VAT refund on the purchase of a first home in Bosnia and Herzegovina

Conditions, amount and time limits for newly built property

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

If you are planning a VAT refund on the purchase of a first home in Bosnia and Herzegovina, the phrase in practice refers to the statutory refund of VAT to the buyer of a first flat, that is, a new house or a flat in a new building. Three things matter from the outset: the right exists only for newly built property whose sale carries VAT, it is tied to a precisely prescribed floor area and a maximum amount, and it requires complete documentation and a special form. The right was introduced by Article 54a of the Law on Value Added Tax and elaborated by the new Article 105a of the Rulebook on the application of the Law on VAT (Official Gazette of BiH 45/26 of 30 June 2026), which entered into force on 8 July 2026. What follows is an overview of the conditions, the recognised area and amount, the documentation, the procedure and the time limits, together with the mistakes that most often lead to a refusal.

The VAT refund on the purchase of a first home is a tax relief by which the state returns to the buyer of a first flat or a new house the value added tax paid, on the conditions prescribed by law. The standard rate of VAT in Bosnia and Herzegovina is 17 per cent and it is contained in the price of a newly built flat bought from a developer registered for VAT, so for many buyers the refund is a significant saving. The right is exercised on request, before the Indirect Taxation Authority of BiH, and it is strictly conditional on every prescribed requirement being met, both on the buyer's side and on the seller's.

How the office works: Law Office Prnjavorac handles the purchase of a flat as a single piece of work: checking the legal status of the property and any encumbrances before signature, drafting the contract of sale and arranging its notarial processing or the certification of signatures before a notary, registering the buyer in the land register, and preparing the documentation for the request to the Indirect Taxation Authority. An overview of the service is on our page on real estate in Bosnia and Herzegovina.

The refund in key figures

Who is entitled to the VAT refund on the purchase of a first home

The refund is available to an adult natural person, a citizen of BiH with permanent registered residence in BiH, who buys a first flat whose sale is subject to the charging and payment of VAT. For the request to be well founded, the following conditions must all be met at the same time:

• apart from the flat being bought, in the seven years before the request the buyer has not owned, co-owned or jointly owned a flat, a house, an apartment or any other building intended for living in or for letting in the territory of BiH;
• the seller has declared the VAT charged in the eDeliveries system and paid it into the Single Account kept by the Indirect Taxation Authority, as part of its monthly obligations;
• the total agreed purchase price including VAT has been paid to the seller in full, into the seller's transaction account or in another manner prescribed by law;
• where the right is used for members of the family household as well, they too must not hold, and must not have held, such property in the last seven years.

New build or existing property: what the refund covers

The most common misunderstanding in practice is whether the refund applies to every purchase of a flat or of any property. It does not: the VAT refund in Bosnia and Herzegovina is tied exclusively to newly built property whose sale carries VAT. The phrase VAT refund on the purchase of a first property must therefore be read through the rules on a first flat, that is, a new house or flat that the buyer acquires for the first time. A first flat means a newly built individual residential building, a new house included, and an economically divisible unit within a newly built collective building. On the sale of older property no VAT is charged, only, where applicable, the tax on the transfer of immovable property under the rules of the entity, the canton or the Brcko District, so for existing property there is no basis for a refund. Where a unit is marketed as an apartment, the name is not decisive: the purpose of the building is. A unit recorded as a residential unit intended for living in meets the condition, whereas units of a tourism or business purpose do not fall within the definition of a first flat even though VAT is charged on them.

Flat, house or apartment: which buildings qualify

Although the Rulebook and everyday speech use the term first flat, the statutory definition is wider and covers two kinds of building. The first is a newly built individual residential building, that is, a newly built family house intended for living in. The second is an economically divisible unit within a newly built collective residential building, that is, a flat in a new block. Both are treated identically, on the same conditions and with the same limits on the recognised area and the maximum amount. What is decisive is that the property is newly built, that VAT was charged on its sale, and that the buyer is acquiring it for the first time. For buildings described in the documents as apartments, the legal purpose decides and not the name: if they are recorded as a residential unit intended for living in, they meet the condition; if they form part of a building of a tourism or business purpose, they do not fall within the definition of a first flat. If you build a house yourself, as a private individual for your own needs, there is no sale on which VAT is charged, so there is no basis for a refund either.

