Non-commercial goods is considered to be goods for which a customs procedure is required occasionally and whose type and quantity indicate whether it is intended for private, personal or household use or for persons bringing it in or it is clear they are presents.

Pursuant to Article 207, point a) indent 16 of the Law on Customs Policy of Bosnia and Herzegovina ('Official Gazette of BiH', number 58/15), passengers' personal luggage, as well as the goods of non-commercial nature contained in the personal luggage of the passengers coming from abroad in the prescribed type, quantity and value, shall be exempt from payment of import duties. The requirements and procedures for the above-mentioned exemption shall be regulated by Articles 34 and 35 of the Decision on the requirements  and procedures for attaining the right to exemption from the payment of import and export duties ('Official Gazette of B&H', number 24/18).

The exemption from payment of import duties shall be granted with regard to the following quantitative limitations per passenger and per day:

• tobacco and tobacco products:
  • up to 200 cigarettes, or
  • up to 100 cigarillos (cigarillos are cigars weighing up to 3 grams per piece), or
  • up to 50 cigars, or up to 250 grams of smoking tobacco, or         
  • a suitable proportional combination of the amounts of the specified tobacco products,
• Alcohol and alcoholic beverages:
  • Exceeding 22% alcohol by volume, or undenatured ethyl alcohol of an alcoholic strength of 80% volume or higher: 1 litre, or
  • of an alcoholic strength of 22% volume or lower: 2 litres, or
  • a suitable proportional combination of the amounts of the specified alcohol and beverages,
• Still wine: 4 litres
• Beer: 16 litres.

Travellers under 17 years of age shall not be exempt from payment of import duties on tobacco and tobacco products, alcohol and alcoholic beverages, still wine and beer.     

Exemption from payment of import duties on other goods of non-commercial nature in travellers' personal luggage is limited to items up to a value of 600 BAM per traveller and per day, regardless of the type of transport the traveller uses. The following goods are not included in the above-mentioned value (tobacco and tobacco products, alcohol and alcoholic beverages, still wine and beer).

The value of travellers' personal luggage, which is imported temporarily, or it is re-imported after a temporary export, and the value of medications essential for travellers' personal needs, shall not be taken into account for the purposes of implementing the aforementioned exemption.       

The customs officer in charge shall orally approve the exemption from payment of import duties for goods contained in the travellers' personal lugagge.

The goods contained in the travellers' personal luggage fulfilling the requirements for exemption from payment of import duties, shall also be exempt from payment of:

• Value added tax, pursuant to Article 26, point 2 of the Law on Value Added Tax ('Official Gazette of BiH', No 9/05, 35/05, 100/08, 33/17) and             
• Excise duties, Pursuant to Article 30, paragraph 1), point c) of the Law on Excise Duties in Bosnia and Herzegovina ('Official Gazette of BiH', No 49/09, 49/14, 60/14 and 91/17).         

If the value of a certain item to be imported is more than 600 BAM, the value of such item cannot be divided, nor can its value be shared between two or more individuals for the purpose of achieving exemption from payment of import duties (e.g. if a traveller imports a television set worth 800 BAM, the value-sharing of the item cannot be implemented in the way that the item is exempt from payment of import duties up to the value of 600 BAM and the import duties are calculated and charged for the 200 BAM part, but the customs authority shall calculate and charge import duties and other indirect taxes for the overall value of 800 BAM of the above-mentioned television set, or e.g. if four passengers in a motor vehicle import one item of the customs value of 2,400.00 BAM and demand that preferences are applied, the preference cannot be approved but the import duties and other indirect taxes are calculated for the overall value of the item).

MOVEMENT OF PETS INTO BiH FROM THE COUNTRIES LISTED IN PART А ANNEX IV:

1. Pets (dog, cat and ferret) must be marked by the implementation of a microchip;
2. Pets (dog, cat and ferret) must be vaccinated for rabbies by an authorized veterinarian as follows:

• The animals were at least 12 weeks old on the date the vaccine was administered;
• The date of the administration of the vaccine does not precede the date of the marking or reading of the microchip;
• The vaccination validity period shall start not later than 21 days since completing the vaccination protocol for primary vaccination, and each subsequent vaccination shall be conducted within the validity period of the previous vaccination;

3. Pets (dog, cat and ferret) must be accompanied by an EU passport completed and issued by a certified veterinarian prior to leaving EU/EFTA Member States;
   4. Pets (dog, cat, ferret) must pass through a travellers' point of entry designated by BiH. The owner must, at the time of entry, contact the competent authority present at the point of entry for the purposes of documentary and identity checks of pets.

