As with most laws, taxation of real estate in Bosnia and Herzegovina (B&H) is to be considered from two different aspects; the legislation of the Federation of Bosnia & Herzegovina (FBiH) and the legislation of Republika Srpska (RS).
Acquisition of real estate in FB&H is subject to a transfer tax at the rate of 5% (except for the tax rate at 8% in Zenica-Doboj canton). The taxpayer of the real estate transfer tax (the seller or the buyer) depends on the canton where the real estate is located. In RS, acquisition of real estate is subject to 3% real estate transfer tax where a tax base is determined by the municipal authority and the seller is considered to be the taxpayer.
In general, a tax obligation for a real estate transfer tax arises at the moment of the purchase agreement conclusion. The tax application has to be submitted to the tax authority within 15 days in FBiH and 10 days in RS from the day of conclusion of a real estate purchase agreement.
Immovable property tax in FB&H is regulated by the relevant cantonal tax authority, which determines the tax rate based on the immovable property market value. On the other hand, in RS the tax rate for immovable property varies from 0.05% to 0.5% of the immovable property’s market value, which is calculated and paid annually.
In addition, the inheritance and gift taxes in FB&H are determined at the cantonal level. For example, in Sarajevo the tax rate is 5%, in Tuzla 3% on inheritance and 2% on gifts. Nevertheless family members are excluded by fulfilling certain conditions. In RS, inheritance and gift tax rates are 3% of the immovable property market value.
Also, it is worth mentioning that capital gains are generally taxed as a profit at the rate of 10%.
Non-residents, either physical persons or legal entities, can claim all property rights including possession of real estate, in the same manner as the domestic residents on the entire territory of B&H (FB&H and RS). Therefore, foreign investors are given full legal protection and undisturbed transfer abroad of their profits originating from investment in Bosnia and Herzegovina.
Slobodan Mihajlovic (slobodan.mihajlovic@eurofast.eu)
Eurofast Taxand, Cyprus
Sead Dado Salkovic (sead.salkovic@eurofast.eu)
Eurofast Global Banja Luka Office/B&H
Tel: +382 20 228 490
Website: www.eurofast.eu
