Tax protection for BiH citizens working abroad

Author: Azur Prnjavorac, attorney at law · Last updated: 5 September 2026

You work for a foreign employer, you have been out of Bosnia and Herzegovina for years, and your pay arrives in an account opened in BiH. Then comes a summons from the Tax Administration of the Federation of BiH and an assessment of income tax and contributions for a period in which you were not even in the country. Cases like these are not resolved by arguing about fairness but by proving one legal fact: that in the disputed tax period you were not a tax resident.

Resident or non-resident: what the tax really turns on

The tax liability of a natural person in Bosnia and Herzegovina does not depend on citizenship, on place of birth or on the bank holding the account. It depends solely on tax residence in the particular tax period. A resident is taxed on the worldwide income principle, and therefore on income earned outside the country as well. A non-resident answers only for income earned in the territory of the entity or the district.

In the Federation of BiH the status is governed by Article 2 of the Law on Income Tax and set out in detail in the Rulebook on tax residence. Under Article 4 of the Rulebook, a resident is a person who has a registered residence in the territory of the Federation, or who stays for 183 days or more in the tax period, or who has a registered residence in the Federation and, on the basis of employment outside BiH, receives payments from the federal or the state budget.

A non-resident is a person who has neither a registered residence nor a permanent abode in the Federation, or who in the tax period stays for less than 183 days. The practical difficulty is that a great many of our clients in the diaspora never deregistered their residence in BiH, so formally they still appear as residents even though every real tie of their life is in another state. It is precisely that gap between the formal and the actual position that most of these proceedings are about.

The three tests the Tax Administration applies

Article 22(2) of the Rulebook on tax residence lists the tests by which the Tax Administration establishes residence. They apply in this order, because Article 23(6) provides that the centre of vital interests test is not applied where the status has already been established by the permanent home test, and Article 24(7) points to the habitual abode test only where the centre of vital interests cannot be determined.

The permanent home test

The primary test. Where a person has a permanent home both in the Federation and abroad, the home is taken to be in the state where the family resides. For a person living alone, what counts is the place from which they predominantly leave for work or in which they predominantly stay. If the other state does not regard that person as its own tax resident, the permanent home is taken to be in the Federation.

The centre of vital interests test

If the first test gives no answer, the residential ties with each state are weighed. The Rulebook treats income, a spouse or unmarried partner and close family members as primary ties. Secondary ties are considered together and take in real property and a vehicle, memberships of associations, bank accounts and savings, a work permit and migrant status, compulsory health insurance and unemployment insurance, a driving licence and vehicle registration. A single secondary tie is not by itself enough to keep a person a resident.

The habitual abode test

The final test. If a person leaves the Federation but keeps a place of abode, that place is treated as the habitual abode. If the property has been let to a third party on market terms, the Tax Administration may find that it is no longer a significant residential tie. If a spouse or unmarried partner stays in the Federation, the person who left is taken still to have a habitual abode in the Federation, except where the partners were already living apart before the departure because the marriage had broken down.

The 183-day rule and how the days are actually counted

Article 10 of the Rulebook is precise: only days of physical presence count, whatever the reason for the stay, and both the day of arrival and the day of departure go into the total. Full days spent outside the country, on holiday or on a business trip, do not count. The illustration in the rule itself: someone who stays in BiH from 1 January to 1 July, that is 182 days, and then returns for one more day on 31 December, is treated as a resident for the whole year.

The tax period is the calendar year, but it may be shorter where in the course of the same year a person moves from resident to non-resident status or the other way round. Rotations of a few months, of the kind usual on ships, on platforms and in international missions, therefore have to be reconstructed day by day rather than estimated year by year.

The Federation of BiH, Republika Srpska and the Brcko District

Income tax in BiH is not governed by a single statute. Each entity and the Brcko District has its own law, so the first thing to establish is which rules apply and which authority has competence.

• Federation of BiH: the Law on Income Tax of the FBiH and the Rulebook on its application; the procedure is conducted by the Tax Administration of the Federation of BiH
• Republika Srpska: the Law on Income Tax (Official Gazette of Republika Srpska, no. 60/15 as amended), whose Article 6 treats as a resident a person with a registered residence in RS, a person who stays for 183 days or more in a period of twelve months, and a person who has a permanent home and a centre of vital interests in RS
• Brcko District of BiH: the Law on Income Tax of the Brcko District, with its own authority and its own time limits

For a person with a registered residence in one entity and an account or property in the other, this division can lead to duplicate summonses and parallel inspections.

The certificate of non-residence, the forms and the procedure before the Tax Administration

It is the Tax Administration that decides whether someone is a resident or a non-resident. The Rulebook also prescribes the forms, so the procedure runs on documents rather than on free-form correspondence.