MOVEMENT OF PETS INTO BiH FROM COUNTRIES LISTED IN PART B ANNEX IV:

1. Pets (dog, cat and ferret) must be marked by the implementation of a microchip;
2. Pets (dog, cat and ferret) must be vaccinated for rabbies by an authorized veterinarian as follows:

• The animals were at least 12 weeks old on the date the vaccine was administered;
• The date of the administration of the vaccine does not precede the date of the marking or reading of the microchip;

3. At the time of entry, pets (dog, cat, ferret) must be accompanied by:

• An animal health certificate:

o   Completed and issued by an official veterinarian;

o   Documenting the alpha-numeric code displayed by the microchip or the tattoo, the details of vaccination for rabies, the details of the blood sampling;

o   valid for 10 days from the date of issue by the official veterinarian until the moment of a check-up at the travellers' points of entry designated by BiH. In the case of transport by sea, that period of 10 days shall be extended by an additional period corresponding to the duration of the journey by sea.

4. Pets (dog, cat or ferret) must pass through a travellers’ point of entry designated by BiH. The owner must, at the time of entry, contact the competent authority present at the point of entry for the purposes of documentary and identity checks.

MOVEMENT OF PETS INTO BiH FROM COUNTRIES NOT LISTED IN ANNEX IV:

1. Pets (dog, cat and ferret) must be marked by the implementation of a microchip;
2. Pets (dog, cat and ferret) must be vaccinated for rabbies by an authorized veterinarian as follows:

• The animals were at least 12 weeks old on the date the vaccine was administered;
• The date of the administration of the vaccine does not precede the date of the marking or reading of the microchip;

3. Pets (dog, cat or ferret) must undergo a rabies antibody titration test, as follows:

• Undergo a neutralized antibody titration equal to at least 0.5 IU/ml carried out on a sample taken by an authorized veterinarian at least 30 days after the vaccination and three months prior to the import or transit of the animals;
• the test must be performed in an approved laboratory.

4. Pets (dog, cat and ferret) must be accompanied by:

• A veterinary health certificate:

o   Completed and issued by an official veterinarian;

o   Documenting the alpha-numeric code displayed by the microchip or the tattoo, the details of vaccination for rabies, the details of the blood sampling;

o   valid for 10 days from the date of issue by the official veterinarian until the moment of a check-up at the travelers' points of entry designated by BiH. In the case of transport by sea, that period of 10 days is extended by an additional period corresponding to the duration of the journey by sea.

5. Pets (dog, cat or ferret) must pass through a travellers’ point of entry designated by BiH. The owner must, at the time of entry, contact the competent authority present at the point of entry for the purposes of documentary and identity checks.

EXCEPTIONS

(1) Regarding the number of pet animals moved

Where pet animals (dogs, cats or ferrets) are moved in a number of more than five they have to undergo all procedures in accordance with the import regulations. Please contact info@vet.gov.ba for more information.

(2) Regarding the marking

BiH shall authorize the movement into their territory of dogs, cats and ferrets marked by a clearly readable tattoo if applied before 3 July 2011.

Pursuant to the Rulebook on Measures for the Prevention of importation, spreading and control of harmful organisms on plants, plant products and regulated facilities ('Official Gazette of BiH', number 59/11) small quantities of plants and plant products which are not subject to phytosanitary inspection and the prescribed treatment may be imported.  Small quantities within the meaning of the Rulebook are:

• fresh fruit and vegetables (except potatoes), with a total weight of up to 5kg
• cut flowers and parts of plants bound in a bouquet or a wreath, one bouquet or wreath
• flowers  and vegetable seeds (except potato seeds) in the original packaging of the total weight up to 100gr not intended for resale, up to 5 packages
• bulbs and tubers of ornamental plants, with a total weight of up to 3kg
• a New Year tree without the root, one unit
• indoor and pot plants (except bonsai tree), up to three plants
• balcony plants and non-woody ornamental bushes, ten plants at the most.

Taking proprietary medications for travelers personal needs is possible in quantities necessary for a standard therapy provided it is followed by a relevant medical documentation (transcript of medical history, doctor's permission, prescription).

