DOING BUSINESS IN BOSNIA AND HERZEGOVINA IN 2018
Since 2003, Healy Consultants Group PLC has assisted our Clients with business registration in Bosnia and Herzegovina. Our services include i) Bosnia and Herzegovina company incorporation ii) government license registration iii) business bank account opening iv) employee recruitment v) visa strategies and vi) office rental solutions.
Summary table of Bosnia and Herzegovina company registration
| Summary | LLC | Fast solution | Free Zone company | Public limited company | Branch office | Representative office |
|---|---|---|---|---|---|---|
| Best use of company? | All products and services | Sign contracts now | Global trading | To secure public funding | Specific projects | Marketing & research |
| How soon can you invoice Clients/sign sales contracts? | 7 weeks | 4 weeks | 5 weeks | 8 weeks | 7 weeks | 6 weeks |
| How soon can you hire staff? | 8 weeks | 5 weeks | 6 weeks | 9 weeks | 8 weeks | 7 weeks |
| How soon can you sign a lease agreement? | 7 weeks | 4 weeks | 5 weeks | 8 weeks | 7 weeks | 6 weeks |
| How long to supply corporate bank account numbers? | 12 weeks | 8 weeks | 9 weeks | 13 weeks | 12 weeks | 13 weeks |
| How long to supply company registration/tax numbers? | 7 weeks | 4 weeks | 5 weeks | 8 weeks | 7 weeks | 6 weeks |
| Corporate tax rate on annual net profits? | 10% | 10% | 10% | 10% | 10% | 0% |
| Limited liability entity? | Yes | Yes | Yes | Yes | No | No |
| Government grants available? | Yes | Yes | Yes | Yes | Yes | Yes |
| Resident director/partner/manager/legal representative required? | No | No | No | No | Yes | Yes |
| Minimum paid up share capital? | US$590 | US$590 | US$590 | US$29,000 | None | None |
| Can bid for Government contracts? | Yes | Yes | Yes | Yes | Yes | No |
| Corporate bank account location? | Raiffeisen Bank | Union Bank | Fima Bank | UniCredit Bank | Fima Bank | Union Bank |
| Can secure trade finance? | Yes | Yes | Yes | Yes | Yes | No |
| VAT payable on sales to local customers? | 10% | 10% | 0% | 10% | 10% | 0% |
| Average total business set up engagement costs? | €11,900 | TBD | TBD | €13,900 | €14,900 | €14,550 |
| Average total engagement period? | 19 weeks | 8 weeks | 9 weeks | 18 weeks | 17 weeks | 16 weeks |
| Accounting and tax considerations | LLC | Fast solution | Free Zone company | Public limited company | Branch office | Representative office |
|---|---|---|---|---|---|---|
| Statutory corporate tax payable? | 10% | 10% | 10% | 10% | 10% | 0% |
| Must file an annual tax return? | Yes | Yes | Yes | Yes | Yes | Yes |
| Must file annual financial statements? | Yes | Yes | Yes | Yes | Yes | Yes |
| Must appoint an auditor? | No | No | No | Yes | No | No |
| Access to double taxation treaties? | Yes | Yes | Yes | Yes | Yes | No |
| Withholding tax on payments to foreign shareholders? | 5% | 5% | 5% | 5% | 5% | None |
| Company Registration | LLC | Fast solution | Free Zone company | Public limited company | Branch office | Representative office |
| Resident director/partner/manager/legal representative required? | No | No | No | No | Yes | Yes |
| Minimum number of shareholders/partners? | 1 | 1 | 1 | 1 | Parent company | Parent company |
| Minimum statutory paid up share capital? | US$590 | US$590 | US$590 | US$29,000 | None | None |
| Security deposit to be kept with Government? | No | No | No | No | No | No |
| Shelf companies available? | Yes | Yes | Yes | Yes | No | No |
| Time to incorporate a new entity? | 19 weeks | 8 weeks | 9 weeks | 18 weeks | 17 weeks | 16 weeks |
| Can easily convert to a PLC? | Yes | Yes | Yes | Yes | No | No |
| Public register of shareholders and directors? | Yes | Yes | Yes | Yes | No | No |
| Can have preference shareholders? | Yes | Yes | Yes | Yes | No | No |
| Business Considerations | LLC | Fast solution | Free Zone company | Public limited company | Branch office | Representative office |
| Good entity for trademark registration? | Yes | Yes | Yes | Yes | Yes | No |
| Can secure an import and export license? | Yes | Yes | Yes | Yes | Yes | No |
| The entity will likely be regulated by? | Municipal court | Municipal court | Municipal court | Municipal court | Municipal court | Registrar of Foreign RO |
| Sponsorship by a local citizen required? | No |
| Our Client needs to travel to Bosnia and Herzegovina for business set up? | No |
| Temporary physical office solutions available? | Yes |
| You need a local resident as bank signatory? | No |
| Government approval required for foreign owners? | No |
| Can be wholly foreign owned? | Yes |
| Minimum number of directors/managers? | 1 |
| Maximum shareholding for foreigners? | 100% |
| Legally tax exempt if properly structured? | No |
| Group HQ tax incentives? | No |
| Monthly VAT reporting to the Government? | Yes |
| Must sign an office lease agreement during incorporation? | No |
| Shareholders & directors documents to be attested/translated? | Yes |
| Each foreign director needs a personal income tax number? | No |
| Foreign director needs a residence visa? | No |
| Maximum number of staff allowed? | No |
| Expatriate to local staff ratio? | No |
| Can secure residence visa for business owner? | Yes |
| Other useful information | |
| What will be included in my customer sales invoice? | Click link |
| This country has signed free trade agreements? | Yes |
| This country is a member of TRIPS? | No |