1. A request for a certificate of residence of natural persons is filed on form ZCOR-101, which must state the double taxation treaty, the purpose and the tax period.
2. The certificate of residence is issued on form COR-102, and the certificate of taxable income on forms CTP-106 and CTP-107.
3. Where the facts are in dispute, the questionnaire for establishing residence (form UCOR-105) is completed, accompanied by evidence of the stay and of ties with the other state.
4. For a person asking to be treated as a non-resident, a certificate of non-residence of natural persons, form CON-108, is issued.
5. If even the tests do not resolve dual residence, the Tax Administration opens a mutual agreement procedure through the Federal Ministry of Finance. Until that procedure ends the person is treated as a resident, so any refund of tax is dealt with afterwards, by a separate decision.

Double taxation treaties take precedence

Article 28 of the Rulebook on tax residence is explicit: where residence is governed differently in a double taxation treaty than under domestic rules, the provisions of the treaty apply. Bosnia and Herzegovina applies such treaties with more than 35 states, among them Germany, Austria, Slovenia, Croatia, Poland, the Netherlands, Qatar and the United Arab Emirates.

These treaties divide the right to tax between the state of residence and the state of source, and for income from employment they as a rule give it to the state where the work is actually performed. Because these cases almost always straddle two legal systems, our page on international private law is also relevant.

Contributions for pension, health and unemployment insurance

Contributions are not tied to money arriving but to the basis of insurance prescribed by the Law on Contributions. If there is no basis of insurance in the Federation and the person is compulsorily insured in the state where they work, there is no basis for charging contributions in BiH either. Bosnia and Herzegovina also has social security agreements with a number of states, whose very purpose is that the same work should not be paid for twice.

In practice the problem most often arises because an earlier registration for insurance in BiH stays active for years after the person has left, so the records show a contributor who is not in fact insured in the country. Deregistering and putting that status in order is part of the same job. On the transfer of funds itself, see our page on money transfer from Bosnia abroad.

When the record or the decision arrives: the time limits that decide

The procedure almost always begins with a record of inspection rather than with a decision. That is the stage at which wrongly established facts are still easiest to put right, and the time limit is very short.

1. An objection to the record is filed within five working days of receiving it (Article 64 of the Law on the Tax Administration of the Federation of BiH).
2. An appeal against the decision is lodged with the second-instance authority within 15 days of its delivery, unless the law provides otherwise (Article 227 of the Law on Administrative Procedure of the Federation of BiH).
3. An action in an administrative dispute is brought before the competent court within 30 days of delivery of the final administrative act (Article 18 of the Law on Administrative Disputes of the Federation of BiH); the framework of that procedure is described on our page on administrative law.
4. Enforcement is tracked separately: while the time for appeal runs and until the appeal is decided, the decision as a rule cannot be enforced (Article 228 of the Law on Administrative Procedure of the Federation of BiH), but an action in an administrative dispute as a rule does not prevent enforcement (Article 17 of the Law on Administrative Disputes of the Federation of BiH), so a stay of enforcement has to be applied for separately.

What proves non-residence

Status is proved by documents, not by a statement. In these cases we most often use:

• travel documents and the record of entries and exits, air tickets, rotation schedules and employer confirmations of the place of work;
• contracts of employment or engagement with a foreign employer, including contracts with subcontractors in international missions;
• a certificate of tax residence issued by the tax authority of the other contracting state;
• evidence of compulsory or private health and pension insurance outside BiH;
• evidence of housing abroad, of registration of residence, of the children's schooling and of the family's place of residence;
• confirmations that no health or social services are being used in the Federation;
• bank documents showing that the money is a remittance of pay already taxed elsewhere and not income earned in BiH.

Whom we represent

In these cases the office represents individuals engaged in international and high-risk missions around the world, among them:

• workers in war and post-conflict zones;
• people engaged at NATO and UN bases;
• staff on oil platforms and in desert camps;
• seafarers and workers on foreign merchant and specialised vessels;
• people employed by foreign subcontractors in international security missions;
• citizens of BiH employed in the European Union, the United States and the Gulf states, in construction, healthcare, transport and the security sector;
• people with dual citizenship who have lived outside the country for decades.

What they have in common is that they spend only a few weeks a year in BiH and earn no income there, and yet an assessment is drawn up against them retroactively, on the strength of the technical payment of their pay into an account opened in the country.

What the office does in these cases

• analysis of the status under the rules of the relevant entity and under the applicable double taxation treaty;
• collecting and organising evidence of the stay, the work and the insurance outside BiH;
• requests, questionnaires and submissions before the Tax Administration, including obtaining the certificate of non-residence;
• an objection to the record, an appeal against the decision and an action in an administrative dispute;
• challenging the assessment of contributions where there is no basis of insurance in BiH;
• putting the registered residence and the insurance registration in order, so that fresh assessments do not follow;
• representation without the client coming to BiH, on a power of attorney certified with an Apostille certificate or at a diplomatic or consular mission.

A wider view of the field is on our page on tax and financial law.

Frequently asked questions

Who counts as a tax non-resident in the Federation of BiH?

