Doing business in Bosnia and Herzegovina

01Legal framework and the EU path

Bosnia and Herzegovina (BiH) consists of two entities, the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS), and the Brčko District. Company, registration, labour, property and direct tax law is largely made at entity level, so the applicable law depends on where the company has its seat or where the asset is located. Indirect taxation (VAT and customs) and merger control are regulated at state level. The currency is the convertible mark (KM), pegged to the euro.

The legal framework for foreign investment makes no distinction between domestic and foreign investors: a foreign investor who founds or takes part in founding a company has the same rights, obligations and status as a domestic one.

BiH has been an EU candidate since December 2022. The European Council decided on 21 March 2024 to open accession negotiations once the necessary degree of compliance with the membership criteria is achieved. The European Commission approved BiH's Reform Agenda in November 2025. As of 31 March 2026, negotiations had not formally started: the office of chief negotiator, one of the conditions, had not been established after the Constitutional Court annulled the earlier appointment decision.

02Company forms and registration: two entities and Brčko District

There is no single BiH company law. The Law on Companies of the FBiH, the Law on Companies of Republika Srpska and the Enterprises Law of the Brčko District apply, and the seat of the company decides which one governs it and which registry registers it. All three provide for general partnerships, limited partnerships, limited liability companies (d.o.o.) and joint-stock companies (a.d.).

• FBiH: notarised founding act, payment of capital, registration at the competent municipal or district commercial court (about 5 days). Minimum capital: d.o.o. KM 1,000, joint-stock company KM 50,000.
• Republika Srpska: notarised founding act, payment of capital, registration through the Agency for Intermediary, IT and Financial Services (APIF), which acts as a one-stop shop (about 3 days). Minimum capital: d.o.o. KM 1, closed joint-stock company KM 20,000, open joint-stock company KM 50,000.
• Brčko District: the registration procedure is the same as in the FBiH. Minimum capital: d.o.o. KM 2,000, joint-stock company KM 15,000.

After registration, the company opens a bank account, has a stamp made and registers with the tax administration. A foreign company can also register a subsidiary (branch) under the company law of the entity where it wants to operate.

03Acquisitions

An acquisition follows the company law of the entity where the target has its seat, and foreign buyers have the same status as domestic ones. Larger projects often involve state-owned partners. In 2022 DRG advised the Chinese company BNBM on a EUR 50 million joint venture in Republika Srpska with the Coal Mine and Thermal Power Plant Ugljevik, a subsidiary of the state-owned Elektroprivreda Republike Srpske. BNBM holds 90% and the state-owned partner 10% of the joint venture, which is to build a gypsum board factory.

Capital markets operate at entity level. In January 2018 the Republika Srpska government put minority stakes in 77 companies up for sale on the Banja Luka Stock Exchange.

Intellectual property should be reviewed in due diligence. A foreign person can apply for a trademark or industrial design in BiH, but must act through a local representative entered in the register kept by the Institute for Intellectual Property; patent applications are an exception, provided the applicant gives an address in BiH for correspondence.

Merger control may apply to the transaction. See the next chapter.

04Merger control

Concentrations are reviewed at state level by the Competition Council of Bosnia and Herzegovina (Konkurencijsko vijeće, Sarajevo). No adopted amendments to the Law on Competition were found; a working group on amendments has existed since 2020.

• Deadline: 15 days from the conclusion of the agreement or another triggering event. Implementation is prohibited until approval.
• Phase I: 30 days from the date the Council confirms that the filing is complete. Phase II: three months from the opening of the in-depth review, extendable by three months in exceptional cases.
• Phase I fee: approximately EUR 3,500 according to our 2026 guide (an older source gave EUR 2,300).
• Fines: up to 10% of total annual turnover for failure to notify and for breach of the standstill obligation. There is no simplified procedure.

05Employment and work permits for foreigners

Employment law is made separately by the FBiH, Republika Srpska and the Brčko District, so contracts, termination and social contributions depend on where the employer has its seat. Personal income tax and social contributions are also set at entity level.

A foreigner needs a work permit, issued at the employer's request by the competent body of the entity or of the Brčko District where the employer is located, for a specific post, with a maximum validity of one year. The Council of Ministers sets an annual quota of work permits divided among the FBiH, Republika Srpska and the Brčko District; for 2026 it was reported as 7,427 permits. The foreigner also needs a temporary residence permit from the Service for Foreigners' Affairs.

