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Bosnia VAT Guide 2026

Value Added Tax (VAT) in Bosnia and Herzegovina is administered at the state level by the Indirect Taxation Authority (ITA). The standard VAT rate is 17%, with a 0% rate for exports of goods and certain international services. The registration threshold is BAM 50,000 in annual turnover. VAT returns are filed monthly or quarterly depending on turnover. Bosnia's VAT law is aligned with EU VAT principles as part of the country's EU accession process.

Overview — VAT in Bosnia and Herzegovina

VAT was introduced in Bosnia and Herzegovina in 2006, replacing the previous cascade sales tax system. The VAT Law is harmonised across both entities and is administered centrally by the Indirect Taxation Authority (ITA), headquartered in Banja Luka. The standard rate of 17% applies to most supplies of goods and services. Unlike many EU countries, Bosnia does not have a reduced VAT rate for specific goods. The 0% rate applies to exports, international transport, and certain supplies related to international trade. Businesses with annual turnover exceeding BAM 50,000 must register for VAT. The tax year is the calendar year.

VAT Rate Structure

Bosnia maintains a simple two-rate VAT structure:

  • Standard rate — 17% on most goods and services
  • Zero rate (0%) — exports of goods, international transport, supplies to diplomatic missions, and certain international services

There is no reduced rate for food, children's clothing, or other essentials. Certain supplies are exempt from VAT without credit for input VAT, including financial services (insurance, banking), education, healthcare, and real estate transactions (rental of residential property). Imported goods are subject to VAT at the standard rate at the border.

Registration Threshold — BAM 50,000

Businesses whose annual turnover exceeds BAM 50,000 must register for VAT with the ITA. Registration is done through the ITA's online portal. Once registered, the business must issue VAT invoices showing the VAT amount separately. Businesses below the threshold may voluntarily register for VAT, which allows them to reclaim input VAT on their purchases. Voluntary registration may be beneficial for businesses that deal primarily with VAT-registered customers. Non-resident businesses making taxable supplies in Bosnia must also register for VAT, regardless of turnover.

VAT Filing & Payment

VAT-registered businesses must file periodic returns with the ITA. The filing frequency depends on turnover:

  • Monthly — for businesses with annual turnover exceeding BAM 500,000 (return due by the 10th of the following month)
  • Quarterly — for businesses with turnover between BAM 50,000 and BAM 500,000 (return due by the 10th of the month following the quarter)

The VAT return reports output VAT on sales, input VAT on purchases, and the net amount payable or refundable. Payment is due at the time of filing. Late filing attracts penalties of up to BAM 5,000 plus interest. The ITA conducts audits and may impose additional penalties for non-compliance.

Input VAT Recovery

VAT-registered businesses may recover input VAT on goods and services used for taxable supplies. Input VAT is recovered by deducting it from output VAT in the periodic return. If input VAT exceeds output VAT in a given period, the excess may be carried forward to the next period or refunded subject to ITA verification. Certain expenses do not qualify for input VAT recovery, including entertainment expenses, passenger cars (limited recovery), and goods used for exempt supplies. The general rule is that input VAT is recoverable if the expense is directly related to taxable business activities.

FAQs

Do I need to register for VAT if I sell only to consumers?

Yes, if your annual turnover exceeds BAM 50,000, you must register regardless of your customer type. Sales to consumers are subject to VAT at 17%.

Can I recover VAT on my business car?

Input VAT on passenger cars is generally not recoverable unless the car is used exclusively for business purposes (e.g., taxi, rental, driving school). Partial recovery may be available for mixed-use vehicles.

What is the penalty for late VAT filing?

Late filing attracts a penalty ranging from BAM 500 to BAM 5,000, plus interest at the statutory rate (currently ~0.03% per day) on any unpaid VAT.

Disclaimer

This guide provides general information about Bosnian VAT for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Bosnian tax advisor or the Indirect Taxation Authority for advice specific to your situation. InvestmentKit does not provide tax advice.