Country Hub · Bosnia and Herzegovina · 2026

Bosnia and Herzegovina

10% flat PIT (FBiH & Brcko) · 8% PIT (Republika Srpska) · Social contributions 19–31% (entity-dependent) · VAT 17% · No CGT on securities · BAM pegged to EUR · EU candidate

10% flat income tax in Federation of BiH (FBiH) and Brcko District; 8% flat in Republika Srpska (RS)

Tax Rate Range

~31% total: pension 17% + health 12.5% + unemployment 1.5% — these are the highest in the Western Balkans

Employee Social Contributions (FBiH)

~19% total: pension 18% + unemployment 1% — lower than FBiH, making RS-registered employment comparatively cheaper

Employee Social Contributions (RS)

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Bosnia Tax Facts

— 2026

Tax Rate Range

10% flat income tax in Federation of BiH (FBiH) and Brcko District; 8% flat in Republika Srpska (RS)

Employee Social Contributions (FBiH)

~31% total: pension 17% + health 12.5% + unemployment 1.5% — these are the highest in the Western Balkans

Employee Social Contributions (RS)

~19% total: pension 18% + unemployment 1% — lower than FBiH, making RS-registered employment comparatively cheaper

Effective Rate (FBiH)

~38–41% combined effective rate (PIT + social) for an employee in the Federation entity; Sarajevo falls in FBiH

Capital Gains Tax

No CGT on securities transactions for individuals; real estate gains may be subject to transfer tax

Currency

Convertible Mark (BAM) — pegged to EUR at a fixed rate of approximately 1.96 BAM = 1 EUR

VAT

17% standard rate (one rate applies across both entities, administered at state level by the Indirect Taxation Authority)

EU Candidate Status

Bosnia and Herzegovina received EU candidate country status in December 2022; accession negotiations ongoing

Tax Year

1 January – 31 December

Quick Country Comparison

— at BAM 36,000

Country	Take-home	Eff. Rate	vs Bosnia
Bosnia (FBiH)	~BAM 21,240	~41%	—
Serbia	~BAM 22,320	~38%	+~BAM 1,080 (saves)
Croatia	~BAM 22,680	~37%	+~BAM 1,440 (saves)
Montenegro	~BAM 25,560	~29%	+~BAM 4,320 (saves)

Comparison based on BAM 36,000/year gross salary (~€18,400) for an employee in the Federation of BiH (FBiH, includes Sarajevo). FBiH: 10% PIT + 31% social ≈ 41% effective. Serbia: 10% PIT + ~36% social ≈ ~38% effective. Croatia: ~37% effective. Montenegro: 9–15% PIT + ~20.5% social ≈ ~29% effective. Illustrative — not tax advice.

Want your exact figures? Use the full Bosnia calculator →

Comparison Guides

Bosnia and Herzegovina is frequently compared to its Western Balkan neighbours Serbia, Croatia, and Montenegro. While the flat income tax rate is low, the high social contribution burden in the FBiH entity means Bosnia’s overall tax take on employment income is among the highest in the region.

Salary Guides

Bosnia and Herzegovina uses the Convertible Mark (BAM), pegged to the Euro at approximately 1.96 BAM = 1 EUR — one of Europe’s most stable currencies. The tax system is administered at entity level: the Federation of BiH (FBiH) and Republika Srpska (RS) each have separate tax authorities and social insurance funds. The Indirect Taxation Authority administers VAT centrally at the state level. IT outsourcing is a fast-growing sector offering employment with competitive salaries in Sarajevo, Banja Luka, and Mostar.

Moving from Bosnia

Sarajevo is attracting growing interest from European digital nomads and remote workers drawn by low living costs, a central European timezone, and EU candidate country status. Bosnia does not yet have a digital nomad visa, but EU citizens can stay long-term without additional visa requirements. The IT sector is particularly dynamic — Sarajevo hosts a number of international tech companies and outsourcing centres. Note that the dual-entity system means employment terms and tax obligations can differ significantly depending on whether you work for an FBiH or RS-registered entity.

2026 Bosnia Tax Changes

EU candidate status progressing — Bosnia and Herzegovina received EU candidate status in December 2022 and is working through accession reform requirements. Tax harmonisation with EU standards is expected to be a long-term outcome of the process.
High social contributions remain a concern — FBiH’s ~31% employee social contribution burden continues to be debated by the business community and foreign investors; reform proposals have been discussed but no changes are enacted for 2026.
IT sector growth in Sarajevo — The technology and outsourcing sector continues to expand, with several EU-based companies establishing operations in Bosnia due to lower labour costs compared to Croatia, Slovenia, and Poland.
VAT at 17% stable — The 17% VAT rate, administered centrally by the Indirect Taxation Authority of Bosnia and Herzegovina (ITA BiH), is unchanged for 2026; no rate modifications have been announced.

Last Updated: June 2026 · Daniel · CountryTaxCalc