VAT Refund in Bosnia and Herezgovina 2025: Fast & Reliable Guide for Foreign Business

At its heart, the VAT refund for foreign businesses is a powerful government incentive that lets foreign companies claim back the Value-Added Tax (VAT) they’ve paid on their business expenses in Bosnia and Herzegovina. The whole point is to ensure this tax burden doesn’t get passed on to international customers, making goods and services from Bosnia and Herzegovina more competitive on the world stage.

Table of Contents

• Understanding the VAT Refund System for Foreign Businesses

• Confirming Your Eligibility for a VAT Refund

• A Practical Walkthrough of the Application Process

• Getting Your Paperwork in Order

• Avoiding Common Pitfalls in Your VAT Refund Claim

• Frequently Asked Questions About VAT Refunds for Foreign Businesses

• Disclaimer

Understanding the VAT Refund System for Foreign Businesses

The VAT refund process for foreign businesses is conducted through direct claims to Tax Administration, rather than through VAT returns. To obtain the refund, the foreign company must appoint a VAT agent who will handle all the necessary tasks, receive the funds into their account, and then transfer the money to the foreign company.

Confirming Your Eligibility for a VAT Refund

To maximize your VAT refunds, you first need to know if you are eligible. Generally, foreign businesses can reclaim VAT if they meet following criteria:

• buys or imports goods, or obtains services to conduct an activity performed by the foreign taxpayer overseas, as long as the foreign taxpayer would qualify for an input tax deduction on that activity if it were conducted in Bosnia and Herzegovina;

• during the period in which the right to a refund of input tax is recognized, does not engage in supplying goods and services that would be deemed as supply made in Bosnia and Herzegovina, except:

  • services related to the import of goods related to Article 21, paragraph 2, item 2 of the VAT Law;

  • services related to imports in accordance with Article 26 and exports in accordance with Article 27 of VAT Law;

  • services on which VAT has been paid by the person for whom those services were performed.

A foreign taxpayer who carries out activities through a business unit or other form of business in Bosnia and Herzegovina, as well as a foreign taxpayer who is registered through a tax representative due to carrying out activities subject to VAT in Bosnia and Herzegovina, is not entitled to a VAT refund.

A representative office of a foreign taxpayer that does not trade goods and services in BiH is not considered a form of established business in BiH.

A foreign taxpayer who is recognized as a VAT taxpayer with the right to deduct input tax, or as a taxpayer of another type of indirect tax in their home country, is eligible for a VAT refund. If the taxpayer employs a proportional deduction of input tax (partial exemption) in their home country, their right to a VAT refund is governed by the rules on proportional deduction of input tax that are in effect in Bosnia and Herzegovina.

VAT that is improperly calculated or lacks a valid basis cannot be refunded, including VAT charged due to not meeting the requirements for a VAT exemption (or "zero" rate). This is particularly significant for services provided.

For the amount of VAT paid to the Indirect Taxation Authority based on a final decision on the assessment of additional VAT liability, a foreign taxpayer is entitled to a refund, provided they possess an invoice, a credit note, or any other document issued by the supplier in which the VAT is stated.

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A Practical Walkthrough of the Application Process

When submitting the first refund request, the tax agent submits a completed Questionnaire for registering a foreign taxpayer, based on which a registration number is assigned, under which the foreign taxpayer will be registered with the Administration for VAT refund purposes. After the registration procedure is completed, the Tax Administration issues Registration certificate.

The right to a refund is exercised by means of a request / claim. The information in the request must be complete, sufficient, understandable and accurate, in particular with regard to the purpose of using the goods purchased and/or services received, in order to verify whether the conditions for granting a VAT refund upon request are met.

The following documentation shall be attached to the request:

• VAT refund request submitted on the "PDV-SPO" form

• completed questionnaire for the purposes of registration with the Indirect Taxation Authority and obtaining a registration number for VAT refund purposes (only for the first claim for the foreign taxpayer).

• original power of attorney, certified by the competent authority, which the foreign taxpayer, for the purposes of VAT refund, gave to the representative. The power of attorney is not limited in time, if this is clearly stated on it, and is valid until it is canceled in writing and the same information is submitted to the VAT Refund Group.

• original tax invoices for goods purchased and services received in Bosnia and Herzegovina, which are issued to the foreign taxpayer and which were issued in accordance with Article 55 of the Law,

• original single customs documents under which the goods were imported, if it is an import transaction,

• original VAT certificate from the tax authority of the country in which the foreign taxpayer has its registered office, which contains the taxpayer's identification number for VAT purposes (VAT number), that he exercises the right to a full deduction of input tax, as well as information on the type of activity carried out by the foreign taxpayer, which cannot be older than six months from the date of issue.

Getting Your Paperwork in Order

The documentation must be formally translated into one of the official languages of Bosnia and Herzegovina. Amounts for which a VAT refund is requested must be expressed in convertible marks (BAM).

The tax agent must provide the specification of tax invoices electronically, using the "PDV-SPO" specification form in Excel format, on an appropriate medium or removable storage device.

Data in the claim must be complete, sufficient, understandable, and accurate, particularly regarding the purpose of use of the purchased goods and/or received services.

A refund claim can only be submitted for VAT amounts greater than 800.00 BAM. If the VAT refund request is submitted for a period of one calendar year, the amount of VAT for which a refund is requested cannot be less than 100.00 BAM.

If VAT is refunded but it is subsequently determined that the data in the claim was incorrect, the refunded amount must be repaid to the Authority within 10 days from the date of delivery of the act to the tax agent, which orders the obligation to return the unduly paid funds.

It is advisable for foreign taxable persons to consult with a local tax advisor or legal expert to ensure compliance with all requirements and to facilitate the refund process.

Disclaimer

This article is intended for informational purposes only and does not constitute legal, tax, or financial advice. While every effort has been made to ensure accuracy, VAT refund regulations in Bosnia and Herzegovina are subject to change and may vary depending on the specific circumstances of each business. Readers are strongly advised to consult with a qualified tax advisor or certified public accountant (CPA) before making any decisions related to export VAT refunds or compliance procedures. Prime Consulting does not assume any responsibility for actions taken based solely on the information provided in this guide.