Bosnia and Herzegovina taxes residents on worldwide income and non-residents on Bosnia-source income only, administered separately at the entity level (Federation of Bosnia and Herzegovina, Republika Srpska, and Brcko District each have their own tax administration under Bosnia's decentralized constitutional structure) rather than through a single unified national tax authority. Bosnia and Herzegovina operates a self-assessment system for corporate tax within each entity's own administration.
The tax year in Bosnia and Herzegovina is the calendar year across all constituent entities.
Bosnia and Herzegovina's headline corporate income tax (CIT) rate is 10%.
The headline personal income tax (PIT) rate is 8-10% by entity (FBiH 10%; RS 8%; Brcko 10%).
The standard VAT/GST (or equivalent consumption tax) rate is 17%.
Bosnia and Herzegovina has a fragmented tax system split across three entities - the Federation of Bosnia and Herzegovina (FBiH), Republika Srpska (RS), and Brcko District (BD) - each with its own tax law. An individual is generally a resident of the relevant entity if their residence, center of business, or vital interests is there, or if they are present in the country for at least 183 days in aggregate during a fiscal year. There is no special expatriate tax regime. Residents are taxed on worldwide income; non-residents only on locally-sourced income, with a foreign tax credit capped at the tax that would apply if the same income had been earned domestically.
A non-Bosnian entity has a Bosnia and Herzegovina permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Bosnia on the entity's behalf, following the OECD Model Treaty definition as applied under the relevant entity's domestic law and any applicable tax treaty.
Bosnia and Herzegovina has no CFC rules.
Thin capitalization rules exist only in the FBiH: under the FBiH CIT Law, interest on related-party loans is deductible only where the ratio of total related-party-loan liabilities to registered equity does not exceed 4:1 (banks and insurance companies excluded); interest on the excess is non-deductible. Republika Srpska and Brcko District have no thin capitalization rules (though RS separately restricts deductibility of total interest expense above a specified amount under its own rules).
Bosnia and Herzegovina does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics. As a non-EU member, Bosnia and Herzegovina is not bound by ATAD2 and does not have a comprehensive anti-hybrid regime.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; foreign income is reported through the standard annual tax return.
Bosnia and Herzegovina does not provide a broad participation exemption for foreign dividends in the European sense; relief from double taxation is available primarily through the applicable entity's foreign tax credit provisions and Bosnia's treaty network.
Bosnia and Herzegovina has a real foreign tax credit mechanism for foreign tax paid on foreign-source income also taxed domestically, administered separately by each constituent entity, capped at the domestic tax otherwise due on that income.
Bosnia and Herzegovina has double tax treaties with more than 40 countries, including Germany (signed 1987, effective 1989) and Serbia, with the network continuing to expand as part of EU integration efforts.