Under Article 2(5) of the Law on Income Tax of the Federation of BiH and Article 4 of the Rulebook on tax residence (Official Gazette of the FBiH, no. 33/22), a non-resident is a natural person who has neither a registered residence nor a permanent abode in the territory of the Federation, or who in the tax period stays in the territory of the Federation for less than 183 days, whether continuously or with interruptions. Staying abroad is not by itself enough, however: the Tax Administration also weighs the residential ties with the Federation, above all where the family is, where the income is earned and where the person has a permanent home.

Do I have to pay tax in BiH if I work abroad?

The answer depends on tax residence, not on citizenship. A resident of the Federation of BiH is taxed on the worldwide income principle, and therefore on income earned outside BiH as well. A non-resident answers in the Federation only for income earned in the territory of the Federation. That is why in these cases the status is established first and the tax liability only afterwards. If it is established that you are a resident of the other contracting state, the double taxation treaty applies, and under Article 28 of the Rulebook on tax residence it takes precedence over domestic rules.

Does money paid from abroad into an account in BiH mean the income was earned in BiH?

It does not. The place of payment is not the place where income is earned. Income is tied to the place of work and the source, not to the bank the pay was remitted to. A technical inflow of funds into an account in BiH does not in itself create a tax liability, but in practice it very often prompts a tax inspection. That is why it is important to keep documents about the foreign employer, the place of work and the stay outside the country from the outset.

How are the 183 days of stay in BiH counted?

Under Article 10 of the Rulebook on tax residence, only days of physical presence count, whatever the reason for the stay, and both the day of arrival and the day of departure go into the total. Full days spent outside Bosnia and Herzegovina, on holiday or on a business trip, do not count. The tax period is the calendar year, running from 1 January to 31 December, though it may be shorter where in the course of the same year a person moves from resident to non-resident status or the other way round.

How is a certificate of non-residence obtained and which form is used?

The Tax Administration of the Federation of BiH decides on the status. The certificate of non-residence of natural persons is issued on form CON-108, while a certificate of residence is applied for on form ZCOR-101 and issued on form COR-102, and where necessary the questionnaire for establishing residence (form UCOR-105) is completed as well. The request must state the name of the double taxation treaty, the purpose and the tax period the certificate is sought for, otherwise the Tax Administration notifies the applicant that it cannot issue the certificate because the information is incomplete.

What if I am a resident of both BiH and the state where I work?

That is dual residence. The Tax Administration then applies three tests: the permanent home test, the centre of vital interests test and the habitual abode test (Article 22(2) of the Rulebook on tax residence). If the status cannot be established even by those tests, a mutual agreement procedure is opened through the Federal Ministry of Finance. It is important to know that while that procedure runs the Tax Administration treats you as a resident, so any refund of tax is dealt with afterwards, by a separate decision.

Do I have to pay contributions in BiH if I am insured abroad?

In the Federation of BiH contributions are not tied to money arriving but to the basis of insurance prescribed by the Law on Contributions. If you have no basis of insurance in the Federation and you are compulsorily insured in the state where you work, there is no basis for charging contributions for pension, health and unemployment insurance either. Bosnia and Herzegovina also has social security agreements with a number of states, whose very purpose is that the same work should not be paid for twice. Every case still calls for the particular basis to be checked, because an earlier registration for insurance in BiH often stays active for years after a person has gone abroad.

A record of tax inspection has arrived: how long do I have?

An objection to a record of inspection is filed within five working days of the day the record is received (Article 64 of the Law on the Tax Administration of the Federation of BiH). That is the shortest and in practice the most important time limit in the whole procedure, because at that stage wrongly established facts are still easiest to correct. After the record a decision is issued, against which an appeal is lodged within 15 days of delivery unless the law provides otherwise (Article 227 of the Law on Administrative Procedure of the Federation of BiH), and against a final decision an action in an administrative dispute is brought within 30 days (Article 18 of the Law on Administrative Disputes of the Federation of BiH).

Do the rules differ in Republika Srpska and the Brcko District?

They do, because income tax is regulated at the level of the entities and the district. In Republika Srpska residence is governed by Article 6 of the Law on Income Tax (Official Gazette of Republika Srpska, no. 60/15 as amended): a resident is a person who has a registered residence in Republika Srpska, or who stays for 183 days or more in a period of twelve months, or who has a permanent home and a centre of vital interests there. The Brcko District applies its own Law on Income Tax. The first question in every case is therefore which rules apply, because the competent authority and the time limits follow from that.

Can a lawyer conduct the procedure without my coming to Bosnia and Herzegovina?

Yes. The power of attorney is signed before a diplomatic or consular mission of Bosnia and Herzegovina or before a foreign notary with an Apostille, and everything after that runs electronically. Clients in the diaspora usually do not travel to the country in these cases, while the office takes over the drafting of submissions, representation before the Tax Administration and, where needed, the action in an administrative dispute.