Bosnia and Herzegovina taxes in 2026

Bosnia and Herzegovina tax rates in 2026: the short version

Bosnia and Herzegovina has not one tax system but three. Value added tax is the same across the country, while income tax, contributions and corporate tax are set by the Federation of Bosnia and Herzegovina, Republika Srpska and the Brčko District, each under its own law. So the first question here is not the rate but which part of the country you live and work in.

The convertible mark is pegged to the euro at 1.95583 marks per euro. Amounts are in US dollars, with marks in brackets, converted at the rate of 7 October 2026, 1.7499 marks per US dollar, and rounded up.

What changed over the last year. The main news is the contribution cut in the Federation: since 1 July 2025 the employer pays 5% on top of salary instead of 10.5%. The minimum wage in the Federation rose to $590 (1,027 marks) net in 2026, and in Republika Srpska to $580 (1,000 marks) for unskilled workers. The Federation's personal allowance stayed at $180 (300 marks) a month: a proposal to double it never became law.

Compare taxes in 146 countries: relocation taxes 2026

Three tax systems in one country: who collects what

Since the 1995 Dayton Agreement, Bosnia and Herzegovina has been organised as a state of two entities and a special district. At the national level only indirect taxes are collected - value added tax, excise and customs duties - by the Indirect Taxation Authority. Direct taxes remain with the entities.

In practice, a company registered in Sarajevo and one in Banja Luka pay corporate tax at the same rate but file with different authorities on different forms. And someone who lives in one part of the country and works in another should find out in advance whose rules apply to the tax withheld from their salary. Mistakes here are more often about the addressee than the rate.

The Federation adds one more level - ten cantons. Property transaction, inheritance and gift taxes are set by the cantons themselves, so the same flat purchase is taxed differently in Sarajevo and in Mostar.

Brčko District. This is a small territory in the north of the country with its own government and tax laws. The income tax rate here is 10%, as in the Federation, and the annual return is due earliest, by 28 February. District companies pay the same 10% corporate tax and withhold no tax on dividends to foreign owners.

Bosnia and Herzegovina tax residency rules: how days count

You become a Federation resident through a place of residence or 183 days in a tax year, in one stretch or with breaks. The tax year is the calendar year. Republika Srpska and Brčko have their own laws, but the approach is similar: a place of residence or 183 days in the year.

A resident pays tax on worldwide income, a non-resident only on local income. So it is important first to understand which part of the country you live and work in: the rate, allowances and filing deadlines depend on it. The calculator below shows whether you reach 183 days.

Residence permit and taxes. A residence permit by itself does not make you a tax resident: what matters is 183 days or a place of residence. If you have a residence permit but live in another country, you pay tax in Bosnia and Herzegovina only on local income.

Residency certificate. To apply a double tax treaty or confirm your status to a foreign bank, you need a tax residency certificate. It is issued on application by the tax administration of the part of the country where you live, with documents on your residence and days in the country. The certificate covers a specific year, so it is renewed annually.

Mistakes here are expensive: days are counted under one law, tax is demanded under another, and your former country may also treat you as its resident. Murblz specialists determine which law applies, count the days, obtain the residency certificate and apply a double tax treaty where one exists.

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How the days are counted. Any day of presence counts, in one stretch or with breaks, but within one calendar year. If you move in September, you will not reach 183 days in the first year and will become resident under this rule only from the following year. A place of residence, such as a flat you bought and live in, can make you resident earlier.

If two countries claim you. The conflict is settled under the double tax treaty: first the permanent home, then the centre of vital interests - family, work and property - then habitual abode and nationality. Without a treaty there is no treaty way to resolve the conflict, and each country applies its own law.

Income tax and contributions in the Federation of Bosnia and Herzegovina

In the Federation there is a single income tax rate of 10%, with no scale. Since 1 July 2025 hiring has become noticeably cheaper: the total contribution rate fell from 41.5% to 36%, and the whole cut went to the employer's share.

The tax is calculated like this: employee contributions are deducted from gross pay, then the personal allowance of $180 (300 marks) a month, and 10% is taken from the rest. The allowance is increased for a non-working spouse, children and dependent parents. The minimum wage in the Federation in 2026 is $590 (1,027 marks) net.

The main burden here is not the tax but the employee's contributions: 31% of gross goes to the funds before tax is even calculated. On the other hand, the employer pays only 5% on top of salary. Contributions give the right to public healthcare and a pension, so working without them in the Federation does not pay off for the employee either.

