Bosnia expat tax 2026: two systems and rates

Bosnia and Herzegovina doesn't have one income tax system. It has three. The Federation of Bosnia and Herzegovina and Republika Srpska each have their own income tax and social security laws, and Brčko District has a third set. Where you live decides which one applies to you.

This guide covers personal tax for people moving to or living in Bosnia and Herzegovina in 2026. The tax year is the calendar year. Our ratings use the Federation's rules, which cover Sarajevo, Mostar, Tuzla and Zenica, and we show how Republika Srpska compares.

The key question is simple. Will you earn a salary, or live on pensions and investments? Salaries carry heavy contributions in both entities. Pensions, dividends and share gains are largely untaxed in the Federation.

What's changed: from 1 July 2025 the Federation cut employer contributions from 10.5% to 5% and self-employed contributions from 41.5% to 36%. The 31% that employees pay from their own salary didn't change. The Federation's minimum wage for 2026 is KM 1,027 net a month. In Republika Srpska, amendments to the income tax and contributions laws were published in Official Gazette 114/2025 and apply from 1 January 2026.

📋 Bosnia and Herzegovina tax at a glance for 2026

Bosnia's currency, the convertible mark (KM or BAM), is fixed to the euro at KM 1.95583. We use €87,000 (KM 170,157) for US$100k, as in our other European guides. At the Central Bank's rate of 17 October 2026, US$1 is KM 1.738052, so US$100k is about KM 173,805.

👉 Central Bank of Bosnia and Herzegovina: exchange rate list

Two entities, two tax systems

Why does it matter which part of Bosnia you live in? Because income tax and contributions are set by the entities, not the state. The state handles VAT, customs and the double tax treaties.

Image 1 — one country, two tax systems

• Federation of Bosnia and Herzegovina: a flat 10% income tax on employment, self-employment, rent and some interest. Dividends, pensions and gains on shares are outside the tax. Employees pay 31% contributions with no cap.

• Republika Srpska: 8% on salaries, 10% on self-employed income and 13% on capital income and capital gains. Contributions total 31% of the gross salary: 18.5% pension, 10.2% health, 1.7% child protection and 0.6% unemployment.

• Brčko District: its own income tax law and contribution rules. If you plan to live there, check them with the Brčko Tax Administration.

Each entity taxes its residents on worldwide income and gives a credit for tax paid abroad or in another part of Bosnia, capped at its own tax on the same income.

👉 Tax Administration of the Federation: Income Tax Law, consolidated text (in Bosnian)

👉 Invest Srpska (Government of Republika Srpska): taxes and contributions in 2026

When you become tax resident

In the Federation, you're resident if either test is met:

• you have your domicile (prebivalište) in the Federation

• you stay in the Federation for 183 days or more in the tax year, continuously or with breaks

Residents are taxed on worldwide income. Non-residents pay Federation tax only on certain income from the Federation, such as pay for work done there.

Republika Srpska's law has a similar 183-day test, but it counts the days over any 12-month period that starts or ends in the tax year. It can also treat you as resident if you have a permanent home there and your centre of vital interests, for example through a work permit or a marriage to a Bosnian citizen. If you split your time between the entities, check with both tax administrations which one counts you as resident.

Leaving is straightforward. Once you no longer have a home in the entity and spend fewer than 183 days there, you stop being resident. We found no exit tax for individuals in either entity.

👉 Tax Administration of the Federation: rulebook on the Income Tax Law, consolidated to 2025 (in Bosnian)

Income tax rates for 2026

Bosnia and Herzegovina income tax rates for 2026

Source: FBiH Income Tax Law, articles 2, 5, 6, 9, 11, 20, 22 and 24; FBiH Law on Contributions, article 10; Invest Srpska, taxes and contributions 2026.

In the Federation, the personal allowance is KM 3,600 a year, given as KM 300 a month through your tax card. You get extra allowances for a dependent spouse and children: KM 150 a month for a spouse or the first child, KM 210 for the second child and KM 270 for each further child. Without a tax card, your employer deducts 10% with no allowance.

