Bosnia-Company formation
Bosnia and Herzegovina is a country known for its complexity. It is divided into different entities that offer special and unique benefits that have not yet been explored by foreign companies and investors. It is still one of the few countries in Europe where you will not encounter too many obstacles that have been set up by international institutions.
Limited Liability Company
An LLC in Bosnia is not much different from other LLCs around the world until you realize that Bosnia is currently a tax haven that you should not miss.
As in most other countries due to its flexibility, this business model is best for small and medium-sized companies.
The director of the company does not have to be a citizen of the Bosnia and Herzegovina and if he wants, he has the right to apply for residency.
Benefits of Bosnian LLC
- Founding capital 1 euro
- 0% dividend tax
- 10% corporate tax
- Time required for establishment 10 days.
- Only the basic documentation for the establishment is needed.
- It can be opened without the presence
- Director of LLC doesn’t need to be citizen of Bosnia and Herzegovina
Tax obligations and benefits
The main advantage is that the Bosnian LLC does not have to pay taxes on dividends. This provides an opportunity for business owners to withdraw dividends or earnings with 0% tax. Dividends can only be withdrawn at the end of the accounting year.
All income generated through company is subjected to 10% corporate tax.
The basis for the corporate tax is only the company’s net earnings. In other words, the corporate tax is only paid on the amount obtained when expenses are deducted from income.
Other tax benefits are:
Employees who are employed in special positions such as directors, pay only 10% personal tax.
Export companies that are mainly engaged in production activities with headquarters in Bosnia are exempted from income tax in the double amount of income generated by exports.
Reduction of the tax base for the taxpayer , up to 50% of the taxable base, for the amount of investment in land, construction facilities, equipment furniture and means of transport for carrying out own activities in the territory of Bosnia.
Reduction of the tax base in the amount of paid gross wages of newly employed workers, as an incentive measure for employment to the taxpayer who employed new workers for an indefinite period in the tax year.
The possibility of submitting a consolidated tax return that is not time limited.
After registering a company in Bosnia, a foreigner should remember that even if the company does not conduct economic activities this does not exempt a it from making tax reports (even with 0 profit) and paying other taxes, such as corporate and personal income tax on their employees.
In case of bankruptcy, shareholders of LLC are not obligated to pay the company’s debt with their own assets.
Non-residents of Bosnia pay tax in accordance with Agreement on avoidance of double taxation. Often, the Agreement provide lower tax rates than 10%.
Maintenance costs
Some of the main costs that foreign companies have while doing business in Bosnia are accounting and address costs for their office.
Qualified accountant must be appointed so that the company can function properly.
Companies that have a minimum number of transactions, pay 60 euros per month.
Companies with an average number of transactions pay up to 150 euros per month.
Price of a company address starts from 100 euros.
Corporate bank account
Together with the company, bank accounts is opened at the same time in order to enable your business functioning.
Banks in Bosnia are in the green zone. This means that your transactions with foreign countries will go through without frequent checks by banks and therefore the time required for money transfer will be much shorter.
Process consists of several key stages:
- Preparation and notarization of documents
- Company registration in the Business Registry Agency
- Assistance when opening personal and corporate bank
- Searching and signing contracts for the office and accounting
Documents that are needed:
- Passport copy of shareholder/director
- Prof of address
- POA in case of remote service
Obligations after company formation
Maintaining the company requires constant communication with the bank as well as the accountant and state institutions. This is a problem for some clients, especially if they have several companies, as is often the case.
An obstacle can be represented by two things:
- If accountant does not understand English. This can be a difficulty when it is necessary to submit the documentation or to find out more about taxes
- Most forms as well as notices from banks and state institutions can only be found in Bosnian language
It is possible to achieve all this but it will take a lot of time.
If you want to be carefree and focus only on your business, you can request our Monthly Advisor service.
Our main job will be to:
- Coordinate with banks as well as government and tax authorities
- Provide legal and consulting services
- Inform you about upcoming obligations
Be free and let us know if you want this additional service. You choose the duration of the contract and you can also cancel the service at any time.
FAQ
Yes, all the taxes we have listed are legal and fully recognized by the state and are not loopholes.
In this case, you only have to pay for bookkeeping and office. If the company does not operate for a long period of time, the price can be negotiated and costs can be further reduced.
The taxes we have listed apply to almost all activities, so you can choose any activity that suits you the most.
Company can have 5 shareholders.
After opening, there are no hidden costs. The biggest costs are known to be accounting and office rent.
Yes, foreigners are allowed to register multiple companies.
Maximum is 3 months.
Yes, from start to finish whole process can be done remotely, but it is highly advised to be present when opening bank accounts.
Our principles of work
Information handling requires a responsible approach, so we always inform you in advance about the upcoming steps and documentation that is required, so you can plan your schedule and enjoy your time.
After the job is done, we don’t turn our backs on you and we don’t charge premium for further consultations.
Even for everyday challenges you stumble on you can always ask us for advice and we will be happy to assist.
Wish you luck and achievement of future plans! See you in Bosnia!