Recognised floor area and the maximum amount of the refund

The refund is recognised for a floor area of up to 40 m². If the buyer uses the right for members of the family household as well, the recognised area increases by 15 m² for each member. Where the flat is larger than the recognised area, the refund is proportionate, up to the amount of VAT corresponding to the recognised area. The maximum amount per request is calculated by applying the converted VAT rate of 14.5299 per cent to the figure obtained by multiplying the average price of a flat including VAT by 55 m². The relevant figure is the quarterly report of the Agency for Statistics of BiH in force on the date the contract of sale was concluded, so the maximum for that contract is fixed once and is not adjusted later. The Rulebook prescribes no fixed amount in convertible marks. By way of illustration, at the average price of BAM 3,701 per square metre from the report for the first quarter of 2026, the base for the calculation is BAM 203,555 and the maximum refund is BAM 29,576.34. That amount is the same whatever the number of members of the household.

The same average price is at the same time the upper limit of the recognised price per square metre. If the buyer paid more per square metre than the average, the refund is calculated at the average price and not at the agreed one. With the price from the first quarter of 2026 that means at most BAM 537.75 per square metre (14.5299 per cent of BAM 3,701), multiplied by the recognised area. A buyer in a more expensive location therefore does not, as a rule, recover the whole of the VAT paid even on the recognised area.

The documents required and form ZKPS

The request is filed on form ZKPS, the request of the buyer of a first flat for a VAT refund, which forms part of the Rulebook. The Rulebook prescribes thirteen attachments, submitted in the original or in a certified copy:

1. an extract from the register of births, and in addition an extract from the register of marriages where the marriage is not recorded in the extract from the register of births;
2. a certificate of citizenship and a certificate of registered residence;
3. a contract of sale of the flat processed by a notary or certified by a court;
4. the seller's tax invoice showing the VAT;
5. proof that the agreed price including VAT has been paid in full;
6. a certificate from the tax authorities of the entities and the Brcko District that you were not liable to tax in connection with such property in the last seven years;
7. a certificate from the authority competent for property law matters, issued for your place of registered residence, that apart from that flat you hold no other property in possession, ownership, co-ownership or joint ownership;
8. proof that the flat is recorded in the official records of the competent authority, in practice a land register extract;
9. a certified statement that you are buying a first flat (form IKPS) and a statement on the members of the household;
10. confirmation of the bank account into which the Indirect Taxation Authority will pay the refund, and for a spouse additional certificates so that property acquired in marriage can be checked.

How to claim the refund: step by step

The procedure runs through several steps, from checking that the conditions are met to the decision of the Indirect Taxation Authority:

1. Check the conditions. Make sure you are buying newly built property whose sale carries VAT, that you are a citizen of BiH with permanent registered residence in BiH, and that in the last seven years you have held no other property for living in.
2. Check the seller's side. Make sure the seller has declared the VAT charged in the eDeliveries system and paid it into the Single Account, and that the total price including VAT has been paid in full into the seller's account.
3. Documents and form ZKPS. Collect the prescribed attachments and complete form ZKPS, together with form IKPS and the certified statement on the members of the household. It is worth entering a contact telephone number on the form so that the Authority can reach you if the documentation needs completing or explaining.
4. File the request. File it with the competent organisational unit of the Indirect Taxation Authority at the regional centre for the registered seat of the seller of the flat.
5. The decision. Await the decision of the Authority, which is issued within six months of the day a complete request was filed.

