How to pay contractors in Bosnia and Herzegovina

How to choose: four questions for paying a contractor in Bosnia and Herzegovina

1. Does the engagement look like a job under Federation rules? The Federation’s income tax rulebook decides whether work is dependent or independent from the whole picture of the relationship. Its markers of dependent work include the client setting the type, place and time of work, providing the means of work, covering business expenses and paying regular compensation (Pravilnik on the Income Tax Law, Art. 13, paragraf.ba, checked 2026-09-29). The Federation’s Labour Law adds a presumption: where someone performs paid work for an employer without a written employment contract, an open-ended employment relationship is deemed to exist unless the employer proves otherwise (paragraf.ba, checked 2026-09-29). A developer on your hours, your laptop and a flat monthly fee ticks most of these boxes. A contractor with other clients, their own schedule and project billing can be paid by wire or a payout tool. A full-time contractor with you as sole client belongs with a Contractor of Record (see contractor misclassification). 4dev acts as Contractor of Record — the contracting party for each contractor — which reduces reclassification risk. Other providers sign as the counterparty too; read the liability clause in the COR contract, not the product name. If the role is a job in substance, Deel, Remote and Multiplier run EOR alongside their contractor products.

2. Which entity is the contractor registered in? The contractor’s costs, and so their rate, depend on it. A Federation sole trader keeping books pays 10% income tax on profit (PwC, checked 2026-09-29) plus contributions of KM 576.72 a month for a craft or KM 975.60 for a free profession in 2026 (bloombergadria.com, checked 2026-09-29). In Republika Srpska a small entrepreneur pays 2% of revenue up to KM 100,000 a year, with a floor of KM 600 or KM 1,200 (paragraf.ba, checked 2026-09-29), and programmers keep access to that status while consultants lost it in 2025 (kontoprom.com, checked 2026-09-29). It changes what you file, not how you pay: ask for the registration decision at onboarding and keep it with the contract.

3. EUR or USD, and through which rail? Bosnian banks are outside SEPA until the application filed on 6 August 2026 is approved and a transition of at least six months has run (klix.ba, checked 2026-09-29). Every payment is therefore an international transfer. Euros are the natural choice: at a fixed 1.95583 KM per euro the contractor knows the KM value in advance (cbbh.ba, checked 2026-09-29). Wise cannot send KM to Bosnia and Herzegovina; it sends USD by international wire (wise.com, checked 2026-09-29) and lists the country among destinations for EUR over Swift (wise.com, checked 2026-09-29). If you hold euros, wire EUR with the OUR or SHA option agreed in the contract. If you hold dollars, compare a platform’s conversion with a USD wire the contractor converts at their bank.

4. How large and how frequent are the payments? Receiving fees are charged per inflow with a minimum. Raiffeisen Bank BiH charges 0.20%, minimum KM 20 on a business account (raiffeisenbank.ba, checked 2026-09-29), so the minimum applies to every transfer below KM 10,000, about €5,113. On a personal account the tariff from 1 February 2026 is 1%, minimum KM 15, up to KM 10,000 (raiffeisenbank.ba, checked 2026-09-29). Four weekly payments of €500 pay the minimum four times. On the platform side, a percentage fee is cheaper than a monthly seat on small invoices, and a seat or flat fee wins once invoices reach a few thousand euros. If you pay one contractor a small monthly amount, a percentage-fee platform or Wise costs least. If you pay a team, batch the month into one transfer per contractor.

Rule of thumb. One contractor with other clients who invoices you in euros: a EUR wire or Wise. Several contractors, or you want documents with every payment: a contractor platform with a document flow. One client, full-time, your hours: a Contractor of Record. Compare the full field in the contractor payouts rating.

Payout rails that work in Bosnia and Herzegovina in 2026

What the contractor needs to get paid

Most IT contractors register as sole traders. In the Federation that is an obrt or related independent activity, registered at municipal or city level, in a process that takes 15 to 30 days (act.ba, checked 2026-09-29). In Republika Srpska it is a preduzetnik, entered in the central register of entrepreneurs kept by APIF (apif.net, checked 2026-09-29). Higher earners sometimes use a d.o.o., which pays 10% corporate income tax in all three jurisdictions (PwC, checked 2026-09-29).

