Bosnia and Herzegovina Payroll Information – Deel Global Payroll

Updated on: 2025/08/04 14:03 (UTC)

Overview

Bosnia and Herzegovina is a federal republic located in southeastern Europe. The capital city of Bosnia and Herzegovina is Sarajevo. Bosnia and Herzegovina is bordered by Croatia to the west and north, Serbia to the east, Montenegro to the southeast, and has a small border with the Adriatic Sea to the southwest.

Bosnia and Herzegovina consists of three first-order administrative divisions, which in Bosnia and Herzegovina often are called political entities. The two larger divisions are the Federation of Bosnia and Herzegovina, which has a primarily ethnic Bosnian and Croatian population, and Republika Srpska, which has a primarily ethnic Serbian population. A third entity, the Brcko District, is a municipality which is legally governed by both the Federation of Bosnia and Herzegovina and Republika Srpska, but in practice is self-governing.

The Federation of Bosnia and Herzegovina is divided into 10 cantons, while Republika Srpska is divided directly into municipalities. The 10 cantons of the Federation of Bosnia and Herzegovina are Bosna-Podrinje, Central Bosnia, Herzegovina-Neretva, Posavina, Sarajevo, Tuzla, Una-Sana, West Herzegovina, Zenica-Doboj, and Canton 10, which also is called Herzeg-Bosnia.

The name of Bosnia and Herzegovina often is abbreviated as “BiH,” which is derived from “Bosna i Hercegovina,” the country’s name in all three of its official languages. The acronym BiH is commonly used in English to denote Bosnia and Herzegovina even though this acronym does not directly correspond to its English name. The Cyrillic equivalent of the acronym is “БиХ,“ derived from “Босне и Херцеговине.” The Federation of Bosnia and Herzegovina often is abbreviated as “FBiH” to distinguish it from the national government. Republika Srpska often is abbreviated as “RS,” while the Brcko District often is abbreviated as “BD.”

The official languages of Bosnia and Herzegovina are Bosnian, Croatian, and Serbian, all of which are mutually intelligible. Government agencies provide information in Bosnian and Croatian in Latin script, and may provide information in Serbian in Latin script, Cyrillic script, or both scripts. With regard to first languages, Bosnian is spoken by about 53% of the population, Serbian by about 31%, and Croatian by about 15%. English is commonly spoken in the business community. There are two separate writing systems for Bosnian and Serbian and one writing system for Croatian, all of which are alphabetic. The three writing systems share a Latin script with 30 letters, among which are 22 English letters (all except Q, W, X, and Y) plus four letters that are the result of adding a caron to the letters C, S, Z, and the z within the digraph Dz; the letter Ć, the letter Đ, and the digraphs Lj and Nj. Bosnian and Serbian also share a Cyrillic script with 30 letters. Instead of referring to Bosnian, Croatian, or Serbian by name in conversation, the U.S. Commerce Department advises that it is preferable to refer to the languages as “the local language” or as “Bosnian/Croatian/Serbian (BCS).” The directionality that is used for written Bosnian, Croatian, and Serbian texts, as is used for English writing, is progression along horizontal lines from left to right, with successive horizontal lines read from top to bottom.

Bosnia and Herzegovina’s currency is the convertible mark.

Employers are responsible for withholding and remitting income taxes and social taxes, and paying employer portions of social taxes, if applicable, to the governments of the political entities. The national government of Bosnia and Herzegovina does not levy any payroll-related taxes. Employers also are responsible for complying with compensation and benefits provisions specified by each political entity, such as paid leave for vacations and holidays.

Foreign workers in Bosnia and Herzegovina generally are subject to the same taxation, compensation, and benefits provisions in each political entity as nationals of Bosnia and Herzegovina, but must obtain the proper visas and permits to work legally in Bosnia and Herzegovina.

Citizens of Bosnia and Herzegovina working in the United States are covered by U.S. tax law with possible treaty and work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.

News articles regarding payroll in Bosnia and Herzegovina are available in

CURRENCY DETAILS

The currency of Bosnia and Herzegovina is the convertible mark (KM). The internationally recognized three-letter currency code for the convertible mark is BAM. The plural form of the convertible mark is convertible marks. In all three of the country’s official languages, the name of the convertible mark is “konvertibilna marka,” or in the Cyrillic script “конвертибилна марка.” Plural forms in the country’s official languages vary depending on the amount of marks expressed and include “konvertibilne marke,” or “конвертибилне марке;” “konvertibilnih maraka,” or “конвертибилних марака;” and “konvertibilna marka,” or “конвертибилна марка.”

The convertible mark is pegged to the euro. One euro is equivalent to 1.95583 convertible marks.

When an amount of convertible marks is written using the currency symbol KM, the symbol follows the numerical value with a space between the numerical value and symbol.

One hundredth ( ¹ ⁄ ₁₀₀ ) of a convertible mark is referred to in English as a fenig or pfenig, with the plural form of fenigs or pfenigs, and in the country’s official languages as a feninga, or Фенинга.

When amounts of convertible marks are written in Bosnia and Herzegovina’s official languages, the comma that in English separates the thousands place from the hundreds place instead is rendered as a dot (.), and the dot that in English separates the ones place from the tenths place instead is rendered as a comma.

TAXES

The governments of Bosnia and Herzegovina’s political entities enact laws relating to taxes on employment. The political entities’ taxes on employment income include income tax and several kinds of social taxes. Employers are required to withhold income tax and, if necessary, the employee portion of social taxes from employees’ wages, and pay the employer portion of social taxes based on employees’ wages.

Income and social taxes are administered in the Federation of Bosnia and Herzegovina by the Tax Administration of the Federation of Bosnia and Herzegovina (Porezna uprava Federacije Bosne i Hercegovine, abbreviated as PUFBiH). Income and social taxes are administered in Republika Srpska by the Tax Adminstration of Republika Srpska (Pоrеskа uprаvа Rеpublikе Srpskе/Пореска управа Републике Српске, abbreviated as PURS/ПУРС). Income and social taxes are administered in the Brcko District by the Tax Administration of the Directorate of Finance of the Brcko District (Порезној управи Дирекције за финансије Брчко дистрикта), abbreviated as the Tax Administration (Порезна управа).

In all three political entities, the tax year is the calendar year from Jan. 1 to Dec. 31.

Coronavirus (Covid-19) Guidance: Employers in the Federation of Bosnia and Herzegovina may apply for a subsidy covering social tax contributions of 244.85 KM per employee per month, starting with wages paid in April 2020 and until the month after the end of its officially-declared state of emergency. The total subsidy covers all employer and employee social tax contributions on the wages of employees who earn up to 590 KM per month, but employers must cover the remaining portion of social taxes for employees who earn more than 590 KM per month. Employers must apply to the FBiH’s Tax Administration using Form ZSD, Application for Subsidization of Contributions for Compulsory Insurance (Zahtjev za subvencioniranje doprinosa za obavezna osiguranja).

To benefit from the subsidy, employers must have made all FBiH income tax withholding and social tax payments due up to February 2020; must have experienced a decrease in sales of at least 20% for a given month compared to the average of January and February 2020; and must submit all social tax returns for the month for which the subsidy is requested. The deadline to apply for a subsidy for April 2020 is May 29, 2020, and for later months the deadline is the 10th of the following month.

Employers in Republika Srpska that temporarily closed, whether because of coronavirus-related restrictions or are economic reasons, may apply to Republika Srpska’s Tax Administration for a subsidy of the monthly minimum wage and applicable social taxes for affected employees. Employers must apply for a subsidy for April 2020 by June 10, 2020.

