Bosnia - Establishing an Office Bosnia - Establishing an Office
Establishing a business in BiH can be an extremely burdensome and time-consuming process for investors. In its “2019 World Bank Doing Business” report, the World Bank ranked BiH 89 out of 190 countries, a decline of five spots from its ranking the previous year. In 2019, BiH improved in only one out of the ten areas covered in the report: dealing with construction permits. The World Bank estimates there is an average of 13 procedures, taking a total of 81 days, to complete registration of a new business in the capital city, Sarajevo. Certain administrative procedures can be especially time-consuming; for example, obtaining a construction permit can take as long as one year. In 2013, the RS established a one-stop-shop for business registration in the RS. This reduces the required processes dramatically and the time to register a business in the RS is down to an average of one to two weeks. Registration in BiH can sometimes be expedited if a local lawyer is retained to follow up at each step of the process. Investors in the Federation may register their business as a branch office in the RS and vice versa.
All three sub-national levels of government (entity, cantonal, and municipal) establish laws and regulations affecting businesses, creating redundant and inconsistent procedures that encourage corruption. It can be difficult to understand all the laws and rules that might apply to certain business activities, given overlapping jurisdictions and the lack of a central information source. It is therefore critical that foreign investors obtain local assistance and advice.
The most common U.S. business presence found in BiH is the representative office. A representative office’s activities are limited to market research, contract or investment preparations, technical cooperation, and similar business facilitation activities. The BiH Law on Foreign Trade Policy governs the establishment of a representative office. To open a representative office, a company must register with the Registry of Representative Offices, maintained by the BiH Ministry of Foreign Trade and Economic Affairs (MoFTER) and the appropriate entity’s ministry of trade. Applications must contain the following information:
1) A document indicating the decision of the founding or parent company to establish a representative office, to include:
- Name and address of the branch office (if such exists)
- Name and address of the founder
- Name and address of the office (in BiH)
- Names of persons managing the office
- Scope of activities of the office
- Terms of reference of the office
2) A certified document proving registration of the parent company in the home country;
3) A certified statement of liability for all liabilities that stem from activities of the office;
4) Appointment of the person in charge of the office (in BiH); and
5) Employment information including the number of employees in the local office and a list of foreign employees.
All documents must be originals and an authorized court translator must translate the documents into the local language. If the documentation is complete and correct, the registration procedure should be completed within 30 days. The BiH Ministry of Foreign Trade and Economic Relations (MoFTER) will appoint the office by a decree published in the Official Gazette. After receiving the decree, the new representative office must notify MoFTER within 90 days of the beginning of operations. If the representative office fails to do so, the appointment will be cancelled.
A representative office is allowed to have both foreign and local currency accounts with local banks. Office equipment can be imported free of customs duties, based on a temporary permit with the possibility for extensions. Office vehicles may be imported but only for expatriates. Expatriates are required to obtain residence and work permits and to pay local income taxes.
Other forms of establishing a business in BiH include:
Unlimited Joint Liability Company
An Unlimited Joint Liability Company is a company of at least two persons who bear unlimited mutual liability of the company. The company is founded by a founding contract of two or more domestic/foreign legal entities. Every member has the right and obligation to manage the company. The company has no statute and no management bodies because members manage the company directly, including representation of the company.
Limited Liability Company
A Limited Liability Company (LLC) is founded by an establishment act or establishment contract by one or more domestic/foreign legal entities with basic capital divided in parts. A member in a limited company is liable for the value of his investment in that company. Minimum basic capital is KM 2,000 (approx. $1,300).
Limited Partnership
A Limited Partnership is a company in which one or more members has unlimited solidarity liability for the liabilities of the company including members’ private assets. Risk of one or more members is limited by the value of their share in that company. A Limited Partnership is founded by a contract of two or more domestic/foreign legal entities. General partners manage the business of the company and the company is represented by each general partner.
Joint–Stock Company
A Joint–Stock Company is founded by the establishment contract of one or more domestic/foreign shareholders with basic capital divided into shares. A Joint-Stock Company is not liable for the obligations of shareholders and can be established by one or more founders. The minimum basic capital is KM 50,000 (approximately $30,000).
The following steps are required to establish a limited liability company (the most frequent business entity form). The steps are uniform for the whole territory of BiH:
1. Establishment of contract
2. Initial capital payment
3. Registration at the competent court
4. Registration of a company stamp
5. Opening of a bank account in a commercial bank
6. Registration at the tax administration
7. Registration at the local municipality
8. Initiation of business activity
Additional English-language information on the registration process can be obtained from:
BiH Ministry of Foreign Trade & Economic Relations (MoFTER)
Musala 9
71000 Sarajevo
Bosnia and Herzegovina
Tel: +387-33-220-093
Fax: +387-33-445-911
BiH Foreign Investment Promotion Agency (FIPA)
Grbavička 471000 Sarajevo
Bosnia and Herzegovina
Phone: ++ 387 33 278 080
Fax: ++ 387 33 278 081
E-mail: fipa@fipa.gov.ba
*(Currency exchange rate: $1 = KM 1.74 on 5/09/2019)