Bosnia and Herzegovina is located in southeastern Europe and borders Croatia, Serbia, and Montenegro. The population is about 3.5 million, with a GDP of 16.5 billion per year. The economy has remained stable for the past several years, focused on export-based growth and tourism. Unemployment continues to be a challenge, with a 35% unemployment rate and one of the highest youth unemployment rates in the world.
There are 4 common types of business entities set up in Bosnia and Herzegovina including joint stock, limited liability, foreign branches, and representative offices. The tax year is based on the company financial year (often the calendar year). In the FBiH (Federation of Bosnia and Herzegovina) region, the tax return and payment is due by the end of March the following year. In the RS (Republika Srpska) region, the tax deadline is 90 days after completion of tax year.
Labor and Payroll Considerations:
- Employment contracts must be written
- Minimum wage is 540 convertible maraca per month
- In the RS region, employee social security contributions are withheld from employee pay at 33%
- Employers in the RS region do not pay social security
- In the FBiH region, employee social security contributions are 31% and withheld from pay
- Employers in the FBiH region must contribute to social security
- There are annual quotas for hiring foreign workers
A new law on Income Tax in 2021 will increase the personal income of workers in Bosnia and Herzegovina. The minimum wage has been increased and the non-taxable income threshold has been increased to 700KM. Personal deductions and the basis of dependent members of immediate family has also increased, giving workers more income each month.
If you are just getting started in Bosnia and Herzegovina, or need to simplify operations, Blue Marble can help. Our cloud-based technology with customized reporting gives you real-time access to your payroll, and our in-country experts can help with compliance and tax regulations. We provide a dedicated US-based service team and direct access to in-country experts to help when questions come up. To learn more or get started, click here