Employers in the Brcko District, except for banks, financial organizations, and insurance companies, may apply to the Department of Economic Development, Sports, and Culture for a wage subsidy that also covers social taxes if they were required to close, if they were not required to close but suffered a decrease in income of at least 20% for April 2020 compared to April 2019; or if they export at least 50% of their sales and must suspend business. The amount of the subsidy for these employers is 860 KM per employee. Other employers may also apply for a subsidy of 30% of employees’ income and social taxes for April 2020. To benefit, employers must not have had outstanding tax obligations as of February 2020 and must not reduce the number of employees the employer had on March 1, 2020, except that employers with more than 10 employees can reduce this number of employees by up to 10%. Employers must apply by June 26, 2020.

Income Taxes

Employees in the Federation of Bosnia and Herzegovina, Republika Srpska, and the Brcko District are liable for personal income tax on their employment income.

Coverage: Generally, all businesses are required to withhold personal income tax from payments made to employees.

Rates and Thresholds: All three political entities have a flat personal income tax rate of 10%.

Registration: Employers in FBiH must register with the Tax Administration by filing Form POR-500, Application for Registration of Legal Entity (Prijava za registraciju pravnih lica), within 30 days of registering for business with the city or municipality where the employer is located.

Employers in Republika Srpska must register with the Tax Administration by filing Form PR-1, Application for Registration of Legal Entity (Prijava za registraciju/ evidentiranje pravnog lica or Пријава за регистрацију / регистрацију правног лица), within eight days of registering for business in the republic. Employers registered with the republic that open or close any bank accounts must also notify the republic within five days of the opening or closing.

Employers in the Brcko District must register with the district’s Tax Administration by filing Form PPL-1, Application/Cancellation for Registration of Legal Entity (Prijava-Odjava za upis u registar pravnih lica), within five days of registering for business with the district. Employers registered with the district that open or close any bank accounts must also notify the district within five days of the opening or closing.

For employee registration, the FBiH and Republika Srpska both have systems called the Unified System for the Registration, Control, and Collection of Contributions (Jedinstveni sistem registracije, kontrole i naplate doprinosa, abbreviated as JSND or ЈСНД), with which employers must register employees. In both entities employers must register employees with the system by the day before the start date of employment using, in the FBiH, Form JS3100, Application/Change/Cancellation of Insurance (Prijava/Promjena/Odjava osiguranja), and in Republika Srpska, Form PD3100, Registration/Change/Cancellation of Contribution Payment (Prijava / Promjena / Odjava uplate doprinosa or Пријава / Промјена / Одјава уплате доприноса). The FBiH provides software for Form JS3100 to be filed electronically, while Republika Srpska allows Form PD3100 to be filed electronically through its e-Usluge (е-Услуге) portal.

Tax card: Employees in all three political entities must provide to their employer, or an employer of their choice if they have multiple employers, a tax card (Porezna kartica or Пореска картица) at the start of employment. The tax card contains information on employees’ personal tax deductions. Employees must first submit an application for a tax card (Zahtjev za izdavanje porezne kartice or Захтјев за издавање пореске картице) if they do not already have a tax card. The data on the card is filled out by the tax administration based on the information in the application.

In FBiH, the tax card is Form PK-1002, while the application is Form PK-1001.

In Republika Srpska, the tax card is Form 1001/1, while the application is Form 1001.

In the Brcko District, the tax card is Form PK-1002, while the application is Form ZPK-1001.

Taxable Amounts: Residents of a political entity generally are liable for income tax on all employment income, while nonresidents of a political entity generally are liable for income tax on income earned in the political entity. The Federation of Bosnia and Herzegovina and the Brcko District consider individuals to be residents if they reside in the entity for at least 183 days in a calendar year, while Republika Srpska considers individuals to be residents if they reside in the republic for at least 183 days in a 12-month period.

Residents of a political entity that earn income in the other political entities of Bosnia and Herzegovina or in another country may deduct income tax paid to the other political entity from the tax owed to the resident political entity. For this purpose, individuals must request certificates of income tax paid from the other political entity or foreign country.

In all three political entities, social taxes paid by employees can be deducted from their employment income subject to personal income tax.

Basic personal deduction (osnovni licni odbitak/основни лични одбитак): All three political entities allow all employees to receive a basic personal deduction and additions to the personal deduction for dependents. In all three political entities, if more than one employee claims the same dependents, the deduction is evenly split between the employees unless otherwise agreed.

In the Federation of Bosnia and Herzegovina, resident employees, as well as residents of another political entity who work for an employer based in the federation, receive a basic personal deduction of 300 KM per month, or 3,600 KM per year. An additional 150 KM per month may be added for a dependent spouse; 150 KM per month for the first child; 210 KM per month for the second child; 270 KM per month for the third and each additional child; 90 KM per month for each other dependent in the immediate family; and 90 KM per month for the employee’s own disability and each dependent with a disability. The sum of the basic personal deduction and the additions for dependents is called a personal tax deduction (licni odbitak poreznog).

In Republika Srpska, effective starting July 1, 2021, all employees receive a basic personal deduction of 700 KM per month, or 8,400 KM per year. An additional 150 KM per month may be added for each dependent. Effective until June 30, 2021, all employees receive a basic personal deduction of 500 KM per month, or 6,000 KM per year. An additional 75 KM per month may be added for each dependent.

In the Brcko District, effective since July 3, 2020, resident employees, as well as residents of another political entity who work for an employer based in the district, receive a basic personal deduction of 500 KM per month, or 6,000 KM per year. An additional 250 KM per month may be added as a deduction for dependents, including spouses and children. For each increment of 20% by which a disability of an employee or an employee’s dependent is quantified, an additional 50 KM per month may be added as a deduction, up to an additional 250 KM per month for permanent disability. Effective since July 3, 2020, residents of other entities who work in the Brcko District may also receive the basic personal deduction, but must apply for a Brcko District tax card. Effective until July 2, 2020, resident employees received a basic personal deduction of 300 KM per month, or 3,600 KM per year. An additional 150 KM per month could be added as a deduction for dependents, including spouses and children. For each increment of 20% by which a disability of an employee or an employee’s dependent is quantified, an additional 30 KM per month could be added as a deduction.

Federation of Bosnia and Herzegovina: In FBiH, reimbursements for travel expenses are not taxable. Taxable benefits include employer-paid reimbursements for personal expenses, the use of employer-provided vehicles for personal tasks, and employer-provided lodging or meals provided free or at less than market value.

Other payments that are not considered taxable in FBiH include injury and sickness payments; any employer-provided meal allowance of up to 1% of the latest-published FBiH average monthly net salary; employer-provided gifts given at holidays or the company’s anniversary if the total gift value provided to an employee is up to 30% of the latest-published FBiH average monthly net salary; lump-sum retirement pay of up to six times the employee’s net monthly pay or six times the latest-published FBiH average net monthly pay, whichever is higher; and monthly severance pay if it is up to 70% of the employee’s average monthly pay for each year of work completed.

Republika Srpska: In Republika Srpska, taxable payments include bonuses and other benefits; employer-provided reimbursements or payments of employee expenses; and employer-provided gifts.

Nontaxable payments include lump-sum retirement pay of up to three times the employee’s monthly salary; severance pay up to the minimum statutory amount; one-time maternity allowances of up to the latest-published average monthly net salary in Republika Srpska; other one-time assistance payments for the death or disability of an employee or for recovery from natural disasters of up to three times the latest-published average monthly net salary in Republika Srpska; and the cost of employer-provided meals, up to 4.50 KM per day per employee.

