In order to attract foreign investment capital in 2025, IA Law Firm Bosnia presents a brief guide to investment opportunities in Bosnia and Herzegovina. Located at the crossroads of Southeastern and Southern Europe, this small but economically growing Balkan country offers rich opportunities for investment. Natural resources, a strategic geographic location, and a comprehensive legal framework make BiH an attractive destination for global investors.

Key Characteristics of Bosnia and Herzegovina

• Geography and Climate: BiH has a diverse landscape of dense forests, river systems, and a modest coastline along the Adriatic Sea, offering opportunities in forestry, hydropower, and tourism. Notably, BiH has more waterfalls than Italy, France, and Germany combined.
• Energy Potential: Bosnia and Herzegovina is over four times more energy-intensive than the EU average and has the highest energy intensity in the Western Balkans. The residential sector is responsible for the largest share of total energy consumption and has significant potential for improvements. BiH has considerable renewable energy potential, particularly in hydroelectric and wind power capacities. According to a study conducted by the German government, BiH could produce up to 2000 MW of wind energy annually, primarily in the Livno, Tomislavgrad, Mostar, and Trebinje areas. This emerging industry still faces several regulatory and financial challenges.
• Natural Resources: From coal, iron ore, lithium, and gold to abundant forests and hydropower, Bosnia and Herzegovina’s natural wealth forms the basis for industrial development.

Economic Indicators:

• Population: 3.2 million (2023)
• GDP: USD 24.24 billion (2022)
• Inflation: 7.6% (2023)
• Unemployment: 13.2% (2023)

Legal Framework and Investment Protection

BiH consists of two entities (Federation of BiH and Republika Srpska) and the Brčko District. Investors are offered a unique market with specific legislations for each entity. Key aspects include:

• Foreign investors have the same rights and obligations as residents of Bosnia and Herzegovina.
• Foreign investors can open bank accounts at any commercial bank in local or freely convertible currencies.
• Foreign investors have the right to freely employ foreign nationals, unless the laws of BiH stipulate otherwise.
• Foreign investors have the same property rights over real estate as domestic legal entities.
• Foreign investors are protected from nationalization, expropriation, requisition, and measures with the same effect; such measures can only be taken in the public interest, in accordance with applicable laws and regulations, and with payment of fair compensation.
• Foreign investors have the right to transfer profits abroad, which result from their operations in Bosnia and Herzegovina.

Foreign Investment Protection Agreements

• After 2015, with the signing of the Stabilization and Association Agreement (SAA) between the European Union (EU) and Bosnia and Herzegovina (BiH), BiH obtained candidate status for EU membership. In March 2024, the European Council decided to open accession negotiations with BiH.
• Free Trade Agreement (CEFTA) with North Macedonia, Serbia, Albania, Moldova, Montenegro, and Kosovo.
• Free Trade Agreement with EFTA countries: Switzerland, Norway, Iceland, and Liechtenstein.
• Bosnia and Herzegovina also has a signed Free Trade Agreement with Turkey, providing access to a market of 70 million people.

BiH has a preferential trading system with New Zealand, Japan, Australia, and the countries of the Eurasian Economic Union.

Bosnia and Herzegovina has signed double taxation avoidance agreements with the following countries:

Albania, Algeria, Austria, Azerbaijan, Belgium, Montenegro, Czech Republic, Finland, France, Greece, Croatia, Netherlands, Iran, Ireland, Italy, Jordan, Kuwait, Qatar, China, Cyprus, Hungary, Malaysia, North Macedonia, Moldova, Norway, Germany, Pakistan, Poland, Romania, Slovakia, Slovenia, Serbia, Spain, Sweden, Sri Lanka, Turkey, UAE, the UK, and Northern Ireland.

Given these relationships, establishing a business in BiH presents an opportunity to export to a market of nearly 600 million people, without paying customs duties.

Taxes and Incentives:

• Corporate Income Tax: 10%
• VAT: 17%
• Free trade zones offer VAT exemptions and simplified business operations.

Contributions:

• Federation of BiH: 31% of gross salary.
• Republika Srpska: 31% of gross salary.
• Brčko District: 32% of gross salary.

Labor Market and Employment

Legal regulations allow the employment of foreigners with the necessary permits.

Tax incentives are available for companies employing BiH nationals.

A detailed overview of investment opportunities in Bosnia and Herzegovina can be found in the brochure prepared by IA Law Firm Bosnia. The brochure can be requested via info@ia-lawfirm.com.