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Bosnia and Herzegovina Tax Guide Hub 2026: Income Tax, Rates & Calculator

Daniel · CountryTaxCalc Updated June 2026
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KEY INSIGHT
On a monthly salary of BAM 3,000 (~€1,534) in Sarajevo (FBiH): Income tax = 10% × 3,000 = BAM 300. Employee social contributions = 31% × 3,000 = BAM 930. Total deductions: BAM 1,230 (41% effective rate). Net take-home: BAM 1,770 (~€904). The high social contribution rate (31%) means the total burden on the employee is substantial despite the low 10% income tax. In Republika Srpska, the 8% income tax reduces total deductions to ~BAM 1,170 (39%). Compare to neighboring Serbia: similar total burden but Serbia's growing economy and lower social rate make it slightly more competitive.
At a glance

Key Facts

Income Tax Rate (FBiH)
10% flat (Federation of Bosnia and Herzegovina)
Income Tax Rate (RS)
8% flat (Republika Srpska)
Employee Social Contributions (FBiH)
~31% (pension 17% + health 12.5% + unemployment 1.5%)
Introduction

Bosnia and Herzegovina (BiH) has a unique dual-entity tax structure: the Federation of Bosnia and Herzegovina (FBiH) applies a 10% flat income tax, while Republika Srpska (RS) applies an 8% flat income tax — one of the lowest income tax rates in Europe. A third administrative unit, Brčko District (BD), follows rules administered jointly. The Bosnian Convertible Mark (BAM) is hard-pegged to the Euro at 1.956 BAM per EUR, providing complete currency stability. Employee social contributions in FBiH are relatively high at approximately 31% of gross salary (pension/disability insurance 17%, health insurance 12.5%, unemployment insurance 1.5%), which significantly increases the total employment cost. Dividends are taxed at just 5% in both entities. Bosnia became an EU candidate country in December 2022. Sarajevo — the capital — is an underrated European destination known for its Ottoman-era old city, cosmopolitan coffee culture, and a cost of living of ~$800-1,100/month for expats.

This hub links to every Bosnia and Herzegovina tax guide and calculator on CountryTaxCalc — covering income tax rates, and tools to calculate your take-home pay.

Section 01

Bosnia and Herzegovina Income Tax Calculator

Bosnia and Herzegovina applies 10% flat income tax in Federation of Bosnia and Herzegovina (FBiH); 8% flat in Republika Srpska (RS). Employee social contributions: ~31% in FBiH (pension 17% + health 12.5% + unemployment 1.5%). Dividends: 5%. Sarajevo is an underrated European cultural hub.. Use the calculator to estimate your take-home pay after income tax:

IncomeRate
All personal income (FBiH)10% flat
All personal income (RS)8% flat
Dividends5%
Social contributions — employee (FBiH)~31% (pension 17% + health 12.5% + unemployment 1.5%)
Small entrepreneurs (FBiH)2% on total annual revenue
Section 02

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FAQ

Frequently Asked Questions

What is Bosnia and Herzegovina's income tax rate for 2026?

Bosnia and Herzegovina does not have a single national income tax — the two main entities set their own rates. The Federation of Bosnia and Herzegovina (FBiH) applies a 10% flat personal income tax rate. Republika Srpska (RS) applies an even lower 8% flat personal income tax rate, one of the lowest in Europe. The Brčko District follows rules administered jointly by both entities. Most of the country's largest cities — Sarajevo, Mostar, Tuzla — are in FBiH territory and subject to the 10% rate. Tax administration is split between the FBiH Tax Administration (pufbih.ba) and the RS Tax Administration (poreskaupravars.org).

What are Bosnia's social security contribution rates?

In the Federation of Bosnia and Herzegovina (FBiH), employee social contributions total approximately 31% of gross salary: pension and disability insurance 17%, health insurance 12.5%, and unemployment insurance 1.5%. Employers pay additional contributions on top of gross salaries. In Republika Srpska, employee contribution rates differ slightly and are generally lower. The high FBiH social contribution rate (31%) is one of the highest in the Western Balkans and significantly increases the effective tax burden compared to what the 10% income tax rate alone would suggest. Total employee deductions in FBiH typically reach 40-42% of gross salary.

What is the Bosnian Convertible Mark (BAM) and is it stable?

The Bosnian Convertible Mark (BAM) is Bosnia's currency, legally pegged to the Euro at a fixed rate of 1.956 BAM = 1 EUR (the same rate as the old Deutschmark). This currency board arrangement — in place since 1998 — means BAM/EUR exchange rates never fluctuate. The Central Bank of Bosnia and Herzegovina (cbbh.ba) maintains 100% EUR coverage of all BAM in circulation, making it one of the most stable currency arrangements in the world. For practical purposes, prices in Bosnia can be easily converted to EUR by dividing by 2. This stability is a major advantage for expats and remote workers receiving EUR-denominated salaries.

Is Bosnia and Herzegovina joining the EU?

Bosnia and Herzegovina was granted EU candidate status in December 2022. Accession negotiations are ongoing but progress is slower than in neighboring Serbia and North Macedonia due to the country's complex constitutional structure (established by the 1995 Dayton Agreement) and the need for significant governance reforms. The EU accession process has, however, accelerated economic reforms and anti-corruption measures. Full EU membership could come in the 2030s at the earliest. For remote workers and expats, the country already benefits from close economic ties with the EU — the BAM's EUR peg, EU trade agreements, and freedom of movement for citizens to work in some EU countries.
Disclaimer:This hub provides general information about Bosnia and Herzegovina taxation for educational purposes only. Tax rules change frequently and individual circumstances vary. Always verify current rates and rules with the official Bosnia and Herzegovina tax authority or a qualified local tax adviser. This is not tax or legal advice.
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