On June 27 2017, the Prime Minister of Bosnia and
Herzegovina adopted a decision ratifying the income tax treaty
between Bosnia and Herzegovina and Romania, which was signed on
December 6 2016. When it becomes effective (pending Romania's
ratification), the treaty will replace the former
Yugoslavia–Romania income and capital tax treaty of
1986.
The new treaty provides for the following withholding tax
reliefs:
- Dividends may be taxed up to 5% of the
gross amount paid in cases of participations exceeding 25% in
the distributing entity, or at a 10% rate in all other
cases;
- The interest withholding tax rate is
limited to 7% (previously 7.5%) of the interest income. Full
relief may be available in cases of a government authority
beneficiary; and
- The new treaty defines a 5% withholding
tax on royalties (previously 10%).
The updated treaty is expected to enable faster and easier
flow of capital, goods, services and knowledge, and to improve
both tax compliance and trade exchange between the countries,
which amounted to €150 million ($178 million) in 2016.
Stevo Tadic (stevo.tadic@eurofast.eu),
Banja Luka/Sarajevo
Eurofast Global, Bosnia and Herzegovina
Tel: +387 51 961 610
Website: www.eurofast.eu