Worked example: the Federation

• You're single, live in Sarajevo and earn KM 170,157 (about US$100k) from a Federation employer in 2026.

• You pay 31% contributions on your gross salary: 17% pension, 12.5% health and 1.5% unemployment. That's KM 52,749.

• Contributions and the KM 3,600 allowance are deducted, leaving taxable income of KM 113,808. Income tax at 10% is KM 11,381.

Your all-in bill is about KM 64,130, or 37.7% of your salary. Your employer pays another 5% on top (KM 8,508), which isn't counted in our rating.

The same salary in Republika Srpska costs roughly 36% to 38%. The tax rate is lower, at 8%, but contributions are also 31% of gross pay.

👉 Tax Administration of the Federation: Law on Contributions, consolidated text (in Bosnian)

Freelancing in Bosnia and Herzegovina

In the Federation, self-employed people pay 10% income tax on their profit, which is business income minus business expenses on a cash basis. Smaller businesses that aren't VAT registered can apply for a fixed flat-rate (paušal) amount set by the Ministry of Finance instead.

Contributions work differently from tax. They aren't charged on your profit. Since 1 July 2025 you pay 36% (19.5% pension, 14.5% health and 2% unemployment) on a fixed monthly base: the average gross wage in the Federation multiplied by a coefficient. The coefficient is 1.1 for free professions that keep books and 0.65 for crafts that keep books. The average wage is the January to September figure for the previous year.

That fixed base is why freelancing in the Federation works well at higher incomes. On US$100k (KM 170,157) of profit, using the latest official average gross wage of KM 2,671 (August 2026) as a guide:

• contributions are about KM 12,693 a year (36% of KM 2,938 a month)

• income tax is about KM 15,386, after contributions and the personal allowance

That's about 16.5% all-in. The 2026 base uses the lower January to September 2025 average, so the real figure is likely a little less.

To work for yourself in Bosnia as a foreigner, you need temporary residence on a ground that allows it, so check the permit side before you register.

👉 Government of the Federation: 2025 amendments to the Law on Contributions (in Bosnian)

👉 Institute for Statistics of the Federation: average gross wage (in Bosnian)

Crypto, investments and pensions

How is crypto taxed in Bosnia and Herzegovina? Neither entity has a specific crypto rule, and we found no official guidance. In the Federation, the income tax law lists the kinds of income that are taxed, and gains on crypto, shares and other movable assets aren't among them. Only property sold within three years is taxed as a gain. So a gain on crypto you've held is untaxed by default. If you trade often, the Tax Administration could treat it as a business, taxed at 10% with contributions.

Investment income is light in the Federation:

• Dividends: profit distributions from companies are not income.

• Interest: interest on bank and savings deposits and on government bonds is exempt. Interest on loans is taxed at 10% by withholding, as a final tax.

• Gains on shares and securities: not taxed.

• Property: a gain on selling property is taxed at 10%, unless you've owned it for more than three years or it was your home.

On our US$1m portfolio example, with 4% income and 4% gains, you pay nothing in the Federation. Dividends from abroad may still carry withholding tax in the paying country.

Pensions are the other good news. The Federation's law says a resident's pension isn't income, whether it's paid from abroad or from Bosnia. Republika Srpska taxes capital gains, including gains on shares, at 13%, so investors usually do better in the Federation.

There's no wealth tax in either entity. In the Federation, inheritances and gifts are taxed under separate federal or cantonal laws, not income tax, so the rates and exemptions depend on the canton. Check the canton's rules before you plan around them.

Social security

Social security is where Bosnia gets expensive. In the Federation, contributions are split like this from 1 July 2025:

• Employees: 17% pension, 12.5% health and 1.5% unemployment, so 31% of gross pay, deducted from your salary.

• Employers: 2.5% pension, 2% health and 0.5% unemployment, so 5% on top.