| This country is a member of WIPO/ICSID? | Yes |
| Average custom duties suffered, %? | 7.6 |
| Government foreign investment approval required? | No |
| Average monthly office rental? (US$ per sq m) | 25 |
| Minimum statutory monthly salary (US$)? | US$212 |
| Average monthly US$ salary for local skilled employees? | US$505 |
| US$ deposit interest rate? (1 year average) | 1.6 |
| Overseas remittance currency controls? | Yes |
| Banking considerations | |
| Multi-currency bank accounts available? | Yes |
| Corporate visa debit cards available? | Yes |
| Quality of e-banking platform? | Good |
| Crowd funding available in this country? | Yes |
Bosnia and Herzegovina business setup summary
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Advantages of Bosnia and Herzegovina company registration
- Our Clients may derive certain benefits when investing in Bosnia including:
- A Bosnia limited liability company can be incorporated within 7 weeks with 1 director and shareholder, who can be of any nationality. The minimum paid-up share capital required is US$1,150 and our Clients do not need to travel to complete engagement;
- Bosnia and Herzegovina has one of the most favorable tax systems in Europe with low corporate tax rates of 10% and VAT at 17%, one of the lowest rates in Europe;
- Bosnian companies will be eligible for corporate tax exemption if i) the value of their annual exports exceed 30% of the total revenue and ii) investment of US$11 million is made in the project for a total 5 years, with the 1st year investment being at least US$2.2 million;
- Bosnian resident companies in which people with special needs and disabilities form 50% of the total work force for a period of more than 1 year will be corporate income tax exempt for that year;
- Companies which setup in Bosnia’s free zones will benefit from i) 100% corporate tax exemption ii) 100% VAT exemption and iii) 100% custom duty exemption on imports into the zones. Furthermore, these companies will be allowed to transfer capital and profits freely into and out of the zone;
- Resident companies will benefit from 30% reduction in annual tax obligations if they invest more than 50% of their total annual profit purchasing production equipment. Furthermore, companies which hire new employees will be entitled to tax deductible expenses of twice the amount if the new employee has worked with the company for at least 1 year;
- Bosnia and Herzegovina is signatory to 40 double tax treaties with different jurisdictions, ensuring reduction or complete exemption of withholding taxes on dividends, royalties or interests;
- The Bosnia government has signed agreements on Promotion and Protection of Investments with several countries including the USA, United Kingdom, Canada, China, and Germany. Furthermore, through the European Union Investment Guarantee Trust Fund enacted by the Multilateral Investment Guarantee Agency (MIGA) the country has managed to insure foreign investors against risks of expropriation, transfer restrictions, war and civil interference and denial of justice;
- Bosnia is rich in natural resources including large expanses of arable lands with fertile soil, forests, huge deposits of valuable minerals including manganese, silver, lead, copper, iron ore, chromium, and coal. Therefore, it is an attractive destination for agricultural, manufacturing and other related industries.
- Our Clients may derive certain benefits when investing in Bosnia including:
Disadvantages of Bosnia and Herzegovina company registration
- To incorporate a Bosnia public limited company, the law requires the shareholder to have a minimum share capital of at least US$32,000;
- Getting a new electric connection for a new establishment in Bosnia can be quite expensive and time consuming. Entrepreneurs should expect to pay at least US$22,000 and wait almost 5 months for an electric line;
- The country’s legal system can be inefficient and entrepreneurs should expect to wait for up to or more than 2 years for courts to enforce legal contracts;
- Entrepreneurs looking to invest in the construction industry should expect to pay at least US$50,000 and wait for up to or more than 6 months for construction permits;
- Bosnia has a complex multi-tiered legal framework that is generally repetitive and contradictory. The country is divided into 2 entities, Federation of Bosnia and Herzegovina and Republic of Srpska, the federation of which is further divided into 10 cantons each with different governments and regulations;
- Entrepreneurs will find it difficult interacting with potential Clients or suppliers in the country since the official and business languages are Bosnian, Croatian and Serbian;
- Bosnia has been ranked poorly in the 103rd position (out of 137 countries) for its global competitiveness in the Global Competitiveness Index 2017-2018 edition. This is largely due to the i) inefficient government bureaucracy along with widespread corruption, ii) nation’s insufficient capacity to innovate and iii) poor supply of infrastructural facilities.
Company registration
- Time to incorporate: Seven weeks
- Cost to set up: €11,900
- Minimum capital: US$1,150
- Physical office required: No
Required appointments
- Shareholders: 1
- Directors: 1
- Company secretary: No
- Resident director: No
Key facts
- Corporate tax rate: 10%
- Corporate tax base: Worldwide
- Shelf companies: No
- Main company type: d.o.o.
