FBiH Government Adopts Decrees on Refund and Co-financing of Contributions

(Patria) - The FBiH Government adopted two decrees at an emergency session today, establishing financial support for private employers through the refund or co-financing of contributions, and giving employers the possibility to pay workers a tax-free monthly assistance of up to 450 KM.

Financial Assistance for Private Employers

The Government of the Federation of Bosnia and Herzegovina adopted the Decree on Measures of Financial Assistance to Private Employers, Crafts and Other Self-Employed Activities in the Federation of Bosnia and Herzegovina with the aim of maintaining existing jobs for 2025. This decree regulates the conditions for granting financial assistance, the method of allocation, analysis of effects, as well as the method of reporting.

The granting of financial assistance refers to the refund of the already paid portion of contributions for employed workers for the period from January 1 to December 31, 2025. The goal of granting financial assistance is the sustainability of beneficiaries, preservation of existing jobs, and ensuring liquidity support for this period.

The total financial resources for the implementation of this decree are secured in the FBiH Budget for 2025 under the allocation of the Federal Ministry of Development, Entrepreneurship and Crafts in the amount of 100,000,000 KM.

The financial assistance funds under this decree are intended for maintaining existing jobs for 2025 for employed workers at beneficiaries who meet the conditions according to the defined methodology, and will be used for the refund of the paid portion of contributions for the number of workers the beneficiary had as of November 30, 2024, who had a net salary of less than 1,000 KM and who have continuity in the insurance registration of workers during 2025.

Financial assistance is granted to beneficiaries based on the Decision of the Government of the Federation of Bosnia and Herzegovina on the distribution of funds, and is paid monthly, i.e., no later than 45 days after the end of the current month of 2025.

Beneficiaries of financial assistance will use the funds as a refund of the already paid portion of contributions for the relevant period, and the results, i.e., the effects of the financial assistance to beneficiaries, will be presented as part of the final report on the granted financial assistance with an analysis of effects.

Financial assistance will be granted to beneficiaries (legal and natural persons) based on data obtained from the Tax Administration of the Federation of Bosnia and Herzegovina, who have their seat on the territory of the Federation of Bosnia and Herzegovina, have at least one employed worker as of November 30, 2024, who had a net salary of less than 1,000 KM and at least one employed worker at the end of the current month of 2025, and have achieved a net profit from operations (companies) or income from self-employment (crafts and other self-employed activities) in the last financial report of less than 6,500 KM per employed worker (average number of workers in 2024).

Conditions also include that beneficiaries have no outstanding obligations based on contributions and taxes, as of the end of the previous month relative to the month of 2025 for which the salary is paid, that they have active transaction accounts, and that they have preserved existing jobs.

This applies to those beneficiaries who, at the end of the current month in 2025, have the same or a greater number of employed workers than the number employed as of November 30, 2024.

The right to a refund is also enabled for beneficiaries who may have a reduction in the number of workers compared to the number of workers as of November 30, 2024, namely: micro and small enterprises and craftsmen and other self-employed activities (up to 50 employees) who have a maximum of 30 percent fewer employees, as well as other employers (50 or more employees) up to 10 percent fewer employees, due to circumstances beyond the employers' control.

The right to a refund is also enabled for exporters who, due to market disruptions, have more than a 20 percent drop in revenue compared to the same month of the previous year, and may apply to the Federal Ministry of Finance for approval of the refund even in cases where they have more than 10 percent fewer employees.

The decree also establishes exceptions to the right, the maximum allowed amount and mechanism for granting financial assistance, as well as the method of granting assistance.

The decree also establishes coefficients for calculating financial assistance, and the amount is calculated by multiplying the unit value of the coefficient by the number of employed workers as of November 30, 2024.

Coefficient 1 in the amount of 50 KM applies to all employed workers for whom contributions were paid on a net salary from 800.01 to 999.99 KM, coefficient 2 in the amount of 100 KM for all employed workers for whom contributions were paid on a net salary from 700.01 to 800 KM, coefficient 3 in the amount of 150 KM for all employed workers for whom contributions were paid on a net salary from 620.01 to 700 KM, and coefficient 4 in the amount of 300 KM for all employed workers for whom contributions were paid on a net salary up to 620 KM.

Based on the methodology for granting financial assistance, the Ministry will publish final Decisions on granting financial assistance to beneficiaries in the Official Gazette of the Federation of Bosnia and Herzegovina no later than 45 days after the end of the current month in 2025.

The final lists of beneficiaries will be published on the websites of the Government of the Federation of Bosnia and Herzegovina and the Ministry after the end of the current month in 2025. The decree enters into force on the day following the day of its publication in the Official Gazette of the FBiH.

Tax-Free Amount up to 450 KM

This decree enables employers to pay monthly assistance to their workers, and prescribes the right to pay assistance to workers by the employer, the dynamics and amount of payment, as well as the method of implementation.

As explained, the decree enables employers to pay their workers up to 450 KM per month as assistance with the aim of mitigating the consequences of the increase in the cost of living, in a way that increases workers' income from the employment relationship, without additional burden on employers in terms of paying income tax and contributions for mandatory insurance.

With the adoption of this decree, as well as the previously adopted Decision on the amount of the lowest salary for 2025, steps have been taken towards fiscal reform, which, among other things, relates to the reduction of the aggregate contribution rate for mandatory insurance, as well as the relief of employers.

The decree stipulates that the right to assistance is held by a person who has an established employment relationship with the employer in accordance with Article 4 of the Labor Law. The right to assistance is held by employers who regularly pay salaries and pay contributions for employees in accordance with applicable regulations, and have no outstanding obligations based on taxes and contributions, as well as exceptionally, if they have concluded an agreement with the Tax Administration of the Federation of Bosnia and Herzegovina on deferral or payment of obligations in installments, in accordance with special regulations governing this, and regularly settle obligations in accordance with the concluded agreement.

Based on this decree, the employer may pay assistance to its workers up to 450 KM per month in accordance with financial capabilities and the rules prescribed by this decree. Also, the employer may pay assistance to the worker in an amount lower than this amount.

This assistance may be paid in the period from the date of entry into force of the decree, and no later than the date of its expiration.

The decree also stipulates that the employer cannot apply the provisions of the decree in a way that reduces the worker's salary that was calculated and paid for the month of November 2024. Payment of assistance will be made exclusively to the workers' transaction accounts, and may be monthly, no later than the last day of the month for the previous month.

The employer is obliged to adopt an internal act which will, among other things, regulate the amount and conditions for payment of assistance to workers. Individual acts, adopted by the employer for exercising this right, must be adopted in writing.

The employer is obliged, by the 7th of the month for the past month in which the assistance was paid, to submit to the competent Tax Office a report on the payment of assistance, which will carry out a check of the fulfillment of conditions.

The Tax Administration is obliged to submit aggregate data from the reports to the Federal Ministry of Finance by the end of the month for the previous month. The Ministry will monthly submit to the Government of the Federation of Bosnia and Herzegovina information on payments made, in accordance with this decree, with the aim of monitoring its effects.

This decree enters into force on the day of its adoption and will be published in the Official Gazette of the Federation of Bosnia and Herzegovina, and ceases to be valid on July 31, 2025.