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.
LLC or in Bosnian (d.o.o.) is the most popular form business model. It opens up wide range of opportunities that can be very important and beneficial later on when doing business.
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
As we mentioned, Bosnia is a tax paradise that you should not miss. 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 Dividends can only be withdrawn at the end of the accounting year. A part of the money is declared as a dividend and after that the founder can distribute the money freely.
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.
For example countries like Estonia and Latvia also have 0% tax on dividends, but that’s why they have about 20% or twice as much corporate tax.
Other tax benefits are:
Employees who are employed in special positions such as directors pay only 10% income tax.
If the company produces and exports more than 50% of its products outside of Bosnia, it is exempted from 100% of taxes.
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.
If you are resident of the country by which the Bosnia and Herzegovina has concluded a Double Taxation Avoidance Treaty you can optimize taxation in order to reduce operation costs.
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 100 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.
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.
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!