Brcko District: In the Brcko District, general employee benefits and awards paid by an employer are tax-free up to a limit. Awards given for milestones of uninterrupted service with the same employer are tax-free in amounts of up to 50% of the employee’s average monthly net salary for five years of service. The tax-free amount increases to 100% of the employee’s average monthly net salary for 10 years of service, increases by 25% for each five years up to 200% of the employee’s average monthly net salary for 30 years of service, and finally increases to 250% of the employee’s average monthly net salary for 35 years of service.

Effective since July 3, 2020, employer-provided meal allowances are taxable if they exceed 1.4% of the Brcko District’s 500 KM monthly personal deduction, which is 7 KM per day. Effective until July 2, 2020, employer-provided meal allowances were taxable if they exceeded 1.5% of the Brcko District’s 300 KM monthly personal deduction, which was 4.50 KM per day. Employer-provided gifts are not taxable if the value is up to 30% of the latest-published Brcko District average monthly salary, and if they are given only once a year. Severance pay on termination is not considered taxable, and severance pay for retiring employees is not considered taxable if it is up to six times the employee’s net monthly pay or the latest-published Brcko District average net monthly salary, whichever is higher.

Employee Share Plans: In Republika Srpska, the value of shares gained from employee share programs is subject to income tax. In the Federation of Bosnia and Herzegovina and the Brcko District, income from participation in profit-sharing programs is not subject to income tax.

Withholding Methods: Employers must withhold income tax on a monthly basis from payments to employees. Tax generally must be withheld and remitted at the time of payment. If an employee has more than one employer, the employer to which the employee has given his or her tax card withholds according to the employee’s personal tax deduction, while the other employers do not.

Returns and Remittance: Returns and remittance requirements for income taxation vary among the Federation of Bosnia and Herzegovina, Republika Srpska, and the Brcko District.

Federation of Bosnia and Herzegovina: Employers must submit a monthly return, Form MIP-1023, listing wages paid and income and social taxes withheld for each employee, to the Tax Administration of the FBiH each month by the 15th day of the following month. A form for keeping records of payments to employees, Form OLP-1021, is provided for employers’ use to simplify the collection of required data for Form MIP-1023, but employers may retain the required data electronically.

The Tax Administration assumes that monthly data is reported on Form MIP-1023. More than one form must be submitted if employees are paid more than once per month.

Employers also must give to employees and submit to the Tax Administration of the FBiH an annual return showing all payments made and tax withheld for the year, Form GIP-1022, by the end of February of the following year.

All employers must file Form MIP-1023 and Form GIP-1022 electronically beginning Oct. 1, 2021. All returns may be filed electronically using the nPIS application, which may be downloaded from the Tax Administration of the FBiH, or on CD or DVD using software for Forms GIP-1022 and MIP-1023 provided by the Tax Administration.

Employers are required to make payments to the FBiH government through authorized financial institutions, often called authorized payment service organizations (ovlastena organizacija za obavljanje platnog prometa, abbreviated as OOPP). Payments of tax withheld generally must be made on the same day as the payment of wages or other taxable payments.

Republika Srpska: Employers must submit a monthly return, Form 1002, listing hours worked, wages paid, income and social tax withheld, and deductions for each employee, by the 10th day of the following month.

Employers are required to file Forms 1002 electronically using the online e-Usluge (е-Услуге) portal. Taxpayers are able to access the Form 1002 and submit it using the online portal. This online portal replaces the previous software provided by the Tax Administration known as the Taxpayer Program (Prоgrаm zа Pоrеskе Оbvеznikе/Програм за Пореске Обвезнике, abbreviated as PPO/ППО).

Employers must remit taxes withheld through bank transfers on the same day that payments are made.

Brcko District: The Brcko District uses equivalent forms with the same names and numbers, Forms MIP-1023, GIP-1022, and OLP-1021, as the FBiH does. Form MIP-1023 is due to the district by the 15th day of the following month, while Forms GIP-1022 are due by the end of January of the following year. Employers with more than five employees are required to submit Forms MIP-1023 electronically using software provided by the Brcko District’s Tax Administration. Employers in the district must annually file Forms GIP-1022 with the government and must provide each employee with his or her Form GIP-1022 by Jan. 31 of the year following the reported year.

Withheld taxes must be remitted through a financial institution by the next day after payments are made to employees.

Recordkeeping: Employers in the Federation of Bosnia and Herzegovina and the Brcko District are required to keep Forms OLP-1021, or equivalent data, for five years after the end of the month covered by the applicable form or data. Employers in Republika Srpska are required to keep tax-related records for five years from the due date of the tax liability to which the records correspond.

Penalties: All three political entities assess penalties both on employers and a responsible person working for the employer. A responsible person is a person in a company who is entrusted with tasks related to ensuring compliance with the political entity’s laws and regulations.

Federation of Bosnia and Herzegovina: Employers that do not comply with the FBiH registration procedures or fail to timely register may be fined from 1,000 KM to 10,000 KM, and a responsible person at the employer may be fined from 200 KM to 2,000 KM.

Employers that fail to file employees’ withholding returns or issue Forms GIP-1022 to employees may be fined 200 KM for each failure, up to a maximum of 50,000 KM.

Employers that fail to comply with recordkeeping requirements may be fined from 2,000 to 20,000 KM, and a responsible person may be fined from 500 KM to 3,000 KM.

Republika Srpska: Employers that fail to register employees with the Unified System of Registration, Control, and Collection of Contributions may be fined from 10,000 KM to 30,000 KM, and a responsible person may be fined from 3,000 KM to 9,000 KM.

Effective Aug. 13, 2020, employers that fail to comply with Republika Srpska tax registration procedures, fail to comply with recordkeeping requirements, or fail to file returns on time may be fined from 2,000 KM to 6,000 KM, and a responsible person may be fined from 1,000 KM to 3,000 KM. Effective until Aug. 12, 2020, this penalty was 1,000 KM to 3,000 KM for the employer and 500 KM to 1,500 KM for a responsible person.

Effective Aug. 13, 2020, employers that fail to both file returns and make payments may be fined 30% of the affected tax liability, up to a maximum of 200,000 KM. Effective until Aug. 12, 2020, this penalty was 20% of the affected tax liability.

Brcko District: Employers that do not comply with the Brcko District registration procedures may be fined from 1,000 KM to 10,000 KM, and a responsible person may be fined from 200 KM to 1,000 KM.

Employers that fail to notify the district of the opening of a bank account within five days may be fined from 1,000 KM to 3,000 KM, and a responsible person may be fined from 200 KM to 1,000 KM. If the employer does not notify the district within 30 days, the fine increases to 2,000 KM to 5,000 KM, and a responsible person may be fined 400 KM to 2,000 KM.

Employers that fail to file withholding returns may be fined from 1,000 KM to 5,000 KM, and a responsible person may be fined from 200 KM to 1,000 KM.

Employers that fail to comply with recordkeeping requirements may be fined from 10% to 30% of the amount attributable to the unkept records, with a minimum of 1,000 KM, and a responsible person may be fined from 200 KM to 1,000 KM.

Social Taxes

Employers in the Federation of Bosnia and Herzegovina withhold social taxes from employees’ wages and pay the employer portion of taxes on employees’ wages. Employers in Republika Srpska only withhold employee taxes and do not pay an employer portion. Employers in the Brcko District only withhold employee contributions for district-specific taxes, but as employees in the district may choose to pay pension and disability taxes to either of the other two political entities, employers may be responsible for an employer portion of taxes for employees that choose the Federation of Bosnia and Herzegovina.

