US Company Formation from Bosnia and Herzegovina (2026): US LLC or C-Corp, Two Entities' Tax Rules, the St. Louis Diaspora and No US Treaty

Bosnia and Herzegovina is one country with three tax administrations. The Federation of Bosnia and Herzegovina (FBiH), Republika Srpska (RS) and the Brčko District each set and collect their own income and profit taxes, while VAT is common to the whole state. So the first question for a Bosnian founder with a US company is not national but local: which entity you live in decides how your income is taxed.

Bosnia's IT sector, centred on Sarajevo, Banja Luka, Mostar and Tuzla, sells increasingly to clients in the USA and Western Europe. The diaspora is large and well established in the USA: St. Louis has the largest Bosnian community outside Bosnia, and there are big communities in Chicago, Utica, Jacksonville and elsewhere. Many families run businesses on both sides. A US company can be formed from Bosnia and Herzegovina remotely. This guide covers the entity rules, the missing US treaty, and the choice between US LLC formation and US C-Corp formation.

In short: citizens and residents of Bosnia and Herzegovina can own 100% of a US LLC or C-Corporation, formed remotely. Residents are taxed on worldwide income, with a credit for foreign tax, under the rules of their entity. The Federation applies a 10% personal income tax rate. Republika Srpska applies 8% to employment income, 10% to self-employment and 13% to other income. Corporate profit tax is 10% in both entities. There is no US–Bosnia and Herzegovina income tax treaty, so US corporate dividends to BiH carry 30% withholding. A single-member US LLC with no US operations usually pays no US tax and no dividend withholding. With UCB, a Wyoming LLC with EIN is $249 and a Delaware corporation with EIN is $358, all-in.

Who can form a US company from Bosnia and Herzegovina

US states do not restrict ownership by nationality or residence. A citizen of BiH, a foreigner living in Sarajevo or Banja Luka, or a Bosnian d.o.o. can own a US company outright, and one owner can be its only manager. There is no need for a US visa, SSN, US address or trip. The company needs a registered agent in its state, which is included for the first year in every UCB formation (see registered agent explained), and an EIN, which the IRS issues without an SSN or ITIN (see EIN for non-residents).

For identity, use your passport. The BiH ID card is not accepted by US banks on its own. Many Bosnians also hold Croatian or Serbian passports. Use one consistently on every document. For proof of address, a utility bill (Elektroprivreda, a water company, or BH Telecom or m:tel) or a bank statement, translated into English.

Which entity taxes you

Personal income tax and profit tax in Bosnia and Herzegovina are entity matters:

• The Federation of BiH applies a 10% personal income tax rate to most income, including income from self-employment. Corporate profit tax is 10%. Dividends received by individuals have generally not been taxed as personal income in the Federation.
• Republika Srpska applies 8% to employment income, 10% to self-employment income and 13% to certain other income. Corporate profit tax is 10%. RS has its own rules for dividends and capital income.
• The Brčko District has its own tax laws on similar lines.

Residents are taxed on worldwide income, with a credit for foreign tax up to the local tax on the same income. Social contributions are added on top for employees and self-employed people, and they often cost more than the income tax itself.

For an owner of a US company:

• Work you do in BiH is taxed as BiH income in your entity, whichever company invoices it.
• Distributions or dividends from a US company are foreign income, treated under your entity's rules, with a credit for any US tax.

Because the rules differ between entities, and have changed more than once, an accountant in your own entity should confirm your position.

No US–BiH treaty

Bosnia and Herzegovina has no income tax treaty with the USA. US domestic withholding applies:

• 30% on dividends from a US corporation.
• 30% on royalties.
• 30% on related-party interest.

With local rates around 10%, US withholding is the bigger cost on anything paid out of a US corporation. That favours an LLC for individual owners, and reinvestment in the USA for corporations.

US LLC formation from Bosnia and Herzegovina

US tax treatment

A single-member LLC owned by a non-resident is not taxed by the IRS as an entity. Its income is attributed to the owner. If the work is done in BiH and the LLC has no US office, employees or agents who conclude contracts, there is generally no US trade or business, and so no US income tax (see effectively connected income explained). With no corporate dividend, the 30% rate does not apply to what you take out. The LLC files Form 5472 with a pro forma Form 1120 every year, and the penalty for missing it is $25,000 (see Form 5472 explained).

A KM example

These are illustrative figures, not a client case, at KM 1.75 to the dollar. The convertible mark is pegged to the euro.

