Bosnia and Herzegovina has one of the lowest corporate income tax rates in Europe: 10%. That makes it attractive — but a low rate only helps if the profit is really taxable in Bosnia. This guide compares the numbers and explains the conditions.
Corporate income tax: Bosnia vs. other countries
Headline rates on company profits, 2026. Local surcharges and special regimes are simplified.
| Country | Corporate income tax | Standard VAT |
|---|---|---|
| Bosnia and Herzegovina (FBiH) | 10% | 17% |
| Hungary | 9% | 27% |
| United Arab Emirates | 9% (above AED 375,000 profit) | 5% |
| Montenegro | 9–15% (progressive) | 21% |
| Bulgaria | 10% | 20% |
| North Macedonia | 10% | 18% |
| Croatia | 10% / 18% (depending on revenue) | 25% |
| Serbia | 15% | 20% |
| Slovenia | 22% | 22% |
| Austria | 23% | 20% |
| United Kingdom | 25% | 20% |
| Germany | ≈ 30% (incl. trade tax) | 19% |
On €100,000 of profit, a Bosnian company pays €10,000 corporate tax. A German GmbH pays around €30,000.
Other Bosnian advantages
- VAT registration only above BAM 100,000 (≈ €51,000) turnover per year;
- 5% withholding tax on dividends paid to foreign owners in the Federation of BiH, often reduced further by tax treaties;
- double taxation treaties with many European countries, the UAE and Turkey;
- low running costs — accounting, office and staff cost a fraction of Western European levels;
- the BAM is pegged to the euro, so there is no currency risk for euro-based businesses.
The rule that matters most: where is the company really managed?
A Bosnian company is taxed in Bosnia if it is actually run from Bosnia. If you live in Germany, Austria or another EU country and make all decisions from there, your home country may treat the company as resident there (“place of effective management”), or tax its profits in your hands under controlled foreign company (CFC) rules.
In practice a Bosnian company gives real tax benefits when:
- you live in Bosnia, or in a country that does not tax foreign company profits of residents;
- the company has real substance in Bosnia — a director, staff or operations there;
- the business itself is in Bosnia — staff, production, services delivered from Bosnia.
It does not work as a letterbox to avoid tax in your home country. We say this clearly because it protects you: a structure that fails a tax audit at home costs far more than it saves.
Who benefits most
- Founders moving to Bosnia or the region and running the business from here;
- companies building teams in Bosnia — IT, engineering, customer service, production;
- regional trading companies serving the Western Balkans;
- owners in countries with territorial taxation, after checking their home rules.
Ask your tax adviser at home how a Bosnian company would be treated in your situation. We are happy to work with them. For Bosnian-side numbers, see our guide to taxes for foreign owners or request a quote.
Sources
- Law on Corporate Income Tax of the FBiH — 10% rate (Art. 31), 5% withholding tax on dividends (Art. 38)
- Law on Value Added Tax of BiH — 17% rate (Art. 23), BAM 100,000 threshold (Art. 57)
- Rates for other countries: national tax authorities, 2026 headline rates