Pursuant to the Law on the prevention and control of abuse of narcotic drugs ('Official Gazette of BiH', number 08/06), persons crossing the state border are allowed to have a medication containing psychotropic substances only if it is accompanied by medical documentation, in a quantity necessary for personal use of up to seven days at the most. Persons who are on a substitution treatment of addiction or a symptomatic treatment in a terminal phase of malignant diseases, may, while crossing the state border, exceptionally possess a medication containing substances, on the basis of medical documentation and in the quantity necessary for personal use of up to 15 days at the most. While crossing the state border, the person shall be obliged to declare to the customs officer the name and the quantity of these medications, followed by a demonstration of medical documentation.

All travellers bringing in or taking out cash or securities in the amount valued more than 10,000 euros shall declare it to the customs authority on every border crossing in Bosnia and Herzegovina.          

The governments of the Republic of Srpska and the Federation of BiH have reached decisions modifying the existing regulations governing taking out and bringing in effective foreign money, convertible marks, cheques and loan stocks.

The bringing in and taking out cash, cheques or securities is declared on a currency declaration form which can be obtained from customs officers on all international border crossings, or downloaded from the website www.uino.gov.ba.  A detailed instruction on completing the currency declaration form is given on its back. After completing it, the form shall be given to a customs officer, who shall, upon the request of the traveller, return a certified copy to the traveller who declared the cash, cheques or other securities.

The aforementioned regulations were adopted for the purpose of harmonizing  with the recommendations of Financial Action Task Force (FATF) and they have:  increased the limit over which a natural person is obliged to declare bringing in and taking out cash to 10 000 euros, established the obligation to declare, in addition to effective foreign money, also convertible marks and cheques, securities and any other physically portable instruments of payment pursuant to the regulations governing prevention of money laundering and financing terrorist activities, and a Cash declaration form was prescribed.

• The Decree on amendments to the Decree on bringing in and taking out effective foreign money, convertible marks, cheques and securities with the Cash declaration form. The aforementioned form is available in electronic format on the website of the Ministry of Finance of the Republic of Srpska  http://www.vladars.net/sr-SP-Cyrl/Vlada/Ministarstva/mf/Pages/default.aspx
• The Decision on amendements to the Decision on taking out foreign cash and cheques  along with the cash declaration form. The aforementioned form is available on the website of the Government of the Federation of BiH  www.fbihvlada.gov.ba and on the website of the Ministry of Finance of the Federation of BiH www.fmf.gov.ba .

The Government of the Republic of Srpska adopted the Decree on amendments to the Decree on bringing in and taking out effective foreign money, convertible marks, cheques and securities ('Official Gazette of the Republic of Srpska, number 46/17) which entered into force on 24 May 2017. The Government of the Federation of BiH also adopted the Decision on amendments to the Decision on taking out foreign cash and cheques ('Official Gazette of the Federation of BiH, number 38/17), which entered into force  on 25 May 2017.

• Cash declaration form – the form

• Instruction for form completion

In passenger traffic with foreign countries, natural persons may transport more than 10,000 euros in cash, provided that they demonstrate an approval by the Ministry of Finance of the Republic of Srpska or the Ministry of Finance of the Federation of BiH.

On arrival in Bosnia and Herzegovina, all products which are not in line with the provisions of this document must be laid down in containers provided for this purpose so they can be destroyed or taken back from the customs territory of Bosnia and Herzegovina.

It is allowed to bring in or send to Bosnia and Herzegovina personal consignments of meat, milk and their products (except powdered infant milk, infant food, special food and special pet food required for medical reasons), provided they come from EU countries, Andorra, Liechtenstein, Norway, San Marino, Switzerland, Faeroe Islands, Greenland, Iceland, Montenegro, Macedonia.

It is allowed to bring in or send to Bosnia and Herzegovina personal consignments of powdered infant milk, infant food, special food required for medical reasons provided that:

• they come from EU countries, Andorra, Liechtenstein, Norway, San Marino, Switzerland, Faeroe Islands, Greenland, Iceland, Montenegro, Macedonia and Serbia, with their total weight not exceeding 1 kg per person travelling, and:

1. the product does not require refrigeration before consumption,
2. the product is in commercially branded packaging and intended for direct sale to the final consumer,
3. the packaging is unbroken unless in current use.