Amra is a UX designer in Sarajevo, in the Federation, whose clients are US software companies. She forms a Wyoming LLC because her largest client will only contract with a US vendor, and the LLC bills US$70,000 a year. Her registered self-employment in the Federation invoices the LLC US$66,000 for her work, about KM 115,500, and pays 10% income tax plus contributions under Federation rules. The LLC keeps US$4,000 for US software and services.

In the USA, the LLC files Form 5472 and a pro forma 1120 and owes no income tax. Had Amra lived in Banja Luka, the same structure would apply, but under Republika Srpska's rates and contributions.

US C-Corp formation from Bosnia and Herzegovina

US tax treatment

A US corporation pays federal tax of 21% on its own profits, plus state tax where it operates, and files Form 1120 and Form 5472 every year (see the 21% corporate tax explained and the C-Corp guide for non-residents). Its dividends to BiH are withheld at 30%.

When it fits

• Software firms selling to US enterprises. A Bosnian d.o.o. that delivers development and testing can use a Delaware corporation to sign US contracts and employ US account managers. The US company pays the Bosnian company for delivery at arm's-length prices. The Bosnian margin is taxed at 10% in its entity, and the US margin at 21% in the USA. See US subsidiary for a foreign company.
• Start-ups raising investment, which need a Delaware C-Corporation parent (see raising US investment as a foreign founder).
• Businesses with US premises or staff, which owe US tax on their US profits anyway.

The diaspora: St. Louis, Chicago and beyond

Bosnian Americans run trucking companies, construction firms, restaurants, bakeries and real estate businesses across Missouri, Illinois, Iowa, New York and Florida. Many are owned jointly with family members still in BiH. When some owners are US citizens or green card holders:

• The US owners pay US tax on their share of the profits.
• A multi-member LLC is a partnership filing Form 1065.
• The Bosnian partner's share of US business income is subject to US withholding, and they file a US non-resident return.
• The business must be formed or registered in the state where it operates, such as Missouri for St. Louis.

See single-member vs multi-member LLC.

Which state

• Wyoming or New Mexico for a contracting LLC run from BiH.
• Delaware for a corporation raising investment or signing enterprise contracts.
• Missouri, Illinois or wherever the business operates, for diaspora businesses with US premises.

See best state for non-residents and the state selector.

What it costs

UCB's formation prices include state fees and the first year of registered agent service:

• A Wyoming LLC with EIN is $249, or $348 with a US bank account application.
• A Delaware corporation with EIN is $358.

A Wyoming LLC costs $121 a year to keep active, or $421 including the annual federal return. A US business address with your own suite number is $60 a year. See what a US LLC costs every year.

Banking

US banks and fintechs generally accept Bosnian owners after standard due diligence. What helps:

• A specific business description.
• An English website.
• One passport used consistently.
• A US business address with your own suite number.

Payments to Bosnian banks such as Raiffeisen, UniCredit or ASA arrive as foreign-currency transfers and are converted to KM at the peg-based rate. See US business bank accounts for non-residents, why banks reject non-resident applications and Stripe for non-residents.

Common mistakes

• Using Federation rules while living in Republika Srpska, or the other way round.
• Treating income for work done in BiH as foreign income because a US LLC invoiced it.
• Paying dividends from a US corporation to BiH, at 30% with no treaty.
• Mixing Bosnian, Croatian and Serbian passports across documents.
• Missing Form 5472 in a year when no US tax was due.

Frequently asked questions

Can a citizen of Bosnia and Herzegovina own 100% of a US company? Yes, without visiting the USA or holding a US visa.

Which tax rules apply to me? Those of the entity where you are resident: the Federation, Republika Srpska or the Brčko District. Each has its own income and profit tax laws.

Is there a US–Bosnia and Herzegovina tax treaty? No. US dividends, royalties and related-party interest paid to BiH are withheld at 30%.

Does my US LLC pay US tax? Not if it has no US office, staff or agents. It files Form 5472 and a pro forma 1120 every year.

How UCB can help

We handle US company formation from Bosnia and Herzegovina remotely: the state filing, EIN, registered agent, US business address and bank application. Each year we file the federal return through our US tax filing service, including Form 1065 for family partnerships. Your accountant in your entity handles local filings, and we supply the US records they need. See our formation, EIN and bank account package and the Serbia guide for a regional comparison.

Setting up a US company from Bosnia and Herzegovina? WhatsApp us at +1 315 961 2956 or email enquiries@ucbsolutions.com.