Tax card. To receive the personal allowance, the employee gives the employer a tax card. Without it no allowance is applied, tax is withheld from the whole amount after contributions, and the overpayment is refunded only through the annual return. Within limits set by law, meal and travel allowances, holiday pay and some one-off payments are not taxed.

What the minimum wage costs. For an employee to take home the minimum $590 (1,027 marks), gross pay must be about $920 (1,605 marks), and with its own contributions the employer spends about $970 (1,685 marks) a month.

Income tax and contributions in Republika Srpska

In Republika Srpska the salary income tax rate is lower - 8% - and the personal allowance is larger: $580 (1,000 marks) a month. But the formula is different: contributions are not deducted from the tax base, and the tax is calculated on gross pay minus the allowance.

All 31% is withheld from the employee's gross salary; there is no separate employer surcharge on top. The minimum wage in 2026 is $580 (1,000 marks) net for unskilled workers and up to $830 (1,450 marks) for workers with a university degree.

Other individual income has its own rates: self-employment income 10%; rent, royalties, capital gains and other income 13%.

The burden on the same salary is about 3-4 points lower in Republika Srpska than in the Federation. For a company with several employees the difference adds up to a noticeable sum over a year, so the place of registration is worth choosing with the numbers in hand.

Family allowance. For each dependent family member $1,100 (1,800 marks) a year is added to the personal allowance. The employer applies it at the employee's request, and the annual total is reconciled in the annual return.

Corporate income tax, dividends and payments to non-residents

Corporate income tax is 10% in all three parts of the country, one of the lowest rates in Europe. Resident companies pay it on worldwide income, non-residents on income earned in Bosnia and Herzegovina.

Dividends to an individual owner. Neither the Federation nor Republika Srpska taxes dividends paid to individuals. Company profit goes through a single 10% tax, and the owner takes the rest home.

Worked example. A Federation company earns $58,000 (100,000 marks) of profit. Corporate tax is $5,800 (10,000 marks). If the remaining $52,000 (90,000 marks) is paid to an individual owner, there is no dividend tax, and they receive $52,000 (90,000 marks). The total burden is the same 10%.

The company itself withholds the tax on payment. A double tax treaty with the recipient's country can reduce the withholding if proof of residence is obtained before the payment, not after.

A low rate does not mean simple compliance. A company in each part of the country files an annual corporate tax return and financial statements, pays advances and runs payroll under the rules of its own entity. A foreign-owned company is better off with an accountant who works exactly where it is registered.

Who a company in Bosnia and Herzegovina suits. Those doing business in the region or selling services abroad who are ready to maintain real presence: an office, a director, bookkeeping. 10% tax and untaxed dividends give a lower burden than in neighbouring European Union countries. But foreign banks and tax authorities look at the place of effective management: if the company is run from another country, its profit may be taxed there.

Advances. During the year a company pays corporate tax in monthly advances based on the previous year's return, and after year end it pays the difference or gets the overpayment back.

VAT in Bosnia and Herzegovina: 17% with no reduced rates

Value added tax is the same across the country - 17% - and there are no reduced rates: bread, medicines and services are taxed alike. The rate has not changed since the tax was introduced in 2006.

Registration is mandatory once annual turnover exceeds $58,000 (100,000 marks): the threshold was raised from $29,000 (50,000 marks) at the end of 2023. Value added tax is administered by the Indirect Taxation Authority, so the tax rules are the same in every part of the country, and a foreign company without registration in the country appoints a tax representative.

What is exempt. Financial and insurance services, healthcare, education and residential lettings are exempt from value added tax. Exports are zero-rated, and the exporter can recover input tax.

Deadlines. The value added tax return is filed for each month by the 10th of the following month, and the tax is paid at the same time. A new-build from a developer is sold with 17% value added tax in the price, while a resale of an existing home involves no value added tax; instead, a transfer tax applies where one exists.

Worked example. In marks: a company sells a service to a local client for 10,000 net and adds 1,700 of value added tax. If during the month it bought goods and services for its business for 4,000 with 680 of value added tax, it pays the difference to the budget - $590 (1,020 marks).

What it means for a family budget. With no reduced rates, food, children's goods and medicines are taxed at the same 17% as electronics. For a family moving here this matters more than the low corporate tax: everyone who shops in the country pays value added tax.

