A Quick Guide to Doing Business in Bosnia and Herzegovina

The Dayton Peace Agreement ended the war in Bosnia and Herzegovina in 1995. Since then the country has flourished thanks to their prioritization of reconstruction, social integration and state building. Because of this, Bosnia and Herzegovina is emerging as a hotspot for businesses looking to set up shop.

What are the advantages of doing business in Bosnia and Herzegovina?

Firstly, Bosnia and Herzegovina is in a great position when it comes to trade import, according to the UK Government.  Bosnia and Herzegovina is a relatively small, open transitional economy with strong import needs. In 2020, the country’s nominal GDP was EUR 16.97 billion, with a real annual GDP reduction of 5.5%. This therefore makes Bosnia and Herzegovina’s economy stable and ideal for investment.

Not only this, but Bosnia and Herzegovina is also a strong candidate for becoming a member of the EU.  Investing in a country before coming EU member is advantageous as the transition over to the Euro makes it easier, cheaper and sager for businesses to trade. Add into the mix Brexit, and the fact that UK firms are being advised to set up in the EU to avoid disruption, this therefore makes Bosnia and Herzegovina an attractive prospect as their membership looms.

What are the major risks of doing business in Bosnia and Herzegovina?

It’s well documented that doing business in Bosnia and Herzegovina can be beneficial to your business, however it also comes with it’s risks.

Firstly, Bosnia and Herzegovina have a large public sector, which could mean that there is limited scope for private wealth creation. With a larger public sector comes large bills which must be paid by the taxpayer. This therefore means that many of the lowest pair workers have a large tax bill to pay, making it difficult for employers to create jobs and attract talent.

Not only this, but exports are only worth 30% of Bosnia and Herzegovina’s GDP, meaning they are a way behind some other European nations. This coupled with the fact that Bosnia and Herzegovina’s economy growth was stunted by the pandemic (along with the rest of the world), means that investing isn’t without its risks.

How to set up a business successfully in Bosnia and Herzegovina

Although setting up a business in Bosnia and Herzegovina can be risky, it can actually turn out to be a pretty worthwhile investment if you go about it the right way.

If you’re thinking of setting up your business, firstly, you’ll want to take the time to research and conduct a feasibility study. The aim of this is to show your costs and returns so that you can work out whether setting up a business would be profitable. From there, you’ll also want to work with international specialist in risks advisory such as RSM Global.

They will then be able advise you on what type of company to set up. The most common type of organization is a limited liability company, however you may also wish to set up a public limited company or a branch office, depending on the business.

The bottom line

Although setting up a business in Bosnia and Herzegovina isn’t without its risks, the good news is that with the right guidance you can be successful in your set up. With a relatively stable economy and an EU membership on the horizon, there’s never been a better time to invest in Bosnia and Herzegovina.