Bosnia and Herzegovina’s prime location makes it an attractive place for companies looking to expand to southeastern Europe. Unfortunately, expanding to the country comes with some difficulties, starting with payroll.
Taxation rules in Bosnia and Herzegovina
Before you look at setting up your Bosnia and Herzegovina payroll, you need to know that the country includes 2 entities — the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS). Each entity is almost entirely separate from the other and has its own government, parliament, police force, laws, and more.
In FBiH, the employer and employee contribute different amounts to social security and health insurance:
- Social security: employer 6%, employee 17%
- Health insurance: employer 4%, employee 12.5%
- Unemployment insurance: employer 0.5%, employee 1.5%
In RS, the employer makes no social security contributions, but the employee must contribute the following:
- Social security: 18.5%
- Health insurance: 12%
- Unemployment insurance: 0.6%
- Child protection: 1.7%
Bosnia and Herzegovina payroll options for companies
No matter which Bosnia and Herzegovina entity you’re in, you can choose between 3 different payroll options:
- Internal: Using an internal payroll is a good option for large companies committed to Bosnia and Herzegovina. However, you’ll need a large staff and a bigger budget to pay employees on time if you go with this solution.
- Bosnia and Herzegovina payroll processing company: Outsourcing with a local Bosnia and Herzegovina payroll processing company will take the stress of running payroll off your plate. That said, you’ll still have to worry about compliance.
- Employer of Record: Working with an Employer of Record (EOR) like G-P is the only Bosnia and Herzegovina payroll option that will take care of both your payroll and your employment regulations. We’ll manage compliance, so you can concentrate on managing your company.
How to set up a payroll in Bosnia and Herzegovina
Before you can set up your payroll, you have to establish a subsidiary in Bosnia and Herzegovina. It can take a significant amount of time to do so, causing you to lose people you were going to hire and forfeit important business relationships. G-P cuts the time it takes to start working to a few days. We’ll use our entity infrastructure to help you get started quickly and efficiently without the worry of compliance.
Entitlement/termination terms
Entitlement and termination terms are important parts of an employment contract that you need to outline before setting up your Bosnia and Herzegovina payroll. In FBiH, employees should get at least 14 days of notice, while employees in RS need at least 30 days of notice. Employees in FBiH are also usually entitled to severance pay.
Streamline global payroll management with G-P.
G-P streamlines each step of the payroll management process with our market-leading global employment platform. Pay your team with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.
Contact us to learn more about how we can support you.