Social taxes are administered by the political entities’ tax administrations and generally are reported together with income taxes.

Coverage: In FBiH, residents, as well as nonresident employees who work in the federation, are required to contribute social taxes. Brcko District residents who work in FBiH are required to pay pension and disability insurance taxes, and these taxes also must be paid by district residents who work in the district if they have chosen to pay FBiH pension and disability taxes.

In Republika Srpska, residents working in the republic are required to contribute pension and disability taxes, and Brcko District residents working in the district also must pay these taxes if they have chosen to pay Republika Srpska pension and disability taxes.

In the Brcko District, residents who work in the district are required to contribute health insurance and unemployment insurance taxes.

If an employee lives in one entity and works in another, agreements between the entities specify that employees pay health insurance and unemployment insurance contributions to their entity of residence.

Rates and Thresholds: Social tax rates vary among the Federation of Bosnia and Herzegovina, Republika Srpska, and the Brcko District.

Federation of Bosnia and Herzegovina: Employees are assessed a pension and disability insurance tax rate of 17%, a health insurance tax rate of 12.5%, and an unemployment insurance tax rate of 1.5%, for a total employee social tax rate of 31%.

Employers are assessed a pension and disability insurance tax rate of 6%, a health insurance tax rate of 4%, and an unemployment insurance tax rate of 0.5%, for a total employer social tax rate of 10.5%.

While there is not generally a maximum monthly amount of wages upon which the social taxes may be assessed, employees who are paid the minimum wage in certain industries, including coal mining, textiles, leather, footwear, and traditional craftmaking, have a contribution base of 25% of the average monthly salary in the Federation of Bosnia and Herzegovina for the period from January to September of the previous year.

Republika Srpska: Effective since Jan. 1, 2020, employees are assessed a pension and disability insurance tax rate of 18.5%, a health insurance tax rate of 12%, a child protection contribution rate of 1.7%, and an unemployment insurance tax rate of 0.6%, for a total employee social tax rate of 32.8%. Effective until Dec. 31, 2019, the same tax rates were in effect, except the unemployment insurance tax rate was 0.8%, for a total employee social tax rate of 33%.

Effective starting July 1, 2021, the minimum contribution base for most employees is Republika Srpska’s gross minimum wage. Employees in the textile, clothing, and leather industries who are paid less than the Republika Srpska average gross salary for the previous year have a separate contribution base of 25% of that average gross salary. Effective for 2021, this contribution base is 371.25 KM, which is 25% of the Republika Srpska average gross salary for 2020 of 1,485 KM. Effective for 2020, this contribution base was 351.75 KM, which was 25% of the Republika Srpska average gross salary for 2019 of 1,407 KM.

Brcko District: Employees in Brcko District are assessed a health insurance tax rate of 12% and an unemployment insurance tax rate of 1.5%, for a total employee social tax rate of 13.5%.

Employees who are residents of Brcko District also may choose to contribute to the pension and disability insurance systems of either of the other two political entities at the same tax rate as is applicable for residents of those entities. These contributions are in addition to the Brcko District-specific employee social taxes. Employers are assessed an FBiH pension and disability insurance tax rate of 6% based on employment income paid to resident employees of the district who choose to contribute to the pension and disability insurance system of the FBiH.

Registration: Because the Federation of Bosnia and Herzegovina and Republika Srpska administer both income and social taxes through their tax administrations, there is not a registration procedure for social tax separate from that for income tax.

Employers in FBiH must register with the Tax Administration by filing Form POR-500, Application for Registration of Legal Entity (Prijava za registraciju pravnih lica), within 30 days of registering for business with the city or municipality where the employer is located.

Employers in Republika Srpska must register with the Tax Administration by filing Form PR-1, Registration of Legal Entity (Prijava za registraciju/ evidentiranje pravnog lica or Пријава за регистрацију / регистрацију правног лица), within eight days of registering for business in the republic. Employers registered with the republic that open or close any bank accounts must also notify the republic within five days of the opening or closing.

In the Brcko District, employers must register employees for health insurance upon agreement of an employment contract with the employee. Employers must notify the Brcko District Employment Institute regarding the employment and termination of workers.

For employee registration, the FBiH and Republika Srpska both have portals called the Unified System for the Registration, Control, and Collection of Contributions (Jedinstveni sistem registracije, kontrole i naplate doprinosa, abbreviated as JSND or ЈСНД), with which employers must register employees. In both entities employers must register employees with the system by the day before the start date of employment using, in the FBiH, Form JS3100, Application/Change/Cancellation of Insurance (Prijava/Promjena/Odjava osiguranja), and in Republika Srpska, Form PD3100, Registration/Change/Cancellation of Contribution Payment (Prijava / Promjena / Odjava uplate doprinosa or Пријава / Промјена / Одјава уплате доприноса).

Taxable Amounts: The definition of amounts considered to be subject to social taxation differs between the Federation of Bosnia and Herzegovina and Republika Srpska and the Brcko District.

Taxable payments in the Federation of Bosnia and Herzegovina include wages, vacation pay, employer-provided occupational injury or disease payments, employer-provided sick pay for up to 42 days, and severance pay when the termination is not caused by the employee.

In Republika Srpska and the Brcko District, all income subject to income tax also is subject to social taxes.

Withholding Methods: Social taxes must be calculated on a monthly basis. Generally, wages earned for work in one month are paid in the next month. Employee social taxes must be withheld from wages at the time of payment.

Federation of Bosnia and Herzegovina: Employees working in the federation who are employed by an employer that is not resident in the federation are responsible for calculating social taxes themselves and making monthly payments by the 10th day of the following month.

Returns and Remittances: Returns and remittance requirements for social taxation vary among the Federation of Bosnia and Herzegovina, Republika Srpska, and the Brcko District. Generally, social taxes are remitted directly to a bank account of the administrative body responsible for collecting the taxes.

Federation of Bosnia and Herzegovina: Employers submit a monthly return, Form MIP-1023, listing wages paid and income and social taxes withheld for each employee, to the Tax Administration of the FBiH each month by the 15th day of the following month. A form for keeping records of payments to employees, Form OLP-1021, is provided for employers’ use, but employers may keep the required data electronically.

Employers also must submit a social tax-specific return, Form 2001, detailing the number of employees, wages paid, total employee and employer social tax contributions paid, and income tax withheld by the day after wages are paid. A companion form, Form 2001-A, must be submitted reporting the same information for employees who are residents of the other two political entities.

Employers must submit the FBiH Form MIP-1023 for Brcko District employees that pay pension and disability insurance contributions to the federation.

Employers must give employees and submit to the Tax Administration Form GIP-1022 by the end of February of the year following the reported year. The form shows social taxes and income taxes withheld during the year.

Employers must remit social taxes to the Tax Administration monthly at the time of each payment of employment income, with payments of employment income generally occurring on a monthly basis. The remissions must be conducted through authorized financial institutions, often called authorized payment service organizations (ovlastena organizacija za obavljanje platnog prometa, abbreviated as OOPP). Payments must be made in convertible marks.

Employees working in the federation who are employed by an employer that is not resident in the federation are responsible for remitting social taxes monthly by the 10th day of the month following the month when employment income was paid upon which the social taxes were assessed.

Employers must remit social taxes to the Tax Administration through bank transfers at the time of each payment of employment income, with payments of employment income generally occurring on a monthly basis.

