Real estate transaction costs and taxes in Bosnia and Herzegovina

1. Due diligence costs for the purchase of real estate

Cost

Variable

VAT

Nil

1.2 Utility search (each service)

Cost

Variable

VAT

Nil

Cost

FBiH: Variable, fee depend on competent court.

RS: Approx. EUR 7.5. per excerpt page for a possession deed or per excerpt for ownership deed.

FBiH/RS: No charge for using the unofficial online database, however with limited data. 

VAT

Nil

1.4 Company search, per company

Cost

FBIH: Variable, fee depend on competent court.

RS: Approx. EUR 5 per extract.

FBiH/RS: No charge for using the unofficial online database, however with limited data.

VAT

Nil

1.5 Survey/Valuation fee, approx

Cost

Negotiable

VAT

17%

1.6 Phase 1 Environmental survey

Cost

Negotiable

VAT

17%

2. Costs associated with a contract for purchase of real estate and registering title

2.1 VAT on price

Cost

Not paid, except on first transfer of the right of ownership or the right of disposal of the newly built real-estate.

VAT

17%

2.2 Transfer duty

Cost

FBiH: 5% of the market value of the real estate as estimated by the municipality’s commission; RS: No real estate transfer tax, but annual property tax on real estate is up to 0.20% of the appraised market value of the real estate by the municipalities and city administrations. For RE wherein the manufacturing is performed, the rate of annual RE tax is up to 0.10% of the annual appraised market value of the real estate by the municipalities and city administrations. Law stipulates that municipalities and city administrations prescribe the prior mentioned tax rates.

3. Tax or duty on the acquisition of shares in a company owning real estate

In FBiH share transfer agreement and changes on internal company’s act/acts, are subject of notarization or signature verification, depending of the discretion of competent court.
In RS share transfer agreement and changes on internal company’s act/acts are subject of notarization or signature verification, depending of the amount of share capital and/or number of company’s shareholders.

4. Capital gain taxation on future disposal of real estate or shares in a company owning real estate

4.1 Tax on capital gains on the disposal of the real estate itself

In FBiH The income generated by an individual from sale of property is taxed at 10%, however the sale of real estate will not be subject of the taxation in case when the real estate is used for residing of tax payer and/or his dependants in family, nor is the subject of taxation any income generated from sale of real estate 3 years after the real estate was acquired.
In RS the subject of taxation is capital gains, generated by a natural person, represented as positive difference between the sale price and acquiring price of the real estate. In both RS and FBiH, the capital gains generated by a legal person from disposal of real estate will be taxed at 10%.

4.2 Tax on capital gains on the disposal of shares in a company owning real estate

In FBiH – As for individuals, the capital gains on disposal of shares in a company are taxed at 10%. Transactions of legal persons are considered proceeds treated as income subject to corporate profit tax of 10%.
In RS foreign legal persons realising profits from real estate in RS, lease or other given rights of use of real estate, or through sale of real estate or sale of shares in a company whose most value is in a real-estate in RS, pays the corporate profit tax of 10%. As for local persons, in RS provisions are same as in FBiH. As for individuals, the capital gains on disposal of shares in a company are taxed at 10%.

Portrait ofIndir Osmić
Indir Osmić
Managing Partner
Sarajevo
Portrait ofNedžida Salihović-Whalen
Nedžida Salihović-Whalen
Partner
Sarajevo