The contractor needs a foreign-currency account. Under the Federation’s Law on Foreign Exchange Operations, a resident company or sole trader holds foreign currency on its account at a bank or sells it to that bank (fbihvlada.gov.ba, checked 2026-09-29); the Republika Srpska law sets the same rule (paragraf.ba, checked 2026-09-29).

Tax follows the entity:

• Federation: 10% on profit from the books, or a flat-rate regime for some activities. Contributions are 36% of a fixed base, the rate since 2025: KM 576.72 a month for a craft keeping books, KM 975.60 for a free profession, KM 487.80 on the flat-rate regime in 2026 (bloombergadria.com, checked 2026-09-29).
• Republika Srpska: a small entrepreneur pays 2% of revenue up to KM 100,000, at least KM 600 a year below KM 50,000 and KM 1,200 above; others pay 10% on profit (paragraf.ba, checked 2026-09-29). Contributions are 31% of 70% of the average gross wage, KM 509.73 a month in 2026 (euronews.ba, checked 2026-09-29).
• Brčko District: its own income tax law, at 10% (paragraf.ba, checked 2026-09-29).

VAT is levied at state level: 17%, with registration above KM 100,000 of taxable supplies (VAT Law, Art. 23 and 57, paragraf.ba, checked 2026-09-29). Rights transfers, consulting and engineering services for a client without a seat in BiH are supplied where the client is (Art. 15), so the invoice carries no BiH VAT. Classification, IP and the entity split in more detail are in our hiring guide.

Documents and tax on the payer’s side

Withholding. None for a client abroad: the invoice is paid in full, and the contractor settles tax with the FBiH, RS or Brčko authority.

US payers. Ask a sole trader for Form W-8BEN and a d.o.o. for W-8BEN-E. No US income tax treaty covers Bosnia and Herzegovina; the country is missing from the IRS treaty list (irs.gov, checked 2026-09-29), and PwC’s list of BiH treaty partners does not include the US (PwC, checked 2026-09-29). Services performed in Bosnia and Herzegovina produce foreign-source income under the IRS sourcing rule (irs.gov, checked 2026-09-29), and no Form 1099-NEC is filed.

Your file for each contractor:

• the signed services contract, with currency, payment schedule, a written IP assignment and a description of how the contractor works;
• the contractor’s registration decision, which shows the entity;
• invoices with number and date;
• SWIFT confirmations showing who bore the charges (OUR, SHA or BEN);
• the W-8BEN, if you are a US payer.

If a platform or Contractor of Record sits in between, your record is its invoice to you, and the contract and invoices with the contractor stay with the platform.

Where it breaks

• Wire charges eat into the amount. Without SEPA, a EUR wire can pass intermediary banks that deduct fees on SHA or BEN, and the receiving bank then takes its own. If you send OUR and the foreign bank does not pass on the full processing fee, Bosna Bank International’s terms let it collect the shortfall from the recipient afterwards (bbi.ba, checked 2026-09-29). Agree in the contract who pays which charges.
• Minimums on small transfers. A KM 20 minimum on a business account or KM 15 on a personal one makes weekly small payments expensive. Pay monthly.
• The bank asks where the money came from. Bosna Bank International asks for supporting documents on inflows from high-risk or non-cooperative countries and offshore destinations, and clients must correct inflow data within two business days for reporting to the Central Bank (bbi.ba, checked 2026-09-29). Paying from an entity in such a jurisdiction, keep the contract and invoice ready and put the invoice number in the payment reference.
• An unregistered contractor. An individual in the Federation without a registered business must file form AMS-1035 and pay 10% tax plus a 4% health contribution within 5 days of each payment from abroad (poreznikalkulator.ba, checked 2026-09-29). Payments that recur monthly are a reason for them to register, and a reason for you to ask for the registration decision.
• Paying from a local company. Payments between residents in the Federation must be made in convertible marks (fbihvlada.gov.ba, checked 2026-09-29). A BiH subsidiary that pays a local contractor pays KM, not EUR.
• Waiting for SEPA. Admission and the six-month technical transition are still ahead (klix.ba, checked 2026-09-29). Do not promise a contractor SEPA timing in the contract. For comparison, neighbouring Serbia went live with SEPA credit transfers in early May 2026 (nbs.rs, checked 2026-09-29).