Please be kindly informed that the Double Tax Treaty (DTT) between Bosnia and Herzegovina and Romania, signed on 06 December 2016 and ratified on 27 June 2018, became effective as of 1 January 2019. The agreement is applicable to the income tax and personal income tax.
The new DTT replaces the DTT taken over from the former Socialist Federal Republic of Yugoslavia (SFRY) which ceased to be in force.
According to the new DTT, dividends and interest income can be subject to withholding tax in the country of residence of either the issuer or the beneficial owner. If the withholding tax is applied in the country of residence of the beneficial owner, the maximum applicable tax rates are as follows:
Dividends:
- 5% if the beneficial owner is a non-resident company with minimum share of 25%
- 10% for all other beneficial owners
Interest Income:
- 7% for all beneficial owners
Asset income:
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Income arising from the sale of securities is only taxable in the country of residence of the beneficial owner
If otherwise is not stipulated by respective DTTs, the following withholding tax rates applicable in Bosnia and Herzegovina are as follows:
Federation of Bosnia and Herzegovina:
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5% on dividends received by non-resident legal entities
-
10% on difference between the selling price and the purchase value of shares
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10% on interest income arising from corporate bonds received by non-resident legal entities
Republic of Srpska:
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10% on dividends received by non-resident legal entities
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10% on interest income arising from corporate bonds received by non-resident legal entities
Dividend income received by private persons as well as interest income arising from government bonds are not subject to withholding tax in Bosnia and Herzegovina
Impact on investors: The Double Taxation Treaty between Bosnia and Herzegovina and Romania entered into force on 01 January 2019. The agreement is applicable to the income tax and personal income tax.