1. Investigations and tax audits
    1. 1. What usually triggers a tax investigation/audit in your jurisdiction and which procedures can be used to limit or exclude a tax audit?
    2. 2. What is the general tax statute of limitations period in your jurisdiction (i.e. how far back can you be audited and reassessed before the tax administration becomes time-barred)?
    3. 3. Do the tax authorities have broad powers when they investigate or are they more limited? For example, can they operate raids, seizures, requests to third parties (like banks and employers) or any other strategies?
    4. 4. What are the rights of taxpayers and how can they defend themselves (with or without assistance) during a tax audit? Can they refuse to disclose certain information during audits (e.g. covered by confidentiality)?
    5. 5. What are possible tax penalties in your country? Are there also any payment interest and/or criminal charges? Can penalties be contested/negotiated?
  2. Administrative and Judicial Phases (first instance + appeals)
    1. 6. What are the typical steps and duration of administrative (i.e. pre-litigation before the tax administration) and judicial (i.e. before the tribunal/court system) tax litigation procedures in your jurisdiction?
    2. 7. Are there interim measures (i.e. deferral of tax payment while a dispute is pending) and/or alternative dispute resolution mechanisms?
    3. 8. Are tribunals and/or courts specialised in tax matters? Is there a formal appeal structure for tax disputes? How many levels are there (first instance, appeals, supreme court) and how long does each generally take?
  3. Trends and Tips
    1. 9. What recent hot topics and/or developments have influenced your tax dispute landscape locally?
    2. 10. In one sentence, as a takeaway, what would you recommend to parties facing a tax dispute in your country?

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Investigations and tax audits

1. What usually triggers a tax investigation/audit in your jurisdiction and which procedures can be used to limit or exclude a tax audit?

Unusual transactions and irregularities in tax returns, or delays and failures in their submission, may trigger a tax investigation or audit. There is no specific procedure available to limit or exclude the possibility of a tax audit. However, based on our experience, companies engaged in standard business activities with regular income levels – or only slight fluctuations – are generally less likely to be audited. In such cases, the tax authority’s system typically does not flag these entities for inspection, as there are no “red flags” triggered in the absence of extraordinary transactions or filings.

2. What is the general tax statute of limitations period in your jurisdiction (i.e. how far back can you be audited and reassessed before the tax administration becomes time-barred)?

The general statute of limitations for tax obligations is 5 years. However, this limitation does not apply in cases of tax evasion or fraud, or where the taxes have been incorrectly reported or not reported at all.

3. Do the tax authorities have broad powers when they investigate or are they more limited? For example, can they operate raids, seizures, requests to third parties (like banks and employers) or any other strategies?

The tax authorities have broad powers and wide discretionary rights in conducting tax inspections. They may carry out unannounced inspections (raids), seize documents or property, or request information from third parties, including banks and employers.

4. What are the rights of taxpayers and how can they defend themselves (with or without assistance) during a tax audit? Can they refuse to disclose certain information during audits (e.g. covered by confidentiality)?

Taxpayers may be assisted by legal counsel or tax advisers during a tax audit. Generally, there are no confidentiality exceptions when it comes to providing the requested information. However, the taxpayer has the right to refuse to disclose information if such disclosure could result in their criminal liability.

5. What are possible tax penalties in your country? Are there also any payment interest and/or criminal charges? Can penalties be contested/negotiated?

Penalties may be imposed in addition to the payment of any assessed additional tax liability and default interest. Tax avoidance or non-payment exceeding approximately EUR 5,000 may result in criminal charges.

Penalties can be challenged in misdemeanour proceedings. In practice, if the taxpayer is cooperative, tax inspectors are generally open to negotiating the amount of the penalty.

Administrative and Judicial Phases (first instance + appeals)

6. What are the typical steps and duration of administrative (i.e. pre-litigation before the tax administration) and judicial (i.e. before the tribunal/court system) tax litigation procedures in your jurisdiction?

Procedures differ for direct and indirect taxes.

For direct taxes, pre-litigation proceedings begin with an objection to the tax authority, followed by an appeal to the Ministry of Finance. The Ministry’s decision is final in administrative proceedings but may be challenged before the competent court. These proceedings typically take 3-5 years.

For indirect taxes, pre-litigation proceedings are handled within the Indirect Taxation Authority (ITA), with the ITA Director as the final instance. The Director’s decision may be challenged before the Court of Bosnia and Herzegovina, with proceedings usually lasting 2-4 years.

7. Are there interim measures (i.e. deferral of tax payment while a dispute is pending) and/or alternative dispute resolution mechanisms?

Interim measures are available both in administrative pre-litigation proceedings and in proceedings before the competent court. Alternative dispute resolution mechanisms, however, are not available.

8. Are tribunals and/or courts specialised in tax matters? Is there a formal appeal structure for tax disputes? How many levels are there (first instance, appeals, supreme court) and how long does each generally take?

Tax matters are handled by specialised administrative and/or misdemeanour departments. However, these departments are not exclusively focused on tax issues, and in our experience, their expertise in tax matters can be limited. Depending on the type of tax and the nature of the matter, first instance decisions may be subject to appeal or extraordinary legal remedies.

9. What recent hot topics and/or developments have influenced your tax dispute landscape locally?

Tax reform concerning income tax and social contribution laws is currently a key topic. The primary goal is to reduce the tax burden on salaries. In parallel, tax authorities have become increasingly active in auditing individuals, particularly in relation to unreported income from the grey economy and the hospitality sector.

10. In one sentence, as a takeaway, what would you recommend to parties facing a tax dispute in your country?

It is advisable to maintain open and constructive cooperation with tax authority officials, as this may positively influence the final outcome of the assessment. As a general rule, parties should consider engaging legal and/or tax advisors at all stages of the proceedings. It is also crucial to clearly state the grounds for challenging the tax authority’s decision from the outset, as introducing additional arguments at a later stage may result in their dismissal on the basis that they were not raised during the initial procedure.