• Self-employed: 19.5% pension, 14.5% health and 2% unemployment, so 36% on a fixed base.

There's no ceiling on employee contributions, so the 31% applies to every mark you earn. The base can't be lower than the minimum wage.

Foreigners working in the Federation pay contributions too, unless an international agreement says otherwise. If you're posted from a country with a social security agreement, you may be able to stay in your home scheme.

Double tax treaties

Does Bosnia and Herzegovina have double tax treaties? Yes. The Ministry of Finance and Treasury lists agreements in force with 38 countries, including the UK, Germany, Austria, Croatia, Slovenia, Serbia, Montenegro, the Netherlands, Ireland, Italy, France, Turkey, the UAE and Qatar. Some are former Yugoslav treaties that still apply. There's no treaty with the United States or Switzerland on the list.

👉 Ministry of Finance and Treasury: double tax agreements in force (in Bosnian)

Staying long term: no nomad visa

Bosnia and Herzegovina doesn't have a digital nomad visa. If your nationality can travel visa free, you can stay up to 90 days in six months from your first entry.

For longer stays you need temporary residence. The grounds include work with a work permit, family reunification, marriage to a Bosnian citizen, study, and owning property in Bosnia. A permit is issued for up to one year at a time, and the first application is usually made at a Bosnian embassy or consulate abroad. Visa-free nationals can apply from inside the country. After five years of continuous temporary residence you can apply for permanent residence.

Once you're resident in an entity, you're taxed there on your worldwide income under the normal rules.

👉 Service for Foreigners' Affairs: stay of foreigners in Bosnia and Herzegovina

Who is Bosnia and Herzegovina good for?

How does Bosnia compare for different kinds of mover? Ratings are relative to the 150+ countries TaxPilot covers, based on the Federation's rules for the 2026 tax year and the all-in cost including contributions.

☑️ Who is Bosnia and Herzegovina good for? Tax ratings for expats in 2026

Filing and deadlines

Employees in the Federation have tax and contributions deducted by their employer each month. If you work for one employer and have no other income, you usually don't need to file an annual return. Your employer gives you an annual statement by the end of February.

If you're self-employed, have income from abroad or more than one source, you file the annual income tax return (form GPD-1051) by 31 March 2027 for the 2026 tax year. Republika Srpska has its own forms and deadlines, set by its Tax Administration.

👉 Tax Administration of Republika Srpska: income tax laws and amendments (in Serbian)

Frequently asked questions

Does Bosnia and Herzegovina have one income tax?

No. The Federation of Bosnia and Herzegovina and Republika Srpska each have their own income tax and contributions laws, and Brčko District has its own. The Federation charges a flat 10%; Republika Srpska charges 8% on salaries, 10% on self-employed income and 13% on capital income and gains.

What are the income tax rates in the Federation of BiH in 2026?

A flat 10% on salaries, self-employed profit, rent and some interest, with a personal allowance of KM 3,600 a year. Employees also pay 31% contributions on their gross salary with no cap, which is deducted before the tax is worked out.

When do I become tax resident in Bosnia and Herzegovina?

In the Federation, you're resident if your domicile is there or you stay 183 days or more in the tax year. Republika Srpska counts 183 days over any 12-month period and can also look at your permanent home and centre of interests. Residents are taxed on worldwide income.

Are foreign pensions taxed in Bosnia and Herzegovina?

Not in the Federation. Its income tax law says a resident's pension isn't income, whether it's paid from abroad or from Bosnia. A treaty may still let the paying country tax a government pension.

Are dividends and crypto gains taxed in the Federation of BiH?

Dividends are not income, and the law doesn't list gains on shares, securities or crypto as taxable income, so they're untaxed by default. There's no official crypto guidance, and frequent trading could be treated as a business.

Does Bosnia and Herzegovina have a digital nomad visa?

No. Many nationalities can stay 90 days in six months visa free. Longer stays need temporary residence on a ground such as work, family, study or owning property, issued for up to one year at a time.

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