Time limits: by when to file and when the Authority decides

The request is filed with the competent organisational unit of the Indirect Taxation Authority at the regional centre for the registered seat of the seller of the flat. After checking that the conditions are met, the Authority decides by a formal decision within six months of the day a complete request was filed. The ordinary deadline for filing is 30 June of the following year, for flats whose sale was recorded in the preceding year. For sales recorded in the transitional period, from 12 April 2025 to 8 July 2026, the deadline is six months from the entry into force of the Rulebook, that is, 8 January 2027.

Where the request is filed: the regional centres of the Indirect Taxation Authority

The request is filed with the tax department of the competent regional centre of the Indirect Taxation Authority of BiH, according to the registered seat of the seller of the flat, either by post or by handing it in at the registry. If the request is filed with a regional centre that is not competent for the seller's seat, the Authority forwards it to the competent centre through official channels, so the applicant does not have to file again.

Administrative fees are payable with the request: BAM 10.00 on the request (revenue type 722801) and BAM 20.00 on the decision (revenue type 722802), in favour of the Single Treasury Account of BiH, quoting the budget organisation code of the competent regional centre.

The ban on disposal and subsequent charging of VAT

A person granted a refund may not dispose of the flat acquired before five years have passed, counted from the day the decision on the refund was delivered. If the flat is nevertheless disposed of before that period expires, the buyer must, in the tax period of the disposal, calculate, declare and pay in a single sum VAT equal to the total refund granted, increased by the interest due. In addition, for a person within Article 54a of the Law from whom VAT is subsequently collected, the Law provides for a fine ranging from BAM 5,000 to BAM 10,000.

Citizenship and residence: can foreign nationals claim the refund

The Law and the Rulebook impose two cumulative conditions on the applicant: that the person is an adult natural person who is a citizen of Bosnia and Herzegovina, and that the person has permanent registered residence in Bosnia and Herzegovina. Both are proved with the request, by a certificate of citizenship and a certificate of registered residence. The Rulebook does not require that the residence be registered at the address of the flat being bought, nor that the buyer move into it, only that the buyer has permanent registered residence somewhere in Bosnia and Herzegovina. Anyone who does not meet both conditions has no right to the refund, however much VAT was paid on the new building.

Foreign nationals therefore cannot obtain this refund, even where they hold an approved residence permit in BiH, because they do not hold BiH citizenship. That is a separate question from the right of foreign nationals to real estate in BiH: foreign nationals may acquire property in Bosnia and Herzegovina subject to reciprocity and to statutory limits, but that purchase gives them no right to a VAT refund. In practice a foreign national may buy a new flat in BiH and pay VAT at 17 per cent, but cannot claim that amount back. There is more on this in our text on reciprocity for foreign nationals.

Citizens of BiH who also hold another citizenship meet the citizenship condition, so they may obtain the refund if they also have registered residence in BiH. Members of the diaspora who live abroad and have no registered residence in BiH will not, as a rule, meet the residence condition, so it is worth checking that status before signing a contract.

Transitional provisions: purchases before the Rulebook entered into force

For flats recorded with the competent register before the Law amending the Law on VAT (Official Gazette of BiH 20/25) entered into force, that is, before 12 April 2025, the earlier rules apply, so the VAT paid on those flats cannot be the subject of a refund. By way of exception, a buyer who through no fault of their own, because of objective circumstances, could not record the purchase of a first flat by that moment may file a request under this Rulebook. Buyers who registered a first property in their name in the transitional period, from 12 April 2025, may now file a request within six months of the entry into force of the Rulebook, that is, by 8 January 2027.

When to ask a lawyer for help

A VAT refund on the purchase of a first property in Bosnia and Herzegovina is a procedure calling for thirteen documents from several institutions, a precisely completed form ZKPS and clean proof of ownership, residence and payment of the price. The most common reasons for refusal are incomplete or inconsistent documentation, failure by the seller to declare and pay the VAT properly, and miscalculation of the recognised area and of the amount. Working across tax and financial law and real estate law, we check that the conditions are met before the request is filed, obtain and reconcile the documentation, deal with the Indirect Taxation Authority and, where necessary, lodge a legal remedy against the decision.

