Payroll in Bosnia and Herzegovina 2026: FBiH, RS and Brčko

Payroll in Bosnia and Herzegovina is run separately in the Federation of BiH, Republika Srpska and Brčko District. In each, the employer withholds employee contributions and income tax from gross pay and pays them when salaries are paid. Employer contributions on top are 5% in the Federation and none in Republika Srpska.

Payroll in Bosnia and Herzegovina at a glance

Salaries are paid in convertible marks (KM, ISO code BAM). Contributions, income tax and the minimum wage are set separately by each entity and by Brčko District.

Social security contributions by entity

Federation of BiH

The Federation's Law on Contributions sets these rates on gross salary. The employer's pension and health contributions were cut from 6% and 4% to 2.5% and 2% for salaries from 1 July 2025 (Službene novine FBiH 33/25), so the employer now pays 5% instead of 10.5%.

Contributions are charged on at least the minimum wage set by the government; for part-time work of four hours a day or less the floor is 50% of it. Jobs counted with an accelerated insurance period carry an extra pension contribution of 2% to 6%. Items that are free of income tax are also free of contributions. The Federation's list of public revenues also includes a special fee for protection against natural disasters, calculated on total net salaries, and a general water fee; check their rates with your accountant.

Republika Srpska

In Republika Srpska all contributions are paid from gross pay, at 31% in total, and the employer pays no contributions on top:

Since 1 January 2026, a non-taxable part of salary of 50 KM net a month applies to certain jobs, depending on the education level the job requires; it is free of both income tax and contributions.

Brčko District

Brčko District's health insurance rates are set by decision of the District Assembly, and pension contributions for Brčko employees go to the pension fund of the Federation or of Republika Srpska. Check the current rates with the District's Tax Administration before your first payroll; this guide does not give figures for them.

Income tax on salaries by entity

Federation of BiH. Income tax is 10%. The monthly base is gross salary minus the employee's contributions minus the personal deduction. The basic personal deduction is 3,600 KM a year (300 KM a month), increased by coefficients of the basic deduction for a dependent spouse (0.5), the first child (0.5), the second child (0.7), the third and each further child (0.9), other dependent family members (0.3) and disability (0.3). The deduction is applied by the employer where the employee has a tax card; without it, tax is 10% with no deduction. Tax is paid on the day of the salary payment or the first day after it.

Republika Srpska. Income tax on personal earnings is 8%. Contributions are not deducted: the base is gross salary, less any non-taxable part, minus a personal deduction of 1,000 KM a month (12,000 KM a year).

Brčko District. Income tax is 10%. The base is salary minus the employee's contributions minus the personal deduction of 1,200 KM a month (14,400 KM a year), in force since 1 August 2022. Tax is paid on the day of the salary payment or the first day after it.

Minimum wage, working time and mandatory pay

Federation of BiH. The government set the minimum wage for 1 January to 31 December 2026 at 1,027 KM net, 2.7% more than in 2025. Salaries are paid after the work is done, for pay periods of no more than 30 days, and the salary for the previous month falls due in the current month. Overtime is paid at a higher rate set by the collective agreement, work rules or employment contract. A hot meal allowance is free of tax up to 1% of the average net wage in the Federation, and a holiday allowance (regres) up to 50% of the average net wage of the last three months; these are tax-free limits, not an obligation to pay.

Republika Srpska. The 2026 minimum wage is 1,476.23 KM gross (1,000 KM net), and higher for jobs requiring more education:

Salaries are paid at least once a month, by the end of the month for the previous month. The employer pays the cost of one hot meal per working day, and overtime is paid at a higher rate set by the general act or employment contract.

Brčko District. There is no government minimum wage: the minimum is set by the employer's general act and may not be lower than the lowest wage on which contributions are paid in the entities. Salary is paid in its net amount at least monthly, by the end of the month for the previous month. Overtime is paid at least 30% more, and the employer pays one hot meal per working day, free of income tax up to 10 KM a day.

Monthly payroll calendar and filings

Federation of BiH

1. 1Register each new employee in the Single Registration System with the Tax Administration at the latest the day before they start work; report other changes within seven days.
2. 2With each salary payment, give the employee a written payslip showing contributions, income tax and the amount paid out, pay the contributions and the tax, and send the Tax Administration the specification of contributions and tax for that payment the same day or at the latest the next day.
3. 3File MIP-1023 by the 15th of the following month.
4. 4Annually, give each employee the GIP-1022 statement by the end of February. From 2026 MIP-1023 and GIP-1022 are filed electronically with a qualified electronic certificate.

If the salary is not paid, the contributions on it are still due by the last day of the month in which it fell due.

Republika Srpska

1. 1Register employees with the Tax Administration on form PD3100 (registration, change and de-registration for contributions).
2. 2Withhold tax and contributions at each payment.
3. 3File form 1002, the monthly withholding return for tax and contributions, by the end of the month for the previous month.
4. 4Give a written payslip with the salary.

Brčko District

Pay the salary and give a written payslip; confirm registration and filing forms with the District's Tax Administration.

Worked example: 2,000 KM gross in the Federation and Republika Srpska

An employee earns 2,000 KM gross a month, is single and has no dependants. In Republika Srpska the job qualifies for the 50 KM non-taxable part.

In the Federation the employer's 100 KM is 50 KM pension, 40 KM health and 10 KM unemployment insurance; before 1 July 2025 it would have been 210 KM. In Republika Srpska the 604.50 KM is 360.75 KM pension, 198.90 KM health, 11.70 KM unemployment and 33.15 KM child protection. Fees such as the Federation's disaster-protection and water fees are not included.

Common mistakes

1. 1Using one set of rates for the whole country. Each entity and Brčko District has its own rules; check cross-entity cases, such as an employee living in another entity, with your accountant.
2. 2Still charging the Federation's old employer rates of 6% and 4% after 1 July 2025.
3. 3Deducting contributions before tax in Republika Srpska. The RS tax base is gross pay minus the personal deduction only.
4. 4Forgetting the 50 KM non-taxable part in Republika Srpska from January 2026, or applying it to jobs that do not qualify.
5. 5Paying the Republika Srpska minimum wage for the wrong education level.
6. 6Sending the Federation's payment specification late. It is due the same day as the payment or the next day.

How Clientlly helps

Clientlly does not ship a built-in payroll profile for Bosnia and Herzegovina. An administrator enters the payroll rates of the entity where the business employs its staff once in the payroll tax settings: the income-tax bands, the personal allowance, the employee and employer contribution rates and the minimum wage. Clientlly then calculates gross to net and the employer contributions and produces payslips. Entity-specific items such as the Republika Srpska non-taxable part and the Federation's other fees should be checked for each employee.

Alongside payroll, the human resources module handles leave requests and approvals with a leave calendar and keeps HR documents, and attendance and time tracking records working hours and overtime.