• they come from other countries (apart from EU countries, Andorra, Liechtenstein, Norway, San Marino, Switzerland, Faeroe Islands, Greenland, Iceland, Montenegro, Macedonia and Serbia), with their total weight not exceeding 1kg per person travelling, and:  

1. the product does not require refrigeration before consumption,
2. the product is in commercially branded packaging and intended for direct sale to the final consumer, 
3. the packaging is unbroken unless in current use.

It is allowed to bring in or send to Bosnia and Herzegovina personal consignments of pet food required for medical reasons provided that:

• they come from EU countries, Andorra, Liechtenstein, Norway, San Marino, Switzerland, Faeroe Islands, Greenland, Iceland, Montenegro, Macedonia and Serbia, with their total weight not exceeding 2 kg per person travelling, and:

1. the product does not require refrigeration before consumption,
2. the product is in commercially branded packaging and intended for direct sale to the final cosumer 
3. the packaging is unbroken unless in current use.

• they come from other countries (apart from EU countries, Andorra, Liechtenstein, Norway, San Marino, Switzerland, Faeroe Islands, Greenland, Iceland, Montenegro, Macedonia and Serbia), with their total weight not exceeding 1kg per person travelling, and:

1. the product does not require refrigeration before consumption,
2. the product is in commercially branded packaging and intended for direct sale to the final consumer, 
3. the packaging is unbroken unless in current use.

It is allowed to bring into or send to Bosnia and Herzegovina personal consignments of fishery products (including freshly processed gutted fish, dried, cooked or smoked, and certain shellfish, such as shrimps, lobsters, dead mussels and oysters) from EU countries, Andorra, Liechtenstein, Norway, San Marino, Switzerland, Faeroe Islands, Greenland, Iceland, Montenegro, Macedonia and Serbia, provided that:      

1. the fish is fresh, processed,       
2. the weight of the fishery products does not exceed 1 kg or the mass of one fish, whichever is heavier, per person

It is allowed to bring into or send to Bosnia and Herzegovina other products of animal origin, such as honey, live oysters and mussels, and snails for example, provided that:       

• they come from other countries (apart from EU countries, Andorra, Liechtenstein, Norway, San  Marino, Switzerland, Faeroe Islands, Greenland, Iceland, Montenegro, Macedonia and Serbia), with their total weight not exceeding 1kg per person travelling,

It is allowed to bring in small quantities of products of animal origin from some of the above mentioned categories (paragrapf 1-5), subject to the rules explained in each relevant paragraph of this document.    

CONSIGNMENTS OF PRODUCTS OF ANIMAL ORIGIN WHOSE TOTAL MASS EXCEEDS THE SPECIFIED WEIGHTS SHALL BE BROUGHT INTO BOSNIA AND HERZEGOVINA IN THE SAME WAY AS THE IMPORT CONSIGNMENTS SUBJECT TO VETERINARY HEALTH CONTROL  BY VETERINARY BORDER INSPECTION ON CERTAIN BORDER CROSSINGS AND WHICH MUST BE ACCOMPANIED BY AN INTERNATIONAL HEALTH CERTIFICATE.

NOT DECLARING SUCH CONSIGNMENTS IS SUBJECT TO PUNISHMENT!

The airport operator and the aircraft operator shall ensure continuous surveillance of baggage from the moment of its check-in until the moment it is claimed by a passenger or an authorized person, except for the period when the baggage is under direct responsibility of the customs authority or under its direct surveillance.

During check-in, every registered baggage is labelled with a tag indicating destination, as well as a specific baggage number or a code which is used in the search for lost baggage, through which a traveller's data and itinerary (the route of a journey) can be checked.

If registered baggage does not arrive on the same flight as its owner, the traveller should, along with his airplane ticket and the registered baggage tag, contact, i.e.report the loss of baggage to the Service authorized for tracing the missing (lost) baggage ('Lost and Found'), organized in compliance with the Convention on international civil aviation organization (ICAO) at an international airport. Airport services are in charge of tracing the lost baggage.

Upon receiving the missing baggage report, the Service in charge for tracing the missing (lost) baggage shall issue a 'report on undelivered baggage' (containing the information on the size, the shape and the content of the suitcase as well as the contact information of the traveller). Without the report, every further communication with the company or airport service shall not be possible , the report is practically the relevant traveller's baggage identity card.