Brcko District: The Brcko District uses equivalent forms with the same names and numbers, Forms MIP-1023, GIP-1022, and OLP-1021, as the FBiH does. Form MIP-1023 is due to the district by the 15th day of the following month. Employers in the district must annually file Forms GIP-1022 with the government and must provide each employee with his or her Form GIP-1022 by Jan. 31 of the year following the reported year. Employers with more than five employees are required to submit Forms MIP-1023 electronically using software provided by the Brcko District’s Tax Administration.

Health insurance taxes are remitted to the Brcko District Health Insurance Fund (Fond zdravstvenog osiburanja Brcko distrikta BiH, abbreviated as FZO Brcko/Фонд здравственог осигурања Брчко дистрикта, abbreviated as ФЗО Брчко). Unemployment insurance taxes are remitted to the Brcko District Employment Institute (Zavod za zaposljavanje Brcko distrikta BiH, abbreviated as ZZZ Brcko/Завод за запошљавање Брчко дистрикта БиХ, abbreviated as ЗЗЗ Брчко). The taxes must be remitted on the day payroll is calculated.

Pension and disability insurance taxes are remitted to either of the other two political entities, depending on the entity to which an employee contributes.

Employers that fail to file employees’ withholding returns or issue Forms GIP-1022 to employees may be fined 200 KM for each failure, up to a maximum of 50,000 KM.

Employers that fail to comply with recordkeeping requirements may be fined from 2,000 to 20,000 KM, and a responsible person may be fined from 500 KM to 3,000 KM.

Employers that fail to file withholding returns may be fined from 1,000 KM to 5,000 KM, and a responsible person may be fined from 200 KM to 1,000 KM.

Other Taxes

The Federation of Bosnia and Herzegovina, Republika Srpska, and the Brcko District do not assess any taxes on employment income other than those covered in the Income Taxes and Social Taxes sections of this primer.

State/Jurisdiction Taxes

Differences among the Federation of Bosnia and Herzegovina, Republika Srpska, and the Brcko District as to requirements regarding taxation of employment income are covered in the Income Taxes and Social Taxes sections of this primer.

COMPENSATION AND BENEFITS

The labor acts of the respective political entities regulate overtime pay, regular hours of work, leave, wage payment, and termination pay. A revised labor code for the Brcko District has been in effect since Jan. 1, 2020.

Each political entity has its own law regarding paid holidays. While the national government of Bosnia and Herzegovina also specifies holidays, it has not written its own law regarding holidays; the last national law on holidays that was effective in Yugoslavia is still in force.

Only Republika Srpska specifies a statutory minimum wage. In the Federation of Bosnia and Herzegovina, the minimum wage is determined by collective agreement between an organization of employers and an organization of trade unions, while the Brcko District allows employers to set a minimum wage.

Wage and hour laws are enforced by political entities’ labor inspectorates. The Federation of Bosnia and Herzegovina has cantonal labor inspectorates, while Republika Srpska and the Brcko District have an entity-wide labor inspectorate.

Coronavirus (Covid-19) Guidance: Employers in Republika Srpska that temporarily closed, whether because of coronavirus-related restrictions or for economic reasons, may apply to Republika Srpska’s Tax Administration for a subsidy of the monthly minimum wage and applicable social taxes for affected employees. Employers must apply for a subsidy for April 2020 by June 10, 2020.

This program was restarted, effective starting Nov. 21, 2020, for employers in the transportation, hotel, restaurant, gambling, and fitness-center sectors, and any other employers that have employees affected by district business closures, to last until the business closures are lifted. The amount of the subsidy is the gross wages paid in October 2020 to the affected employees, provided that the employer indeed paid those wages and the required taxes on those wages.

Minimum Wage

The minimum wage in the Federation and Bosnia and Herzegovina is subject to determination by a collective agreement, which is agreed upon by an organization representing all employers in the political entity and an organization representing all trade unions in that entity and approved by the entity’s government. The minimum wage in Republika Srpska is determined by the republic’s government, while the Brcko District requires a minimum wage but does not specify an amount.

Federation of Bosnia and Herzegovina: Effective since Jan. 1, 2016, the minimum hourly wage is 2.31 KM.

Meal allowance: Employers are required to provide employees either meals or a meal allowance of between 0.5% and 1% of the most recent average net salary paid in the FBiH, as published by the Federal Institute for Statistics.

Republika Srpska: Effective starting June 1, 2021, the minimum monthly wage is 540 KM. Effective from Jan. 1, 2020, to May 31, 2021, the minimum monthly wage was 520 KM. The minimum monthly wage represents a net wage after social taxes are subtracted.

Meal allowance: Employers are required to provide employees either meals or a meal allowance for one meal per day, as well as a second meal allowance if employees work more than three hours of overtime in a day. The value of a meal allowance may be set by a collective bargaining agreement.

Brcko District: The district’s revised labor code, effective since Jan. 1, 2020, requires employees to be paid a minimum wage set by the employer, which must be at least the minimum contribution base for entities’ social taxes; however, starting July 1, 2021, only Republika Srpska has a minimum contribution base for social taxes, which is its gross minimum wage.

Previously, the district required a minimum wage to be set through a collective agreement, but no collective agreement setting a minimum wage was signed.

According to the U.S. State Department, in practice, employers in Brcko District use the minimum wage of the entity to which employees pay pension contributions.

Overtime

In all three political entities, overtime work generally is only permitted in exceptional situations, such as a suddenly increased workload or as a response to accidents or natural disasters.

Federation of Bosnia and Herzegovina: Employers may have employees work up to eight additional hours per week. Employees must be paid at least 125% of their net hourly wage for overtime work. If employees work overtime for more than three consecutive weeks or more than 10 weeks in a year, the employer must notify the cantonal labor inspectorate. Minors, pregnant women, mothers of children up to three years of age, single parents, and guardians of children up to six years of age may not work overtime without written consent.

Republika Srpska: Employers may have employees work up to 10 additional hours per week, with a maximum of four additional hours in one day. Employees are entitled to extra pay for overtime work, but there is not a governmentally prescribed amount. Employees may not work more than 180 hours of overtime per year, which may be extended to a maximum of 230 hours per year through a collective agreement. If employees work overtime for more than three consecutive weeks or more than 10 weeks in a year, the employer must notify the republic’s labor inspectorate. Minors, pregnant women, mothers of children up to three years of age, and single or adoptive parents of children up to six years of age may not work overtime without written consent.

Brcko District: Under the district’s revised labor code, effective since Jan. 1, 2020, employers may have employees work up to 10 additional hours per week at the employer’s written request, with up to a maximum of 300 hours per year. If employees work overtime for more than three consecutive weeks or more than 10 weeks in a year, the employer must notify the district’s labor inspectorate. Employees also are entitled to compensation for travel expenses related to overtime work. Pregnant women, mothers, or adoptive parents with children up to three years of age, and single parents with children up to seven years of age may not work overtime without written consent.

Before the district adopted its revised labor code, employers could have employees work up to 12 additional hours per week. Employees could also agree to work up to 10 additional hours of overtime per week beyond the aforementioned 12 additional hours per week at the request of the employer, up to a maximum of 300 hours per year. Pregnant women, mothers or adoptive parents with children up to one year of age, and single parents with children up to two years of age could not work overtime without written consent, and employees were entitled to at least 130% of their normal salary for overtime or night work and work on rest days or holidays.

Hours of Work

In all three political entities, the normal amount of working time per week is 40 hours. Employees must receive one weekly day of rest, generally Sunday.