VAT refund for a first flat: frequently asked questions

Who is entitled to a VAT refund on the purchase of a first property in BiH?

In practice people speak of a refund on the purchase of a first property, but the legal text speaks of the buyer of a first flat. The right belongs to an adult natural person, a citizen of BiH with permanent registered residence in BiH, who buys a first flat or a new house whose sale is subject to the charging and payment of VAT, that is, newly built property. The condition is that apart from that flat or house the buyer has not, in the seven years before the request, owned, co-owned or jointly owned a flat, a house, an apartment or any other building intended for living in or for letting in the territory of BiH. The right may be extended to members of the family household on the same conditions. The legal basis is the new Article 54a of the Law on VAT and Article 105a of the Rulebook on its application.

What counts as a first flat, and does the refund cover existing property and apartments?

A first flat means a newly built individual residential building or an economically divisible unit within a newly built collective residential building in the territory of BiH, which the buyer acquires for the first time. What matters is that the property is newly built and that VAT at 17 per cent was charged on its sale. Buying existing property gives no right to a refund, because no VAT is charged on the sale of older property, only, where applicable, the tax on the transfer of immovable property under the rules of the entity, the canton or the Brcko District. For units marketed as apartments the name is not decisive but the purpose of the building is: a unit that is legally residential, a newly built residential unit intended for living in, meets the condition even if the sales material calls it an apartment. A unit forming part of a building of a tourism or business purpose, not intended for living in, does not fall within the definition of a first flat, even though VAT is charged on it. The Rulebook prescribes no special document on the purpose of the building; the purpose must follow from the contract, the documents of the building and the official records.

Does the refund cover only a flat, or a newly built house as well?

It covers a house as well. The statutory definition of a first flat takes in two kinds of building: a newly built individual residential building, that is, a newly built family house intended for living in, and an economically divisible unit, a flat, within a newly built collective building. Although the Rulebook uses the word flat, a house is treated in the same way. The condition is the same: the property must be newly built, VAT must have been charged on its sale, and the buyer must be acquiring it for the first time, with the same limits on the recognised area and the maximum amount.

Can someone who builds their own house claim the refund?

The refund covers the purchase of a newly built residential building on whose sale VAT was charged. If you build a house yourself, as a private individual for your own needs, there is no sale on which VAT is charged, so there is no VAT paid on the building that could be refunded. This refund does not cover VAT paid on building materials and services during construction. As a rule the right belongs to a person who buys a finished new flat or house from a developer registered for VAT.

How much VAT is charged on a new flat and why does that matter for the refund?

The standard rate of VAT in BiH is 17 per cent and it is contained in the price of a newly built flat bought from a developer registered for VAT. It is precisely that VAT paid which is the subject of the refund, within the limits of the recognised area and the maximum amount. On the sale of older property no VAT is paid, so there is no basis for a refund.

For what floor area is the VAT refund available?

The refund is recognised for a floor area of up to 40 m². If the buyer uses the right for members of the family household as well, the recognised area increases by 15 m² for each member. If the flat is larger than the recognised area, the refund is proportionate, up to the amount of VAT corresponding to the recognised area, according to the calculation values in the Rulebook. An area of 55 m² is used to calculate the maximum amount, and the recognised price per square metre is capped at the average price of a flat from the quarterly report.

What is the maximum amount of the refund?

The maximum per request is established by applying the converted VAT rate of 14.5299 per cent to the figure obtained by multiplying the average price of a flat including VAT by 55 m². The relevant figure is the quarterly report of the Agency for Statistics of BiH in force on the date the contract of sale was concluded, so the maximum for that contract is fixed once and is not adjusted later. The Rulebook prescribes no fixed amount in convertible marks. At the average price of BAM 3,701 per square metre from the report for the first quarter of 2026 the maximum refund is BAM 29,576.34. The buyer is refunded VAT within the limits of the recognised area, of the VAT actually paid and properly declared, and of that maximum, and the recognised price per square metre is also capped at the average price. The amount is the same whatever the number of members of the family household.

