Capital Gains Taxation in Bosnia and Herzegovina
In Bosnia and Herzegovina, the taxation of capital gains is governed by the Law on Income Tax ("Official Gazette of Bosnia and Herzegovina", No. 24/05, 82/05, 62/07, 18/08, 62/08, 89/08, 24/10, 84/10, 62/11, 100/11, 47/12, 95/12, 122/12, 42/13, 95/13, 142/13, 12/14, 108/14, 24/15, 96/15, 63/16, 107/16, 18/17, 96/17, 78/18, 55/19, 93/19, 123/19, 17/20, 47/20, 86/20, 130/20, 70/21, 123/21, 29/22, 68/22, 101/22, 133/22, 10/23, 27/23, 62/23, 90/23, 121/23).
Definition of Capital Gains
Capital gains in Bosnia and Herzegovina refer to the profit realized from the sale or disposal of capital assets. Capital assets include:
- Real estate properties
- Stocks and securities
- Bonds and debentures
- Business assets
There is no distinction made between short-term and long-term capital gains for tax purposes.
Calculation of Taxable Capital Gains
Taxable capital gains are calculated as the difference between the selling price of the asset and its acquisition cost. The formula for calculating capital gains is as follows:
Capital Gain = Selling Price - Acquisition Cost - Expenses
Adjustments or deductions may be allowed in the calculation of the gain, including expenses related to the sale (e.g., brokerage fees, legal fees) and any improvements made to the asset during ownership.
Tax Rates
Capital gains in Bosnia and Herzegovina are taxed at a flat rate of 10%. This rate applies to both individuals and legal entities.
Legal Framework
The taxation of capital gains in Bosnia and Herzegovina is outlined in the following articles of the Law on Income Tax:
- Article 12: Definition of taxable income
- Article 13: Calculation of taxable income
- Article 14: Tax rates
Policy Objectives
The capital gains tax system in Bosnia and Herzegovina aims to:
- Generate revenue for the government
- Encourage investment and economic growth
- Ensure that individuals and businesses contribute their fair share of tax on profits realized from investments and asset disposals
Conclusion
The capital gains tax system in Bosnia and Herzegovina is relatively straightforward, with a flat tax rate of 10% applied to all capital gains. This system provides clarity and predictability for taxpayers and helps to ensure that the government receives its fair share of revenue from investment activities.
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