Federation of Bosnia and Herzegovina: The workweek may be divided into a five- or six-day week, unless a contract or collective bargaining agreement specifies a shorter workweek than 40 hours. Minors may not work more than 35 hours per week. Work done between 10 p.m. and 6 a.m. is considered night work. Employees must be paid at least 125% of their normal net hourly wage for night work. For minors employed in industry, work done between 7 p.m. and 7 a.m. is considered night work, and for minors not employed in industry, work done between 8 p.m. and 6 a.m. is considered night work. Minors may not generally perform night work other than in exceptional situations with the approval of the cantonal labor inspectorate.

Employees who work at least six hours a day are entitled to a 30-minute break. Employees must receive at least a 12-hour break between two consecutive working days and a rest day of at least 24 consecutive hours at least once a week. Employers may require employees to work on their rest day in exceptional situations, but must be given another rest day within two weeks. Employees must be paid at least 115% of their net hourly wage for work on their rest day.

Republika Srpska: The normal workweek is five days and 40 hours per week. Employers may specify fewer hours in a week, but the workweek must be at least 36 hours. Work done between 10 p.m. and 6 a.m. is considered night work. Minors may not work more than eight hours per day and 35 hours per week. For minors, work done between 7 p.m. and 6 a.m. is considered night work. Minors may not generally perform night work other than in exceptional situations with the approval of the republic’s labor inspectorate. Women who are at least six months pregnant and mothers of children of up to two years of age may not perform night work.

Employees who work at least six hours a day are entitled to a 30-minute break. Employees who work from four to six hours a day are entitled to a 15-minute break. Employees who work more than 10 hours in a day must receive an additional 15-minute break. Employees must receive at least a 12-hour break between two consecutive working days and a rest day of at least 24 consecutive hours at least once a week. Employees working on their rest day must receive another rest day in the next week.

Brcko District: Under the district’s revised labor code, effective since Jan. 1, 2020, the workweek is 40 hours and may be five or six days. Work done between 10 p.m. and 6 a.m. is considered night work. For minors, work done between 7 p.m. and 7 a.m. is considered night work. Previously, work done between 8 p.m. and 6 a.m. was also considered night work for minors not employed in industry. Minors, women who are at least six months pregnant, and mothers with children up to three years of age generally may not perform night work other than in exceptional situations with the approval of the district’s labor inspectorate. Under the district’s revised labor code, workers performing night work are entitled to additional wages, but the exact amount is not specified in the code.

Under the district’s revised labor code, employees who work at least six hours in a day are entitled to a 30-minute break, and employees who work at least 10 hours in a day must receive an additional 15-minute break. Employees who work from four to six hours a day are entitled to a 15-minute break. Employees must receive at least a 12-hour break between two consecutive working days and a rest day of at least 24 consecutive hours at least once a week, generally Sunday. Employees working on their rest day must receive another rest day in the next two weeks.

Previously, full-time employees were entitled to a 30-minute break and at their request were to be given a one-hour break not counted in working hours once during the work week.

Leave

Federation of Bosnia and Herzegovina: Employees are entitled to between 20 and 30 days of paid annual leave each year after working for an employer for six months. Employees who are minors are entitled to at least 24 days of annual leave. Employees who are not yet entitled to the statutory annual leave are entitled to at least one day of annual leave for each month of completed employment.

Employees may divide the entitlement of annual leave accumulated in a year into two parts. The first part must be at least 12 days and must be taken during the current calendar year, while the remainder must be taken by June 30 of the following year.

Employers determine with input from the employee when annual leave is taken, and must notify employees in writing of the length and timing of periods of annual leave at least seven days before the period begins.

Leave of Absence: Employees are entitled to seven days of paid leave in a year for purposes such as marriage, the birth of a child, or the illness or death of a family member.

Employees are also entitled to paid leave for vocational training or education for trade union-related work, but the duration is to be determined by a collective bargaining agreement.

Maternity Leave: Female employees are entitled to a one-year period of maternity leave, which may begin up to 28 days prior to the expected date of birth. Employees may take maternity leave for a shorter period, but it must last at least 42 days after the birth of the child. After the 42-day period ends, the father may also use maternity leave by agreement.

Employees taking maternity leave are entitled to receive compensation, but the amount of the employee’s salary to which they are entitled varies by canton.

After the period of maternity leave ends, the mother of a child at least one year of age may work half-time until the child reaches two years of age.

Blood Donation: Employees are entitled to one day of paid leave for each time that they donate blood.

Republika Srpska: Employees are entitled to at least 20 days of paid annual leave each year after working for an employer for six months in a calendar year. Employees working in unavoidably dangerous working conditions are entitled to 30 days of annual leave. First-time employees and employees who went longer than 30 days between ending work with a previous employer and beginning work with a new employer are entitled to at least one day of annual leave for each month of completed employment. Employees intending to switch employers must take their annual leave before terminating employment with their current employer.

Annual leave accumulated during a year may be used in multiple parts. One part must be at least 10 days and must be taken during the current year, while the remainder must be taken by June 30 of the following year. Employers determine when annual leave is taken with input from employees and must notify employees in writing by June 30 each year.

Leave of Absence: Employees are entitled to up to five days of paid leave in a year for purposes such as marriage, the birth of a child, blood donation, or the illness or death of a family member, in which case the five-day limit does not apply.

If employees cannot report to work because of unavoidable circumstances or a temporary reduction in the employer’s capacity, they are entitled to 50% of their pay during the absence.

Maternity Leave: Female employees are entitled to a one-year period of maternity leave, starting up to 28 days before the expected date of birth.

The maternity-leave period is 18 months for twins, as well as for each child, starting with the third child.

Employees may take maternity leave for a shorter period, but it must last at least 60 days after the birth of the child. If the employee does so, she is entitled to a one-hour break to express breast milk. After the 60-day period, the father may use maternity leave instead of the mother.

Employees taking maternity leave are entitled to receive their average salary from the previous 12 months before the start of maternity leave. Employers may apply to Republika Srpska’s Public Child Protection Fund (Јавног фонда за дјечију заштиту Републике Српске, abbreviated as ЈФДЗ) for reimbursement of compensation paid to employees on maternity leave.

Effective starting with 2020, 100% of the compensation paid to employees on maternity leave may be reimbursed by the Public Child Protection Fund. Effective for 2019, 80% of the compensation paid to employees on maternity leave could be reimbursed by the Public Child Protection Fund.

Brcko District: Under the district’s revised labor code, effective since Jan. 1, 2020, employees are entitled to between 20 and 30 days of paid annual leave after six months of completed employment with an employer, increasing from a minimum of 20 days by one day for each three years of service. Minor employees are entitled to at least 24 days of leave, and employees in certain industries who work in unavoidably dangerous working conditions are entitled to between 30 and 35 days of leave. Employees that are not yet entitled to the statutory annual leave are entitled to at least one day of annual leave for each month of completed employment. A five-day workweek must be used to calculate the length of annual leave.

Annual leave may be used in multiple parts, one of which may be used in the current year and one by June 30 of the following year. While employers determine when annual leave is taken, under the district’s revised labor code, employees may use up to five days of leave when they wish, but must notify the employer five days in advance of taking that leave.

Previously, the district’s annual leave provisions were identical to the provisions in effect under the revised labor code, except that employees were entitled to at least 18 days of paid annual leave each year after working for an employer for six months, and employees in certain industries who worked in unavoidably dangerous working conditions were entitled to 30 days of leave.

