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SLC-English> Company Formation in Europe> Company Formation in Bosnia and Herzegovina
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Company Formation in Bosnia and Herzegovina

Bosnia and Herzegovina has been on its way from the centrally taxed economy to the free social market economy since the declaration of independence from the former Yugoslavia. The war (1992-1995) has left the country in an uneasy situation: many factories were destroyed and in those that exists the capacity of production does not reach the output comparable with the output of the pre-war times. The infrastructure is still not renovated which is on one hand an obstacle but on the other hand offers trade opportunities.

Within the frame of the Dayton Peace Accords there were created two so-called entities, the Federation of Bosnia and Herzegovina and the Republic of Serbia. The entities have far-reaching competence in legislation, but the people in internal affairs are poorly educated. Apart from others, this is the cause why the Federation of Bosnia and Herzegovina as well as the Republic of Serbia have the same legal forms of business but presumptions for the registration of a company are different in many points. Currently existing differences in taxation successfully harmonize and already existing laws adjust and approve each other in order to create a unified inland market.

The advantage of the location of Bosnia and Herzegovina is in its central position as well as in a possibility to use the Free Trade Agreement between remaining Balkan countries (including Turkey). The stable currency, comparable high economic growth, low inflation as well as a good access to the finance - Austrian banks are powerfully represented there -create good general conditions for the investments. This is the base for the agreement related to the protection of the investments.

On the other hand there are further problems not mentioned previously; mainly dealing with the complicated structure of state administration (whole country, entities, and cantons). The official requirements are time-consuming and the competences among the whole country and the entities are not clear at times.

The processes of the foundation of companies are often slow and complicated. AHST recommends involvement of the competent lawyer´s office (documents recommended by attorneys are to be found in the attachment). Exceptional caution is required at the proprietary assurance. The state investment support gives the tax preferences for the first years (only in federation) and customs-free for the capital goods is independently delimited.

The fact is that Austria and Austrian companies in Bosnia and Herzegovina have a great reputation and the Austrians are very benevolent. Many Austrian companies employ people from Bosnia who live in Austria and in this way make first-rate contacts with Bosnia and Herzegovina.

From 1st January 2006, modern and the European Union-conformal act of legislation about value added tax is in the force, which is the same for both entities. Within the effort to become the part of the European Union, many modernizations of laws are being realized quickly.

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