Do I Need a Local Entity to Hire in Bosnia & Herzegovina?

In Bosnia & Herzegovina, a "local entity" typically refers to a business structure like a subsidiary or branch office that allows a foreign company to operate legally and employ staff. This setup is essential for managing local payroll, tax obligations, and employee rights effectively. Without a local entity, you may struggle to fulfill these obligations and ensure compliance with local labor laws.

For many companies, establishing a local entity can be time-consuming and costly. Fortunately, using an Employer of Record (EOR) can be a practical alternative. An EOR allows you to hire employees in Bosnia & Herzegovina without the need for a local entity, as they take on the legal employer responsibilities while you focus on your business operations.

What is Required to Employ Someone in Bosnia & Herzegovina?

• Local employing entity required to directly employ? Usually yes (unless using an EOR)
• Payroll registration required? Yes (employer must register with the Tax Administration)
• Withholding/tax remittance required? Yes (mandatory income tax and contributions must be withheld)
• Social contributions required? Yes (employer must pay social security contributions)
• Local employment agreement required? Yes (written contracts are mandatory under local law)
• Mandatory benefits to budget? Yes (statutory leave, health insurance, and pension contributions)
• Works council/collective agreements considerations? Often (many sectors have collective agreements influencing employment terms)

Best Options If You're Hiring in Bosnia & Herzegovina

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but be cautious about misclassification risks.

While hiring contractors allows you to bypass establishing a local entity, Bosnia & Herzegovina has strict regulations regarding employment classification. If contractors are deemed to be functioning as employees, you could face legal challenges and financial penalties.

• Ensure that contractors operate independently and are not integrated into your business.
• Be wary of controlling their work hours, tools, or methods.
• Consider the nature of the work and its alignment with your core business activities.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Bosnia & Herzegovina, depending on the required registrations and documentation.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 1,500–3,000 BAM per month ($800–$1,600)
• Payroll provider: Estimated 200–500 BAM per employee per month ($100–$250)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated 2,000–5,000 BAM per year ($1,000–$2,500)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 per month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions, typically around 41% of gross salary)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Bosnia & Herzegovina

Hiring in Bosnia & Herzegovina can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Bosnia & Herzegovina quickly without establishing a local entity, eliminating incorporation costs and ongoing administration.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.