Leave of Absence: Under the district’s revised labor code, effective since Jan. 1, 2020, employees are entitled to five days of paid leave in a year for purposes such as marriage, the birth or marriage of a child, or the illness or death of a family member. Previously, this period of paid leave was three days.

Blood Donation: Under the district’s revised labor code, effective since Jan. 1, 2020, employees are entitled to two days of paid leave for each time that they donate blood.

Maternity Leave: Female employees are entitled to a one-year period of maternity leave, which may begin up to 28 days, but no less than seven days, prior to the expected date of birth. Employees may take maternity leave for a shorter period, but it must last at least 42 days after the birth of the child.

The maternity-leave period is 18 months for twins, as well as for each child starting with the third.

Under the district’s revised labor code, effective since Jan. 1, 2020, either parent may work part-time after the expiration of maternity leave until the child reaches three years of age if the child needs additional care. Previously, this period of part-time work was the same length as the length of maternity leave.

The district pays the wages of employees on maternity leave. Previously, employers were to pay the wages of employees on maternity leave for three months, or for 42 days if the employee opted to take maternity leave for a shorter period, with the district paying the remaining wages.

Holidays

Public holidays are generally specified by the political entities. Two public holidays for which paid leave is required are specified by the national government for all political entities:

Jan. 1 and Jan. 2: New Year’s Day.
May 1 and May 2: Labor Day.

Federation of Bosnia and Herzegovina: The additional public holidays specified by the Federation of Bosnia and Herzegovina for which paid leave is required include:

March 1: Independence Day.
Nov. 25: Statehood Day.

Employees in the Federation of Bosnia and Herzegovina also are entitled to up to four days of leave per year to celebrate religious holidays, of which two days are paid and two days are unpaid.

Employees must be paid at least 140% of their net hourly wage for work on public holidays.

Republika Srpska: The additional public holidays specified by Republika Srpska for which paid leave is required are:

Jan. 6 to Jan. 7: Orthodox Christmas Eve and Christmas Day.
Jan. 9: Republika Srpska Day.
May 9: Victory over Fascism Day.
Catholic Good Friday, the Friday immediately before Catholic Easter Sunday.
Catholic Easter.
Orthodox Good Friday, the Friday immediately before Orthodox Easter Sunday.
Orthodox Easter.
Ramazanski bajram (known internationally as Eid al-Fitr). The principal day of Eid al-Fitr is internationally recognized as the first day of Shawwal, which is the 10th month of the Islamic Calendar and can fall in any month of the Gregorian Calendar.
Kurban bajram (known internationally as Eid al-Adha). The principal day of Eid al-Adha is internationally recognized as the 10th day of Dhu al-Hijjah, which is the 12th month of the Islamic Calendar and can fall in any month of the Gregorian Calendar.
Nov. 21: Anniversary of the Dayton Agreement.
Dec. 24 and Dec. 25: Catholic Christmas Eve and Christmas Day.

If the second day of the New Year or Labor Day holidays occurs on Sunday, it is moved to the following Monday in Republika Srpska.

Except for the Good Friday holidays, all Republika Srpska religious holidays are celebrated for two days. Employees that are Catholic, Muslim, or Orthodox are entitled to paid leave on their religion’s respective holidays. Employees are entitled to two days of paid leave and three days of unpaid leave per year to celebrate religious holidays other than the aforementioned religious holidays.

Brcko District: The only additional public holiday specified by the Brcko District for which paid leave is required is March 8, in recognition of the anniversary of the district’s establishment.

Religious holidays are also specified by the district, but are binding upon only public institutions. However, it is customary for employers in the private sector to abide by these leave provisions. Under the district’s revised labor code, effective since Jan. 1, 2020, employees are entitled to two days of paid leave to celebrate religious holidays. Previously, employees were entitled to up to four days of leave per year to celebrate religious holidays, of which two days were paid and two days were unpaid. The specified religious holidays include:

Jan. 7: Orthodox Christmas.
Catholic Easter.
Orthodox Good Friday, the Friday immediately before Orthodox Easter Sunday.
Ramazanski bajram (known internationally as Eid al-Fitr). The principal day of Eid al-Fitr is internationally recognized as the first day of Shawwal, which is the 10th month of the Islamic Calendar and can fall in any month of the Gregorian Calendar.
Kurban bajram (known internationally as Eid al-Adha). The principal day of Eid al-Adha is internationally recognized as the 10th day of Dhu al-Hijjah, which is the 12th month of the Islamic Calendar and can fall in any month of the Gregorian Calendar.
Dec. 25: Catholic Christmas.

If a holiday would occur on Sunday, it is moved to the following business day. The holiday given for Catholic Easter, while not specified as Easter Monday, therefore coincides with Easter Monday.

Wage Payment

The political entities’ tax administrations assume for reporting purposes that wage payments are made monthly. In FBiH, employees must be paid at least once every 30 days, and in the Brcko District at least once per month, but employers may determine pay periods.

Only the Federation of Bosnia and Herzegovina specifies that payments must be made in convertible marks. The federation also requires employers to provide at the time of each payment to employees payslips including the amount of income and social taxes withheld.

Bonuses and Special Benefits

None of the political entities require employers to pay bonuses to employees.

Termination Pay

In all political entities, employers are required to pay employees severance pay (otpremnia or отпремнина) if they have completed at least two years of service with the employer.

Federation of Bosnia and Herzegovina: Employers must give at least 14 days’ written notice before terminating an employee. Employees must give seven days’ notice before terminating an employment relationship. A longer period may be prescribed by a collective bargaining agreement or an employment contract, up to a maximum of one month’s notice from the employee or three months’ notice from the employer.

The amount of severance pay may be determined by a collective bargaining agreement or an employment contract, but must be between one-third and six times the employee’s average monthly salary from the last three months before termination for each year of service.

Employees are entitled to compensation for unused annual leave.

Republika Srpska: Employers must give at least 30 days’ written notice before terminating an employee. A longer notice period must be determined by the employer for employees with more experience. Employees must give 15 days’ notice before terminating an employment relationship. Employees must also be given at least one day of leave during the notice period for the purpose of finding new employment.

Brcko District: Under the district’s revised labor code, effective since Jan. 1, 2020, employers must give at least 15 days’ written notice before terminating an employee. Previously, the notice period was at least 14 days.

The minimum severance pay is one-third of the employee’s average monthly salary from the last three months before termination for each year of service.

Treatment of tax card: In the Brcko District, employers must return the employee’s tax card to the employee upon termination. A copy must be kept in the employer’s records, and the employer must give Form GIP-1022 to the employee and file it with the district within 30 days of termination.

In FBiH, the employer must notify the Tax Administration within five days of terminating an employee who is not a resident of FBiH to cancel the employee’s tax card, which may be reinstated by the employee if he or she begins work for another employer in FBiH.

FBiH employers also must provide Form GIP-1022 to employees upon termination and deregister the employee from the Unified System for the Registration, Control, and Collection of Contributions no later than the date of termination using Form JS3100, Application/Change/Cancellation of Insurance (Prijava/Promjena/Odjava osiguranja).

Workers’ Compensation

Compensation for employees temporarily unable to work because of illness or injury is governed by each political entity’s law on health insurance.

Federation of Bosnia and Herzegovina: Employees generally are entitled to 80% of their salary when temporarily unable to work, but the replacement wages cannot be less than the minimum wage. The employer must pay up to 30 days of replacement wages.

If the employee is unable to work as a result of occupational injury or disease, they are entitled to replacement wages until they are again able to work, with a maximum of 12 months of replacement wages.