On 12 March 2026 the House of Representatives of the FBiH approved amendments to the Law on Employment of Foreigners that would simplify hiring in shortage occupations. Whether the amendments have been completed and published should be confirmed.

06Real estate

Property law is set separately in the FBiH, Republika Srpska and the Brčko District. In all three, a foreign person acquires ownership of real estate on the condition of reciprocity, except by inheritance. Reciprocity is presumed, and the FBiH Ministry of Justice publishes a list of countries with which there is no reciprocity, each year by 31 January at the latest.

Agricultural land is treated differently: in the FBiH and the Brčko District, foreign natural persons can acquire arable land only by inheritance, while in Republika Srpska foreign persons may own arable land, provided reciprocity is respected. A foreign investor can avoid the reciprocity question by founding a local company, which may be wholly foreign-owned, and buying the property through it.

Taxes on real estate differ by entity. A real estate transfer tax exists only in the FBiH, where it is set by the cantons, with reported rates up to 5%. Property tax rates are set by the entities and the Brčko District.

07Tax basics

Value added tax is regulated at state level and administered by the Indirect Taxation Authority. The standard rate is 17% across BiH. The consolidated text of the Law on Value Added Tax and the Authority's website give this rate.

Corporate income tax is set by each entity and by the Brčko District, and the rate is currently 10% in all three: the FBiH Law on Corporate Income Tax, the RS Law on Corporate Income Tax and the Brčko District law. In the FBiH, withholding tax is 10%, and dividends paid to non-residents are taxed at 5%, unless a tax treaty provides otherwise. In Republika Srpska the standard withholding rate is 10%.

Personal income tax, social contributions and property taxes are also entity-level matters and are outside this overview. Each entity has its own tax administration, and the Brčko District has its own Directorate for Finance.

08Data protection

BiH has a new Law on Personal Data Protection, published in the Official Gazette of BiH no. 12/25 on 28 February 2025. It entered into force on 8 March 2025 and applies from 4 October 2025, replacing the 2006 law. It follows the GDPR and Directive (EU) 2016/680 and is enforced at state level by the Personal Data Protection Agency of BiH.

The law applies to controllers outside BiH who offer goods or services to individuals in BiH or monitor their behaviour. It regulates the principles and legal bases of processing, the rights of individuals, the duties of controllers and processors, and transfers of data outside BiH.

Sources give different figures for the maximum fines, so we do not quote a figure here. Businesses that serve EU customers may also fall under the EU Data Act, as explained in our guide.

09Disputes and enforcement

Court proceedings can last several years and generate costs, so creditors often prefer a settlement. Under the FBiH Law on Civil Procedure, a judicial settlement can be concluded at any time until the proceedings end and has the force of an enforceable title. A settlement concluded before a notary can also be an enforceable title. A judicial settlement concluded in error or under coercion or fraud can be contested by a lawsuit within three months of learning the reasons and no later than five years after conclusion.

According to our 2020 analysis, the FBiH statutory default interest rate was reduced from 12% to 10% per annum, and default interest cannot exceed the principal debt. Whether the rate has changed since should be confirmed.

Intellectual property rights are enforced through judicial proceedings, including claims for damages for copyright infringement. BiH is a party to the 1958 New York Convention on foreign arbitral awards, by succession; the reservations made should be checked for each case.

10How DRG works in Bosnia and Herzegovina

DRG has a correspondent office in Bosnia and Herzegovina, established through cooperation with the Bojan Peulić Law Office from Banja Luka. Mr Peulić and his team cover the entire territory of BiH: Republika Srpska, the Federation of BiH and the Brčko District. Mr Peulić is an independent attorney in Banja Luka who cooperates with DRG in accordance with the applicable Bar rules.

In their work they can rely on the capacity, expertise and experience of DRG's main office in Belgrade, so that complex projects in BiH can be completed. Mr Peulić was part of the DRG team on the EUR 50 million BNBM joint venture in Republika Srpska.

Contact: bosnia@doklestic.law. IFLR1000 has ranked DRG in Bosnia and Herzegovina, in addition to Serbia and Montenegro.