Company formation in Bosnia and Herzegovina

Bosnia and Herzegovina is a candidate country for EU membership. The state in the Balkans has a growing economy that allows new businesses to compete successfully with existing ones and generate income. The active growth of companies such as tourism, health care, construction, and technology makes registering a company in Bosnia and Herzegovina attractive to a wide range of foreign investors. The business environment may differ from region to region. Entrepreneurs who intend to register a company in Sarajevo or any other city of Bosnia and Herzegovina choose this country because of the stability and progressiveness of the financial system.

Advantages of registering a company in Bosnia and Herzegovina

• the convenient geographical location in the central part of Europe;
• low tax burden and additional preferences;
• possibility to establish a company in Bosnia and Herzegovina with one director and shareholder of any nationality;
• availability of free economic zones;
• low capital requirements of at least 2,000 BAM (about $1,100).

Main forms of legal presence and doing business in Bosnia and Herzegovina

• joint stock company – Dioničko društvo, (D.D);
• Limited Liability Company – Društvo s ograničenom odgovornošću (D.O.O.);
• general partnership – Društvo s neograničenom solidarnom odgovornošću (D.N.O.);
• Limited Partnership – Komanditno društvo (K.D./LP).

The most attractive options for foreigners who want to open a company in Bosnia and Herzegovina are the legal forms D.D. and D.O.O.

Registration procedure in Bosnia and Herzegovina

• choose a company name and check its uniqueness;
• prepare the Memorandum and Articles of Association in one of the national languages with certified signatures of the founders (a lawyer or notary must be involved);
• register the company in Bosnia and Herzegovina in the registry of business entities at the competent municipal court;
• sign a contract with a certified accountant and rent office space;
• obtain an identification number from the tax administration
• notify the city municipality of the commencement of operations;
• to open a bank account;
• obtain licenses (necessary for certain types of business activities).

Legislation and regulatory environment

The legal framework of Bosnia and Herzegovina is complex and multi-layered. Some legislative acts contradict each other. The reason is that the state consists of two entities: the Federation of Bosnia and Herzegovina and Republika Srpska, divided into ten cantons, each with different governments and regulations. Therefore, buying a business in Bosnia and Herzegovina and avoiding problems with the law is necessary to enlist the support of experienced lawyers.

Tax system

Introductory rates applicable in the country:

• corporate tax -10%;
• VAT – 17%;
• personal income taxPIT -10%; PERSONAL INCOME TAX -10%;
• capital gains tax – 10%;
• income tax for individuals – 0-10%.

In addition to low overall rates, buying a company in Bosnia and Herzegovina is also advantageous due to the availability of benefits. For example, corporate income tax will not be withheld from companies that have invested at least 4 million BAM in the first year with a total planned investment of 20 million BAM over five years. Suppose you want to start a company in Bosnia and Herzegovina but need to meet such financial capabilities. In that case, the 30% tax liability relief will be available when reinvesting 50% of annual profits in purchasing production equipment.

Opening a Business in Bosnia and Herzegovina: how Prifinance lawyers can assist

The abundance of bureaucratic procedures is the main problem for foreigners wishing to buy a company in Bosnia and Herzegovina. Misinterpretation of local laws is fraught with financial and legal consequences. Prifinance offers the assistance of qualified lawyers. Furthermore, we provide consulting services and guide our clients through starting a business. In addition, Prifinance has high-quality accounting services for business abroad, as well as protection of your rights and interests.