Entrepreneurs, freelancers and remote work

Bosnia and Herzegovina has no special tax regimes for newcomers: a resident pays tax on worldwide income, including a salary from a foreign company for remote work.

Remote work for a foreign company. A Federation resident pays 10% on such a salary. Tax paid abroad is credited, but not beyond the tax that would be due on the same income in Bosnia and Herzegovina. If a double tax treaty is in force with the other country, its rules apply. So before the move we check where you will be resident and gather the documents on tax paid abroad.

Entrepreneurs. Self-employment income is taxed at 10% of profit in both the Federation and Republika Srpska. An entrepreneur keeps records of income and expenses, pays advances and files an annual return. Contributions are paid by the entrepreneur directly; in Republika Srpska the contribution base for entrepreneurs in 2026 stayed at 70% of the average wage.

Small trades. Both entities offer simplified lump-sum taxation for small activities, but the list of occupations is limited and it does not suit everyone.

Which option is better depends on the amount of income: on a small income it is simpler to work as an entrepreneur, on a large one a company with 10% tax and untaxed dividends pays off. We run the numbers for your income before registration, not after the first return.

Property, inheritance and gifts

Property taxes in Bosnia and Herzegovina are set not by the country but by its entities, and in the Federation also by the cantons. So the rate depends on where the flat is.

In Sarajevo Canton the transfer tax is paid by the buyer, in the other Federation cantons by the seller. This matters in negotiations: the same contract price means different costs for a buyer in Sarajevo and in Mostar.

Worked example. A flat in Sarajevo for $180,000 (300,000 marks). The buyer pays $8,600 (15,000 marks) of transfer tax, plus notary fees and title registration. Buying a new-build from a developer would involve no transfer tax, but 17% value added tax is already built into the price.

Inheritance and gifts. In the Federation this tax is also cantonal: close relatives are as a rule exempt, and for others it is calculated on the assessed value of the property. Before transferring property within a family we check the rules of the specific canton, and in Republika Srpska and Brčko their own rules.

How to choose a flat and what it costs is covered in buying an apartment in Bosnia, and investing in income property on the investment property in Bosnia and Herzegovina page.

Letting a property. Rental income is declared and taxed: at 10% in the Federation and 13% in Republika Srpska. The owner pays the tax, including a non-resident owner.

Double tax treaties

Bosnia and Herzegovina has about 40 double tax treaties in force. They include Austria, Germany, Italy, the Netherlands, the United Kingdom, Turkey, the United Arab Emirates, China and all its regional neighbours: Serbia, Croatia, Montenegro and Slovenia.

Treaties are concluded by the country as a whole and applied by the entities' tax administrations. The main way to remove double taxation is the credit: tax paid abroad is deducted from local tax, but not beyond the amount that would be charged in Bosnia and Herzegovina. Without a treaty a credit is still possible under domestic law if payment abroad is documented.

On corporate tax, Bosnia and Herzegovina and Bulgaria are the cheapest in the region. Rates for other countries are collected in the general tax table by country.

How to get the reduced rate. For the paying company to apply the treaty rate, the recipient gives it a tax residency certificate from their country in advance. If there is no certificate on the payment date, the full rate is withheld, and the overpayment can then be recovered only through an application to the tax administration, which takes months.

Filing, deadlines and what it means if you move

What all this means in practice:

• Employed. The employer withholds tax and contributions, but it pays to compare the Federation and Republika Srpska in advance: on the same salary the difference reaches 3-4 points.
• Working remotely for a foreign company. Once resident, you pay 10% or 8% on that salary too, and tax paid abroad is credited.
• Setting up a company. 10% corporate tax and untaxed dividends to individuals give one of the lowest burdens in Europe, but the books follow the rules of the entity where the company is registered.
• Buying a home. In the Federation budget for a 5% transfer tax, in Republika Srpska for an annual tax of up to 0.2%.

The passport and how to get it are covered on the Bosnia and Herzegovina citizenship page, all grounds for moving in Bosnia and Herzegovina: all programs, and life in the capital in the Sarajevo guide. A local bank account is covered on the personal account and business account in Bosnia and Herzegovina pages.

How we help. Murblz specialists determine which part of the country's law you are taxed under, count the days, register you and your company with the tax administration, calculate salary and contributions, prepare the annual return, obtain the residency certificate and support property purchases with a transfer tax calculation.

Key features of the tax system

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