An aircraft or an airport operator or the representative refereed to in Article 5 of the Law on Customs Policy of Bosnia and Herzegovina, shall, Pursuant to Article 37 of the aforementioned Law, submit the registered baggage which arrived separately from its owner (traveler) to the customs authority, immediately upon arrival of the aircraft on the international flight on which the baggage arrived and upon unloading the baggage.

For a more transparent proceeding, the form 'Registration of unreconciled baggage', which is attached to this document, can be used for the registration of the delivered baggage for registration of the delivered baggage.

The baggage which arrived separately from a traveller in international air traffic, is under customs surveillance from the moment of its check-in to the customs authority until its delivery to the traveller, returning abroad, i.e. until conducting the appropriate customs procedure, until which time it is stored at an approved provisional location at the premises of the tracing service/airport operator, which are approved as the premises for provisional location by an authorized customs authority, in compliance with the customs regulations.

The customs procedure with unreconciled baggage is considered urgent.

When ordering products online or in another way, which are to be delivered to BiH by post, the purchaser of such goods shall pay import duties.  

The Customs procedures for the import of all types of goods, including goods arriving to Bosnia and Herzegovina by postal packages, shall be carried out in accordance with the Law on Customs Policy of BiH and all applicable by-laws.    

Pursuant to Article  207 of the Law on Customs Policy, and Article 24 of the Decision on the requirements  and procedure for attaining the right to exemption from the payment of import and export duties, goods of negligible value contained in the consignment sent directly from abroad to a recipient in Bosnia and Herzegovina  shall be exempt from payment of import duties.

Goods of negligible value are considered to be goods whose total value does not exceed 300.00 Convertible Marks per consignment, excluding alcohol products, perfumes and toilet waters, tobacco and tobacco products. The usual reception of packages, within the meaning of the aforementioned  exemption, implies receiving packages from abroad once a week. Postal consignments fulfilling the requirements for the above-mentioned exemption from payment of customs duties, are also exempt from payment of value added tax pursuant to Article 26, point 2 of the Law on Value Added Tax.

Pursuant to Article 207 of the Law and Article 26 of the Decision, goods of non-commercial nature contained in the consignment sent free of charge by a natural person from another country to a natural person in Bosnia Herzegovina shall be exempt from payment of import duties.

Consignments of non-commercial nature are considered to be occasional consignments containing solely goods intended for personal use or for the use by the exemption users' household members, which by its type and quantity indicate that they are not of commercial nature and that they were sent free of charge to the recipient.

Exemption from payment of import duties applies to goods valued up to 90 Convertible Marks per consignment.

Exemption from payment of import duties has quantitative restrictions, per consignment, for certain goods:

• Tobacco and tobacco products, up to 50 cigarettes or 10 cigars, and 50 grams of tobacco
• Alcohol and alcoholic beverages  for the quantity of 1 litre and wines for the quantity of  2 litres
• Perfumes, up to 50ml or toilet waters up to 250ml.

The exemption from payment of import duties for the goods reffered to in Article 24 and 25 of this Decision shall be approved orally by the customs office where the goods was declared.

In case that the value of goods arriving from abroad to BiH by postal consignment exceeds the value of 300 BAM or 90 BAM in the cases when the packages are sent by natural persons, the customs service shall use a postal customs declaration for natural persons to inform the person who ordered the goods that they can collect the goods.

If a person in BiH receives a postal consignment from a natural person from abroad, the single customs rate for non-commercial goods in the amount of 10% customs fee is calculated on top of the established customs value (the value of goods + all dependent costs incurred in the procurement process), and then the total amount so derived represents the basis for the calculation of the 17%  VAT rate. The basis for the calculation of import duties comprises all dependent costs incurred upon importation of goods, such as transport, insurance etc. In order for a consignment to be categorised as non-commercial goods, its value must not exceed 1,500.00 BAM.

If a person from BiH receives a postal consignment from a legal person from abroad, the standard customs rate in compliance with the Customs tariff of BiH (5%, 10 %, 15% - depending on the type of goods) and the 17% VAT rate are calculated on top of the established customs value. The basis for the calculation of import duties comprises all dependent costs incurred upon importation of goods, such as transport, insurance etc. The invoice value of goods is most commonly used when establishing a customs basis for the calculation of import duties, namely the same invoice which accompanies certain goods or proof of payment is required through a credit card account statement. The duties laid down by the law are calculated and paid on the established customs value. If there is no invoice for certain goods which are the subject of importation, the customs service shall call the recipient  to deliver the proof of payment by credit card, and if that is not provided, the customs service shall, in compliance with the applicable regulations, start establishing the real value of the goods which will represent  the basis for the calculation of import duties, based on the value of the same or similar goods  which was imported in a previous period.  Additional documents required from natural persons shall be submitted directly by fax or e-mail into the customs units at postal offices in BiH.