Which conditions must be met for the refund?

Besides not having held other residential property in the last seven years, the following must also be satisfied: the seller must have declared the VAT charged in the eDeliveries system and paid it into the Single Account of the Indirect Taxation Authority as part of its monthly obligations; by the time the request is filed the total agreed price including VAT must have been paid to the seller in full, into the seller's transaction account or in another manner prescribed by law; and a member of the family household, where the right is used for that member, must likewise not hold and not have held such property in the last seven years. If the seller has not properly declared and paid the VAT, the refund cannot be granted.

Which documents are needed and which form is filed?

The request is filed on form ZKPS, the request of the buyer of a first flat for a VAT refund. The Rulebook prescribes thirteen attachments in the original or in a certified copy, among them: an extract from the register of births, with an extract from the register of marriages where the marriage is not recorded in the extract from the register of births, a certificate of citizenship, a certificate of registered residence, a contract of sale processed by a notary or certified by a court, the seller's tax invoice showing the VAT, proof that the price including VAT has been paid in full, a certificate from the tax authorities and a certificate from the authority for property law matters issued for the place of registered residence showing that you hold and have held no other property, proof that the flat is recorded in the official records, in practice a land register extract, a certified statement that you are buying a first flat (form IKPS), a statement on the members of the household, and confirmation of the bank account for payment. For a spouse, additional certificates are required so that property acquired in marriage can be checked.

Who counts as a member of the family household?

A family household means the community of living, earning and spending income of the buyer of a first flat together with the buyer's spouse, children, adopted children, parents, brother or sister, and the children and adopted children of the spouse, provided they have the same place of registered residence as the buyer. For each member for whom the refund is claimed the appropriate documents and, where needed, proof of the family relationship are attached.

What if a first flat is bought jointly by several people?

If two or more natural persons buy a first flat jointly, only one of the buyers has the right to a VAT refund on the recognised area. The other buyers may obtain the refund as members of the family household, where the prescribed conditions are met.

Must I register my residence at the address of the flat I am buying?

No. The Rulebook requires the buyer to have permanent registered residence in Bosnia and Herzegovina, but does not require that residence to be registered at the address of the flat being bought, nor that the buyer move into it. The certificate of registered residence is attached whatever address in BiH it is held at, and the certificate from the authority for property law matters is issued for that existing place of residence. The only obligation after a refund is granted is the ban on disposing of the flat for five years from delivery of the decision. Take care over one point: if you use the right for members of the family household as well, they must have the same place of registered residence as you. The Rulebook requires the same place of residence rather than expressly the same house number, but members of the household must form a community of living, earning and spending income, so in practice the same address is the strongest proof of a joint household.

Are members of the diaspora and foreign nationals entitled to the refund?

The right belongs only to an adult natural person who is a citizen of BiH and has permanent registered residence in BiH. Foreign nationals have no right to this refund. Equally, citizens of BiH who live abroad and have no permanent registered residence in BiH will not, as a rule, meet the residence condition, so they cannot obtain the refund either, however much they are buying newly built property in BiH. Members of the diaspora planning a purchase should check their residence status and whether the conditions are met before signing a contract.

Can foreign nationals buy newly built property in BiH, and are they entitled to a VAT refund?

Foreign nationals may buy property in BiH, but subject to reciprocity and to statutory limits, and such a purchase gives them no right to a VAT refund. Only citizens of BiH with permanent registered residence in BiH are entitled. In practice a foreign national may buy a new flat in BiH and pay VAT at 17 per cent, but cannot claim that amount back.

Can a foreign national married to a citizen of BiH obtain the refund?

A foreign national alone has no right to the refund, having no BiH citizenship. If, however, the spouse is a citizen of BiH with registered residence in BiH and meets every condition, that spouse may obtain the refund as the buyer of a first flat, within the limits of the recognised area and the maximum amount. On a joint purchase only one buyer who meets the conditions obtains the right to the recognised area, while the prescribed conditions are checked for the members of the household. Because property acquired in marriage has to be checked, additional certificates are required for a spouse.

