Taxes and Contributions

The cumulative contribution rate is 31% of gross salary, of which:

• allocates 18.50% for pension and disability insurance
• for health insurance 10.20%
• for child protection 1.70%
• for unemployment insurance 0.60%.

 

Tax rates in countries in the Balkans region

2021 year	Republic of Srpska	Federation of BiH	Serbia	Croatia	Montenegro	North Macedonia
Income tax rate	8 % 13 %	10 %	10% on the tax base up to 5,974,848 dinars   15% on the tax base over 5,974,848 dinars	20% on the basis of up to HRK 360,000   30% on the basis of over HRK 360,000	9% 11% on the amount of income above the average monthly gross earnings earned in the previous year	10 %
Non-taxable part of income (in euros)	511	153	164	528	0	136
Dividend tax rate	–	–	15 % and 20 %	10 %	9%	10 %
Profit tax rate	10 %	10 %	15 %	10% for revenues up to HRK 7,500,000   18% for income equal to or greater than HRK 7,500,000.01	9 %	10 %
VAT rate	17 %	17 %	20 %, 10%	25%, 13%,5%	21 %, 7 %	18 %, 5 %
Cumulative contribution rate to gross wages	31 %	41,50 %	36,55 %	36,50 %	32,30 %	28 %

 

The tax system in BiH and the Republic of Srpska comprises the categories of direct and indirect taxes.

Indirect taxes include value added tax (VAT), excises (special taxes paid on petroleum products, tobacco and tobacco products, soft drinks, alcohol, alcoholic beverages and natural fruit brandies, beer and wine, coffee), tolls, customs. Indirect taxes are the responsibility of BiH.

Laws in the field of indirect taxation at the level of BiH:

• Law on Indirect Taxation System in BiH (“Official Gazette of BiH”, No. 44/03, 52/04, 34/07, 4/08, 49/09, 32/13)
• Law on Indirect Taxation Authority (“Official Gazette of BiH”, No. 89/05)
• Law on Payments to the Single Account and Distribution of Revenues (“Official Gazette of BiH”, No. 55/04, 34/07, 49/09)
• Law on Indirect Taxation Procedure (“Official Gazette of BiH”, No. 89/05, 100/13)
• Law on Enforced Collection Procedure (“Official Gazette of BiH”, No. 89/05, 62/11)
• Law on VAT (“Official Gazette of BiH”, No. 9/05, 35/05, 100/08)
• Law on Excise Duties of BiH (“Official Gazette of BiH”, No. 62/04, 48/05, 49/09, 49/14)
• Law on Customs Policy of BiH (“Official Gazette of BiH”, No. 57/04, 51/06, 93/08, 54/10, 76/11)
• Law on Customs Tariff of BiH (“Official Gazette of BiH”, No. 58/12)
• Law on Customs Offenses (“Official Gazette of BiH”, No. 88/05).

Direct taxes are the sole responsibility of the entities and the Brčko District. In the Republic of Srpska, a payroll tax rate of 8% is applied to employees’ pay and 13% to other personal income.

 

All foreigners with foreign residence in the Republic of Srpska are obliged to pay income tax on income earned in a calendar year on the territory of the Republic of Srpska. Likewise, all foreigners who do not reside permanently in the Republic of Srpska but who earn income in the Republic of Srpska are considered taxpayers.

 

Income tax

Income tax in the Republic of Srpska is calculated at a rate of 10%. Profit tax is adjusted to EU standards. Foreign legal entities are subject to income tax:

• if they perform an activity and have a permanent place of business in the Republic of Srpska for the profit related to that permanent place of business
• if it generates income from immovable property located in the Republic of Srpska for the profit related to that immovable property.

Taxation of foreign legal entities is prescribed in more detail in Articles 40 to 43 of the Law on Profit Tax. Laws in the field are as follows:

• Law on Profit Tax (“Official Gazette of the Republic of Srpska”, No. 94/15, 1/17, 58/19)
• Law on Income Tax (“Official Gazette of the Republic of Srpska”, No. 60/15, 66/18, 105/19, 123/20, 49/21, 119/21)

 

Real estate tax

The Law on Real Estate Tax (“Official Gazette of the Republic of Srpska”, No. 91/15) stipulates that real estate tax is paid at a rate of up to 0.20%. Exceptionally, the tax rate for real estate in which the production activity is directly performed is up to 0.10%. In this case, real estate means production facilities and facilities for storage of raw materials, semi-finished products and finished products, if they form a complete whole.

Municipal and city assemblies are obliged to make a decision on the amount of the real estate tax rate for estates within their area by January 31 for the current year.

In the case of performing a deficient production and craft activity, the taxpayer may be released from obligations, on which a special decision is made by the municipal or city assembly. Among other things, the following are exempt from paying real estate tax: cultivated agricultural land and real estate used for own agricultural production. Laws in the field are as follows:

• Law on Real Estate Tax (“Official Gazette of the Republic of Srpska”, No. 91/15)

 

Incentives and tax breaks

The program of support to employment in the economy through the payment of incentives in the amount of paid taxes and contributions is implemented through the Employment Bureau of the Republic of Srpska. All employers who hired workers in the past year will have the opportunity to get their taxes and contributions back. The public call under this program is announced for each year individually and is available on the portal of the Employment Service of Republic of Srpska.

The Law on Amendments to the Law on Profit Tax of the Republic of Srpska (“Official Gazette of the Republic of Srpska”, No. 58/19) enables a taxpayer who within the territory of the Republic of Srpska invests in equipment and facilities to perform registered production activities the right to reduce the tax base for the value of the investment made.

The Law on Income Tax (“Official Gazette of the Republic of Srpska”, No. 60/15, 66/18, 105/19, 123/20, 49/21, 119/21) provides for certain benefits or privileges for annual income for a qualified investor.

 

Contributions

The cumulative contribution rate is 31% of gross salary, of which:

• allocates 18.50% for pension and disability insurance
• for health insurance 10.20%
• for child protection 1.70%
• for unemployment insurance 0.60%

Laws in the field are as follows:

• Law on Contributions (“Official Gazette of the Republic of Srpska”, No. 114/17, 112/19, 49/21, 119/21

 

Other fees and charges

• Law on Forests (“Official Gazette of the Republic of Srpska”, No. 75/08, 60 / 13.70 / 20)
• Law on Waters (“Official Gazette of the Republic of Srpska”, No. 50/06, 92/09, 121/12)
• Law on Communal Taxes (“Official Gazette of the Republic of Srpska”, No. 4/12, 123 / 20,119 / 21)

In all municipalities across the Republic of Srpska the obligations based on communal taxes are determined separately by the decision of the municipal assemblies.