The Indirect Taxation Authority carries out the customs procedure for the importation of all goods to BiH, including passenger motor vehicles.  A vehicle must meet the minimal technical requirements for motor vehicle homologation  in order to enter  BiH in line with the applicable legislation. Vehicle homologation, i.e. testing the technical characteristics of each individual vehicle is carried out by authorised technical services in Bosnia and Herzegovina. Therefore, any person coming to BiH in a vehicle shall declare it for importation at a border crossing, after which they are given a customs transit declaration valid for a period of 10 days and during that period they must go to an authorised technical service which checks the vehicle and issues a certificate that the vehicle meets the minimal technical requirements for vehicle homologation.

More information on the homologation and compliance with all the requirements a vehicle must satisfy in order to be imported into BiH can be obtained at one of the authorised technical services in BiH in charge of conducting the homologation process.

After the vehicle obtains a homologation certificate, it is required to take all the other documentation to the relevant customs office in the inland of BiH where  the customs procedure for the importation of vehicles is completed, the import duties (customs duty and VAT) are paid, after which the vehicle can be registered at an authorised office of the Ministry of Interior. With regards to import duties, the standard duty rate for passenger motor vehicles is 15% and the VAT rate is 17%. When it comes to used passenger motor vehicles from EU, the customs duty was eliminated at the beginning of 2013 and only the 17% VAT rate is paid on top of an established customs value of the vehicle.

In order to be exempt from payment of the customs duty, a person shall provide proof of the origin of the vehicle from EU, which is a statement on the invoice by the seller of the vehicle (provided the vehicle is bought at a company capable of issuing the invoice), or the EUR1 certificate (if the vehicle is bought from a natural person through a sales contract, or if it is already owned by the importer). The EUR1 certificate is issued and verified by an authorised customs service of the country where the vehicle was bought.

Exemption from payment of the customs duty cannot be achieved without one of the above-mentioned proofs of origin of the vehicle. VAT shall be paid in any case. With regards to new passenger motor vehicles from EU, the customs duty has been eliminated since 1 January 2009, meaning that only the 17% VAT is required to be paid for the importation of such vehicles into BiH.

NOTE: Vehicles from EU without EUR 1 certificate

The Stabilisation and Association Agreement  between the European Communities and their Member States, on the one hand, and Bosnia and Herzegovina on the other, or more precisely, the corresponding Protocol 2 on the definition of the term 'products with origin' and the methods of administrative cooperation prescribes the conditions and the means for the acquisition of origin of goods, proof of origin, the procedure for the issuing of the proof of origin, submitting proof of origin in the customs clearance procedure, validity of the issued proofs, application of preferential treatment, subsequent verification, keeping the documentation, etc.                                  

In compliance with the provisions reffered to in Article 17 of Protocol 2, proof of origin of goods – EUR 1 movement certificate is issued by the customs authorities of the exporting country, upon a written request from the  importer or their authorised representative, having reviewed the documentation which proves the origin of the relevant products, and having ascertained that the other requirements laid down in Protocol 2 have been met.                     

An invoice declaration, as laid down in Article 22 of Protocol 2, is completed by an importer for parcels whose value does not exceed 6.000 euros or by an authorised exporter regardless of the value of the goods, if the exported products can be considered products with origin.                           

The customs authorities of the exporting country (in this case BiH) shall apply a preferential customs rate if the importer asks for the rate to be applied and submits an adequate proof of origin.           

Therefore, 'duty-free imports' are not provided for by the customs authorities of BiH and they do not have an influence on the issuance of proof of origin in the importing country. Importing goods with origin with the application of reduced or zero customs rate is prescribed in the trade agreement, in this case between Bosnia and Herzegovina and the European Community.                

Having learned of the fact that no proof of origin is issued for vehicles originating from the European Union, the Indirect Taxation Authority communicated this to the competent Ministry of Foreign Affairs and Economic Relations of BiH, so they can, as a signatory to the Agreement the provisions of which are not fully observed, undertake activities to resolve this problem being to the detriment of importers of goods into BiH.