Employees are entitled to 100% of their salary as replacement wages when they are unable to work because of occupational injury or disease, because of complications caused by pregnancy or childbirth, or because of organ donations.

Republika Srpska: Employees are generally entitled to a minimum of 70% and a maximum of 90% of their net wages when temporarily unable to work. The employer must pay up to 30 days of replacement wages, and after the 30-day period, the Republika Srpska Health Insurance Fund (Fond zdravstvenog osiguranja Republike Srpske, abbreviated as FZO RS, or Фонд здравственог осигурања Републике Српске, abbreviated as ФЗО РС) pays for up to 12 months after the employee was first unable to work.

If the employee is unable to work as a result of occupational injury or disease, the employer is responsible for paying all replacement wages.

Employees also are entitled to 15 days of replacement wages for care given to a sick family member under 15 years of age, or seven days of replacement wages if the family member is older than 15 years of age.

Brcko District: Employees in the district are entitled to wages lost when the employee is unable to work as a result of occupational injury or disease or because the employee is caring for a sick spouse or child. The employer must pay up to 42 days of replacement wages, and after the 42-day period the district pays for up to 12 months after the employee was first unable to work. The general benefit is 80% of the employee’s salary, but at least the minimum wage in effect, except that the benefit for occupational injury or disease is 100% of the employee’s salary.

Recordkeeping

FBiH employers are required to keep employment records showing employee data, start dates, whether the employee has an indefinite or fixed contract, the place of work, and weekly working hours. For terminated employees, the records must show the date and reason of termination and the total length of service. The required data may be kept electronically, and must be retained for at least five years.

Employers in Republika Srpska are required to keep tax-related records for five years from the due date of the tax liability to which the records correspond.

Brcko District employers must keep records required by Form OLP-1021 for at least five years.

FOREIGN WORKERS

Foreign workers are entitled to the same rights as Bosnian citizens and generally are covered by the same tax and workplace laws.

Visas: Generally, North American visitors can travel to Bosnia and Herzegovina for business and leisure for up to three months without a visa. Visitors must register with the local police station within 24 hours of arrival, but hotels are required to automatically register foreign guests.

Visitors staying for longer than three months for business purposes must apply for a temporary residence permit from the Service for Foreigners’ Affairs (Sluzba za poslove sa strancima or Служба за послове са странцима, abbreviated as SPS or СПС) at least 15 days before the initial three-month visit period expires. A temporary residence permit lasts for one year and is renewable.

Foreign workers may apply for permanent residence in Bosnia and Herzegovina after residing in the country for at least five years on temporary residence permits. Individuals applying for permanent residence are required to have knowledge of one of Bosnia and Herzegovina’s official languages.

Individuals intending to work in Bosnia and Herzegovina must have a work permit before entering the country. Work permits last for one year and may be issued upon application of the employer in Bosnia and Herzegovina to the political entity where the employer is located. The national government sets an annual quota of work permits, in which extensions of existing permits take precedence over new permits.

Blue card (plava karta): Individuals may be issued a blue card, which grants temporary residence for up to two years for the purpose of highly-qualified employment, if an employer has advertised a position in three nationwide newspapers and with the national Labor and Employment Agency (Agencija za rad i zaposljavanje Bosne i Hercegovine or Агенција за рад и запошљавање Босне и Херцеговине) for at least 30 days and if no qualified citizens of Bosnia and Herzegovina apply to fill the position. The position must require a university degree and five years’ experience and must pay a salary of at least 1.5 times the average gross annual salary in Bosnia and Herzegovina, as published by the Agency for Statistics (Agencija za statistiku Bosne i Hercegovine or Агенција за статистику Босна и Херцеговина).

Taxes: Foreign workers are subject to the same personal income tax rates as nationals of Bosnia and Herzegovina. Foreign workers performing work in the Federation of Bosnia and Herzegovina are subject to the social tax provisions of the federation. Foreign workers performing work in Republika Srpska are subject to the social tax provisions of the republic. Foreign workers performing work in the Brcko District are required to pay unemployment insurance taxes, and are required to pay health insurance taxes only if they do not have health insurance coverage in any other country or from any other institution that provides health insurance.

Wages/Payments: The political entities’ tax administrations assume for reporting purposes that wage payments are made monthly. In FBiH and the Brcko District, employees must be paid at least once every 30 days, but employers may determine pay periods.

WORKING IN THE UNITED STATES

Foreign workers from Bosnia and Herzegovina must meet general visa requirements and be certified to be employed in the U.S. General visa requirements for the U.S. are included in the separate

U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.

For tax purposes, Bosnian citizens are subject to U.S. employment-based taxation on income earned in the U.S. unless they can claim an exemption under certain tax treaty provisions or they work under specific visa types that exempt earnings from taxes.

State and local taxation of Bosnian workers also can apply, although some states within the U.S. recognize international tax treaties that can eliminate that income tax liability for foreign workers.

The U.S. labor laws apply to all workers employed and providing services in the country.

Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.

Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the

Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.

Income Taxes:

Generally, nonresidents in the U.S. who are from Bosnia and Herzegovina and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.

A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from Bosnia and Herzegovina and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c.

Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the

Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.

An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the

Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.

Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.

Tax treaties: Bosnia and Herzegovina and the U.S. have not entered into an income tax treaty.

Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a Social Security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.

Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the U.S.

Totalization Agreements: Bosnia and Herzegovina and the U.S. have not entered into a totalization agreement.

Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.

There are no particular requirements that employees be paid in U.S. dollars.

TREATY ARRANGEMENTS

Bosnia and Herzegovina has entered into more than 30 income tax treaties, but does not have a treaty with the United States. Bosnia and Herzegovina has entered into eight totalization agreements for social tax coverage purposes, but does not have an agreement with the United States.

Bosnia and Herzegovina’s tax treaties are available in

RESOURCES

All resources are in English unless otherwise noted.

General

U.S. State Department:

U.S. Relations With Bosnia and Herzegovina
International Travel Information: Bosnia and Herzegovina

U.S. Central Intelligence Agency:

The World Factbook: Bosnia and Herzegovina
The World Factbook: Languages

U.S. Department of Commerce:

Export.gov: Bosnia and Herzegovina - Market Overview
Export.gov: Bosnia and Herzegovina - Business Travel

U.S. Library of Congress:

Guide to Law Online: Bosnia and Herzegovina
Global Legal Monitor: Bosnia and Herzegovina

Taxes

Federation of Bosnia and Herzegovina

Tax Administration of the Federation of Bosnia and Herzegovina (Bosnian, Croatian, and Serbian)

Income Tax Act (Bosnian)

Income Tax Regulations (Bosnian)

Law on Tax Administration (Bosnian)

Republika Srpska

Tax Administration of Republika Srpska (Serbian)

Tax Laws and Regulations of Republika Srpska (Serbian)

Republika Srpska Public Child Protection Fund (Serbian)

Brcko District

Laws of the Brcko District (Bosnian, Croatian, and Serbian)

Brcko District Tax Administration (Bosnian, Croatian, and Serbian)

Brcko District Health Insurance Fund (Serbian)

Brcko District Employment Office (Serbian)

Compensation and Benefits

Federation of Bosnia and Herzegovina’s Federal Ministry of Health (Bosnian)

Republika Srpska Labor Laws (Serbian)

Republika Srpska 2021 Minimum Wage Increase (Serbian)

2021 Changes to Republika Srpska’s Law on Income Tax and Law on Contributions (Serbian)

Republika Srpska Health Insurance Fund (Serbian)