Page 10 - Mazars Central and Eastern European tax guide 2023

Bosnia and Herzegovina VAT options in Applicable / limits Both custom duties and excise duties on goods imported
into BiH constitute types of indirect taxation in BiH.
Bosnia and
Herzegovina Personal income tax / Social security system
Distance selling No
In FBiH personal income is taxed at a flat rate of 10%,
Call-off stock ü and is applicable for active income (e.g., employment,
Mazars BH d.o.o. assignment fee) and passive income (interest, real
Bulevar Meše Selimovića 17a VAT group registration No estate rental, etc.). Dividends are not taxable in BiH.
71000 Sarajevo, Cash accounting – yearly No In FBiH, the lowest permitted monthly salary is BAM 596
Bosnia and Herzegovina amount in EUR (approx.) (EUR 305) net.
Phone: (00387) 33 265 800 Import VAT deferment No
Fax: (00387) 33 444 951 In RS, personal income is taxed at a rate of 8%, assignment
Local reverse charge ü fees at a rate of 13% and all other passive income at a rate
Option for taxation of 10% (interest, real estate rental, etc). The lowest salary
letting of real estate ü permitted is determined as a net amount and for 2023,
this amounts to BAM 700 (EUR 358).
supply of used real estate No
Corporate taxes and other direct taxes In FBiH, interest expenses taken from related parties In the RS, employees contribute 31% of the gross salary.
are tax deductible in a debt/equity ratio of 4:1 (thin cap VAT registration approx. EUR 25,560/year In the FBiH, employer contributions are set at 10.5%, and
It is important to note that Bosnia and Herzegovina (BiH) rule). In RS, interest expenses are not recognized for the threshold employee contributions at 31.5% of the gross salary.
is divided into three tax jurisdictions: the Federation of BiH amount of net interest expenses that exceed 30% of the the conditions and manner in which VAT refunds for
(FBiH), the Republika Srpska (RS) and Brčko District (BD). tax base (without financial items). In the RS, R&D costs are VAT paid by non-residents in B&H can be claimed In RS, the lowest salary is determined as a net amount and
For simplicity’s sake, we will focus on the RS and FBiH. recognized in line with IAS. In FBiH and BD, R&D costs are (i.e., there is separate form to be completed that must for 2022, this amounts BAM 590 (EUR 302).
CIT is set at a flat rate of 10%. A company in the FBiH/ recognized. be accompanied by supporting documentation (originals In the RS, the employee contributes 31% of the gross
RS is resident if it is registered as a legal entity in the Profit on dividends is not included in the calculation of the of invoices). VAT refunds can be made only for invoiced salary. In the FBiH, the employer contributes 10.5%, and
relevant jurisdiction, or in case its activities in BiH qualify tax base. In the FBiH, taxpayers who make investments amounts exceeding BAM 800. employee contributes 31.5% of the gross salary.
as PE. Losses can be carried forward for up to 5 years in all in production equipment from their own resources
tax jurisdictions. Loss carry back is not permitted. There to a value exceeding 50% of the profit for the current tax
are no special limitations in the case of M&A transactions.
period, reduce corporate income tax liabilities for 30% Wage related taxes in
of the amount for the year of the investment. Minimum wage in FBiH Minimum wage in the RS
Transfer pricing in Bosnia and Herzegovina Any taxpayer who invests more than 20 million in BAM Bosnia and Herzegoniva
Arm's length principle ü Since 1998 (EUR 10.2 million) over five consecutive years (minimum Exchange rate BAM/EUR 1.95 in EUR in BAM in EUR in BAM
investment in first year equals to 4 million BAM (EUR 466 911 520 1,016
Necessary. Prescribed in the
Documentation liability ü transfer pricing documentation. 2.04 million), reduces its CIT liability by 50% of the
investment in each of the 5 years. Total wage cost 515 110.50% 520 100.00%
APA No – The withholdings rate is 10% for dividends and amounts Employer's SS and other contributions 49 10.50% - 0.00%
Annual consolidated group to 5% in FBiH unless a DTT applies (currently, there are
Country-by-Country revenue equal to or exceeding around 38 active DTT’s). Interests, royalties and technical Gross salary 466 100.00% 520 100.00%
liability ü EUR 750 million in the Employees' contributions 144 31.00% 161 31.00%
previous year. fees paid by a BiH company to a foreign company are
Master file-local file Deadline 45FBIH/30RS days subject to withholdings at a rate of 10%. In RS, there Personal income tax* 17 3.61% 1 0.13%
(OECD BEPS 13) ü from the request made by the tax is a flat rate withholding tax (10%) on all payments Net salary 305 65.39% 358 65.23%
applicable administration. to foreign legal persons in which there is an obligation
Penalty to pay withholding tax. The group taxation concept
RS: EUR 10,226.00-EUR is allowed in BiH for a group of resident companies with Wage related taxes in
30,678.00 for legal persons and a minimum of 90% (FBiH). Moreover, the parent company Bosnia and Herzegovina Average wage in FBiH Average wage in the RS
EUR 2,556.00-EUR 7,669.00 for and its subsidiaries constitute a group of companies if they
lack of documentation ü responsible person. Exchange rate BAM/EUR 1.95 in EUR in BAM in EUR in BAM
FBIH: EUR 1,534.00-EUR have direct or indirect control over 50% or more of the
51,130.00 for legal persons and shares or stakes. 881 1,724 885 1,730
EUR 1,278.00-EUR 5,113.00 for In cases of real estate acquisition in the FBiH, the transfer
responsible person. Total wage cost 974 110.50% 885 100.00%
tax shortage No – is taxable at the canton level. In the RS, there is no transfer
Direct or indirect control (25% tax, but the owner of the real estate has to pay property tax Employer's SS and other contributions 93 10.50% - 0.00%
for FBIH, 25% for RS) or common of up to 0.20% of the market value. (Decreased rules for Gross salary 881 100.00% 885 100.00%
25% managing director or significant production RE apply).
Related parties (25%) < influence on decisions - directly Employees' contributions 273 31.00% 274 31.00%
or indirectly in the management, Personal income tax* 31 3.49% 30 3.38%
control or capital of the other VAT and other indirect taxes
person, etc. Net salary 577 65.51% 580 65.62%
In FB&H, the safe harbour rate for The general rate is 17%. There are no reduced rates apart
support services is 5%. Support from the 0% rate (mainly for the export of goods). VAT- * Tax base differs from the gross salary, deductions apply.
services include: IT maintenance exempt services are mainly banking services, insurance,
services, accounting and auditing,
Safe harbours ü administration, legal services, healthcare, etc. Export exemption and exemption for Pere Mioč
HR management, training and deliveries to free zones apply. Specific thresholds are Partner, Tax Advisory Services
education and tax advisory as follows. Phone: +385 (0)1 4864 424
services for employees.
Level of attention paid by Tax Amendments to the VAT rulebook have been officially Mobile: +385 (0)99 736 8746
Authority 7/10 introduced as of 2 August 2020. The Rulebook prescribes E-mail: pere.mioc@mazars.hr

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