QUESTION:

A taxpayer plans to open a so-called mining farm for cryptocurrencies (most likely for bitcoin) that would be sold to a foreign buyer after it has been mined. Is the mining and turnover of cryptocurrencies chargeable for VAT in Bosnia and Herzegovina, and would the taxpayer be entitled to a deduction of input tax on the procurement and maintenance of the equipment and on resulting costs (e.g. electricity costs)?

REPLY:

Article 3 of the Law on Value Added Tax (Official Gazette of BiH 9/05, 35/05, 100/08 and 33/17) (hereinafter: the Law) provides that VAT is to be paid for the supply of goods and services provided by the taxpayer within the scope of his activities within the territory of Bosnia and Herzegovina for compensation and for the import of goods to Bosnia and Herzegovina.

Pursuant to Article 25, paragraph (1), item 4, subparagraph b) of the Law, services relating to managing deposits, savings and bank accounts, conducting payment transactions, transferring and executing due liabilities, cashing checks or other financial instruments, with the exception of payment of debts and factoring, shall be exempt from VAT.

In the context of the above, brokerage of the above-mentioned transactions is also exempt from the calculation and payment of VAT, as Article 35(2) of the Rulebook on the implementation of the Law on Value Added Tax (Official Gazette of BIH 93/05, 21/06, 60/06, 6/07, 100/07, 35/08, 65/10 and 85/17) stipulates that the financial services referred to in Article 25, paragraph (1) item 4 shall also include broker’s accompanying services, but only if these services have the characteristics of a financial service to the benefit of the final recipient of the financial service.

Accordingly, given the fact that bitcoin or other virtual currencies, from the aspect of BiH regulations, are not considered to be goods, nor money used as legal tender, it should, in this sense, be considered as a transferable financial instrument (which enables the fulfillment of a monetary obligation), which is why transactions in bitcoins or other virtual currencies should be regarded as financial services transactions exempt from the calculation and payment of VAT, in accordance with Article 25, paragraph (1), item 4, subparagraph b) of the Law.

Furthermore, when it comes to VAT deduction, Article 32(1) of the Law provides that input tax, in relation to a taxpayer, is the amount of VAT levied on the sale of goods or services and the VAT he pays, or should pay, when importing goods, where (in both cases) those are the goods or services he uses or should use for the purpose of the business he performs.

Pursuant to paragraph (2) of the same Article of the Law, the taxpayer has the right to deduct the VAT which he is obliged to pay, or has paid, when purchasing goods or services from another taxpayer or when importing goods, provided that he uses those goods or services for the circulation of goods and services subject to VAT.

Therefore, all transactions performed with virtual currencies, including brokerage of the said transactions, are exempt from the calculation and payment of VAT, in accordance with the stated provisions of the Law and the Rulebook. This means that taxpayers who carry out these transactions are not entitled to deduct input VAT from the invoices of suppliers of goods or services used for these activities, since it is an activity that is not subject to VAT, in accordance with Article 32 of the Law.

Furthermore, with regards to the tax treatment of cryptocurrency mining, there is often a dilemma in BiH whether mining is subject to VAT calculation and payment obligations. However, if we understand the essence of mining, we will see that in the process of mining, miners are mining virtual currency for themselves, that is, they are not mining them for other persons.

In this regard, it is clear that in such a situation there is no turnover of goods or services within the meaning of Article 3 of the Law, because there are no two persons constituting the turnover nor is there a specifically agreed mining fee.

Turnover occurs only when the virtual currency is put into circulation, that is, when the virtual currency is sold, and that turnover, as we described above, is exempt from VAT.

Thus, the mining alone does not constitute turnover by miners or mining associations, within the meaning of Article 3 of the Law, but the sale of mined virtual currencies, or their transfer to investors, represents turnover, but that turnover is exempt from VAT, pursuant to Article 25, paragraph (1), item 4 of the Law on VAT, without the right to deduct input VAT.

At the same time, we would like to inform you that, since mining is not considered a turnover, persons engaged in this activity are not obliged to register in the VAT system, and therefore do not have the right to deduct the VAT shown on the invoices of expensive equipment suppliers, whether purchased in BiH or imported from abroad, nor to deduct the VAT shown on electricity bills (the mining process requires a large amount of electricity), etc.