Bosnia & Herzegovina Publishes Regulations For VAT Refunds To Non-Residents


The regulations for granting VAT refunds to foreign taxable persons were published in Official Gazette No. 78 of Bosnia and Herzegovina on 4 December 2020. The legislation aims at harmonization of the VAT rules for granting VAT refunds to foreign taxable persons with the Law on VAT (Article 53) which entered into force on 12 December 2020.

The legislation defines in more detail the concept of a tax representative – A tax representative is a taxable person, registered for VAT in Bosnia and Herzegovina (BH), that represents a foreign taxable person for all VAT obligations concerning VAT refunds, including communication with the Indirect Taxation Authority (ITA) as well as receiving decisions and other legal acts relating to VAT refunds to be granted to the foreign taxable person.

Article 94 of the Rulebook on the Application of the Law on VAT states that the request for a VAT refund must be completed and signed by the tax representative. It must also be accompanied by the following documents:

• an original proxy given to the tax representative for the purpose of requesting VAT refunds;
• original invoices for purchased goods and services received, even in case of a negligible amount (i.e. less than EUR 100 or BAM 195.58);
• original customs declarations on imports of goods, if any;
• proof of export of goods;
• an original certificate of VAT status of the foreign taxable person, issued by the competent body in the country where the foreign taxable person is established, which includes a VAT identification number and proof that the foreign taxable person has the right to deduct input VAT in the country of residence.

Article 95 prescribes that the applicant will be refunded if, within 14 months from the date of issuance of the invoice by the seller from whom the good was purchased, submits the certified original form PDV-SL-1.

What is the practical significance of the changes introduced?

One of the points stated in Article 94 requires the submission of proof of export of goods. This point entirely eliminates the possibility for BH companies to exercise the right to a VAT refund from other countries requiring reciprocity. It is in practice not feasible and inapplicable. In Eurofast’s experience when dealing with VAT refunds for clients, it is often an obstacle as it is not possible to prove that a certain service was “exported” (eg. pay tolls or accommodation paid).

Deleting this point and adding new paragraphs in the Rulebook would create a legal framework for establishing the same approach as EU countries which require reciprocity. It would also enable BH companies to be able to request a VAT return from EU countries for fuel and toll costs, but also for hotel services, roaming services, fair and seminar participation fees, advertising, marketing services etc.

It is very important to mention that the EU TWINNING group, which in BH had the task of harmonizing regulations in the field of indirect taxes with EU’s legislation, gave an official proposal to amend Articles 94 and 95 of the Rulebook on the Application of the Law on VAT.

Bearing in mind the future growth of BH exports, it becomes clear how important it is to access the Amendments to the Ordinance on the Application of the Law on VAT as soon as possible.

Finally, the conclusion of bilateral agreements in this area is step forward towards EU integrations, because this is one of the segments that will in any case have to undergo the described changes.

Eurofast is a regional business advisory organisation employing local advisors in over 23 cities in South East Europe & Middle East (SEEME). The Organisation is uniquely positioned as one stop shop for investors and companies looking for professional services in South East Europe & Middle East. 

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