What if I am buying the flat from a private individual rather than a developer?

A refund is possible only where VAT was charged on the sale, which is the case where the flat is sold by a developer, that is, a person registered for VAT. If you are buying from a private individual not registered for VAT, no VAT is charged on that sale, only, where applicable, the tax on the transfer of immovable property, so there is no VAT paid that could be the subject of a refund.

Does owning a building plot exclude the right to a refund?

Under the text of the Rulebook, what is checked is that in the prescribed period the buyer has not owned, co-owned or jointly owned a flat, a house, an apartment or other buildings intended for living in or for letting. Undeveloped building land is not a building intended for living in, so owning a plot should not in itself be an obstacle to the refund. Since every case turns on the records and on the particular circumstances, a legal review before the request is filed is advisable.

To whom and by when is the request for a refund filed?

The request is filed with the competent organisational unit of the Indirect Taxation Authority at the regional centre for the registered seat of the seller of the flat. The ordinary deadline is 30 June of the following year, for flats whose sale was recorded in the preceding year in the register of the competent authority. For sales recorded in the transitional period, from 12 April 2025 to 8 July 2026, the deadline is six months from the entry into force of the Rulebook, that is, 8 January 2027.

Within what time does the Authority decide on the request?

After checking that the conditions are met, the competent organisational unit of the Indirect Taxation Authority decides on the request by a formal decision within six months of the day a complete request was filed. In the course of checking, the Authority may use data from the electronic records of the entity administrations for geodetic and property law affairs and of the Basic Court of the Brcko District of BiH.

Who has no right to a VAT refund?

The right cannot be obtained by a person who has already obtained a VAT refund as the buyer of a first flat, nor by a person in whose name a refund has already been obtained as a member of a household (that person may later obtain a refund reduced by the right already used). Nor do people have the right where any of the prescribed conditions is not met, or where the request is found to rest on fraudulent or unlawful acts. In practice buyers of existing property are excluded, because no VAT is charged on that sale, as are buyers of units that are not legally a residential building intended for living in but form part of a building of a tourism or business purpose, even though VAT is charged on them. For units marketed as apartments, their purpose and not their name is decisive: if they are recorded as a residential unit intended for living in, they do not exclude the right to a refund.

Can I sell the flat once I have obtained the refund?

You may not dispose of a flat on which a refund has been granted, whether by sale, gift or any other transfer of ownership, before five years have passed, counted from the day the decision on the refund was delivered to you. If you dispose of the flat before that period expires, you must, in the tax period of the disposal, calculate, declare and pay in a single sum VAT equal to the total refund granted, increased by the interest due.

Is the right to a VAT refund inherited?

The right to a VAT refund on the purchase of a first flat is not transferable and cannot be the subject of inheritance, as the Rulebook expressly provides. It is a personal right tied to a buyer who meets the prescribed conditions.

When did the Rulebook enter into force, and what about purchases recorded earlier?

The Rulebook entered into force on the eighth day after publication in the Official Gazette of BiH, that is, on 8 July 2026. For flats recorded with the competent register before the Law amending the Law on VAT (Official Gazette of BiH 20/25) entered into force, that is, before 12 April 2025, the earlier rules apply, so the VAT paid on those flats cannot be the subject of a refund.

I bought a flat before the Rulebook entered into force: can I still obtain the refund?

The Law amending the Law on VAT (Official Gazette of BiH 20/25) entered into force on 12 April 2025, but applies only from 8 July 2026, that is, from the entry into force of the Rulebook. For sales recorded from 12 April 2025 to 8 July 2026 the buyer has six months from 8 July 2026 to file a request, that is, until 8 January 2027. By way of exception, a buyer who through no fault of their own, because of objective circumstances, could not record the sale before the amending Law entered into force may file a request under this Rulebook. In practice, buyers who registered a first property in their name from 12 April 2025 onwards may now file a request with the documentation prepared.