultation, we invite you to contact us.

הפוסט Business Activity in Bosnia and Herzegovina הופיע לראשונה ב-Y-tax Balkan.

Opening a company in Bosnia and Herzegovina

BananaBlitz — Thu, 11 Jan 2024 16:47:44 +0000

Entrepreneurs looking to establish a company often seek a country whose business environment aligns best with their strategic objectives. In this article, we will explore Bosnia and Herzegovina, highlighting the business incentive programs it offers. Bosnia and Herzegovina is dedicated to supporting enterprises and fostering an atmosphere conducive to growth and innovation, making it a promising market for both domestic and foreign ventures.

The Benefits of doing business in Bosnia and Herzegovina

A Stable financial sector – Due to its robust financial health, the banking sector in Bosnia and Herzegovina has effectively mitigated risks arising from both domestic and international factors such as the Russian-Ukrainian war. Bosnia and Herzegovina successfully navigated the risks of a financial crisis, which was apparent due to the EU’s sanctions on Russia, by leveraging a streamlined regulatory system. The banking sector remained well-capitalized and liquid, saw improvements in the quality of its assets, and observed a significant increase in profitability measures.
Incentives for Foreign Investors – Foreign investors are eligible for several tax benefits and incentives. One such incentive allows a tax deduction of twice the gross wage paid to new employees under specific conditions. Additionally, there are specific incentives for direct investments in new technologies, emphasizing the introduction of advanced technologies and modern equipment. These funds are distributed based on the investment project and are accessible following a public tender process. Click here to read about the numerous incentives of the Bosnian government related to foreign investors.
Favorable Legislation for Foreign Investors.
Bosnia and Herzegovina’s Law on Foreign Direct Investments creates a favorable environment for foreign investors. It ensures national treatment, granting them equal rights as residents, including the ability to open accounts in any commercial bank, employ foreign nationals, and transfer investment proceeds abroad. The law permits foreign ownership of real estate with property rights equivalent to those of local entities and offers strong safeguards against nationalization or expropriation. These rights take precedence over later laws, providing foreign investors with the flexibility to select their regulatory framework.
Free Trade Zones – Bosnia and Herzegovina currently hosts four (4) free trade zones strategically located near key economic hubsa.

Trebinje.
Vogošća, Sarajevo.c.
Hercegovina, Mostar.
Visoko.

In these free trade zones, individuals are not obligated to pay Value Added Tax (VAT) and contributions, except for those specifically tied to salaries and wages.

Types of Business Companies in Bosnia and Herzegovina

Bosnia and Herzegovina Federation

Unlimited Joint Liability Company (d.n.o. / o.d/ UnLtd) – This entity is established through a contract involving two or more partners, who can be domestic or foreign natural persons. The founders are responsible for the company’s liabilities with all their assets, including personal property. There is no stipulation for minimum or maximum contributions for the establishment of this entity.
Limited Liability Company (d.o.o./Ltd) – Established by either an establishment act or contract, this entity can be formed by one or more domestic or international natural or legal entities, with its initial capital divided into parts. In a limited liability company, each member’s liability is confined to the amount of their investment in the company. The required minimum initial capital for this type of company is 1,000 BAM (approximately 500 EUR).
Limited Partnership (k.d./LP) – A company established through a contract involving two or more domestic or international natural and/or legal entities, where there is at least one partner with full liability, including personal property, and at least one partner whose liability is limited to their share value in the company. This type of company does not have specified minimum or maximum requirements for initial capital.
Joint-Stock Company (d.d. /a.d./JSC) – Legal entities founded by the establishment contract of one or more domestic/foreign natural or legal shareholders with initial capital divided into shares. Joint stock companies may be open or closed. Open joint stock companies are companies whose shares have been issued using public offering and which meet one of the following criteria: a) they are banks or insurance companies, or b) they have a share capital of at least in the amount of 4 million KM (approx.. 2 mil eur) and at least 40 shareholders. A closed joint-stock company is a legal entity whose shares are distributed among a limited number of shareholders. The min. initial capital is 50,000 BAM (approx. 25,000 EUR).

Republic of Srpska

Unlimited Joint Liability Company (d.n.o./o.d./ UnLtd) – Established by an act involving two or more domestic or foreign natural and/or legal partners, this company is formed to engage in specific activities under a unified company name. The partners are jointly and fully liable for the company’s obligations, with no set minimum or maximum contribution requirements.
Limited Liability Company (d.o.o./Ltd) – Established through an act by one to a hundred domestic or foreign natural and/or legal entities, a shareholder in this limited company bears no personal liability for the company’s debts beyond the value of their investment in the company. The minimum required initial capital for establishment is set at 1 BAM (approximately 0.5 EUR).
Limited Partnership (k.d./LP) – Formed through an establishment act by two or more domestic or foreign natural and/or legal entities, this company structure requires at least one person to have unlimited liability and at least one person whose liability is restricted to their investment in the company. There is no stipulation for minimum or maximum initial capital for its formation.
Joint-Stock Company (d.d. /a.d./ JSC) – A legal entity in the form of a joint-stock company can be established by one or more domestic or foreign natural or legal entities, with its capital divided into a set number of shares. An Open Joint-Stock Company allows its shares to be publicly traded, requiring a minimum initial capital of 50,000 BAM (25,000 EUR). Conversely, a Closed Joint-Stock Company restricts its shares to a limited number of shareholders, with a minimum initial capital of 20,000 BAM (10,000 EUR).

Business Registration in Bosnia and Herzegovina

Establishing a company in Bosnia involves a series of steps. These include choosing the suitable company type, selecting a business name, preparing the required documentation, and completing the registration with both the Bosnian Business Registration Agency and the Bosnian Court as well.

The steps are:

Establishment contract/decision. This document specifies the company’s name, address, business type, ownership composition, and other critical information. (must be made by a notary).
Payment of the required capital at a bank (bank by choice of founder).
Registration of the company at the Registry of Business Entities.
Manufacturing the stamp with the name and the address of the company on it. Bear in mind to choose a unique name.
Opening a bank account.
Registration of the company and employees at the tax administration.
Obtaining the service permission certificate for completion of the activities issued by the Municipality Bureau of Economic and other permits/licenses.
Hire employees if needed.

The expenses associated with setting up a business include administrative costs of around 500 EUR and lawyer and notary costs ranging between 500-1000 EUR. The legal process for business establishment, as mandated by the law, typically spans 5 days, though the comprehensive procedure in practice may extend to 30-45 days.

If you are considering the establishment of a company in Bosnia and Herzegovina, consulting with experts is crucial. Nimrod Yaron & Co. specializes in offering professional guidance and support in the area of taxation. For an initial consultation, we invite you to contact us through the provided link.

הפוסט Opening a company in Bosnia and Herzegovina הופיע לראשונה ב-Y-tax Balkan.