Importing a tractor or equipment into BiH: customs duty, VAT, origin and who files

A tractor, tractor attachments, a cold room or kitchen equipment bought abroad must go through customs clearance. Customs duty and VAT are charged on import. Duty is often not charged because of where the goods originate. VAT almost always is, so include it in the price.

In short

• The importer pays customs duty at the rate in the Customs Tariff of BiH and 17% VAT. The Council of Ministers of BiH adopts the tariff for the next year by a decision made by 20 December of the current year.
• Industrial products (tariff chapters 25 to 97, which include tractors, machinery and electrical appliances) originating in the EU or in CEFTA countries, Serbia among them, are imported duty-free. The condition is proof of origin.
• Origin is not the same as the country the goods were shipped from. On a machine made outside the EU and CEFTA but bought in Serbia or Germany, you pay the duty rate the tariff sets for its code, unless BiH has another free trade agreement with the country of origin.
• The VAT base is the customs value plus duty, other import charges and incidental costs up to the first destination in BiH. Zero duty does not mean zero VAT.
• The importer or the importer's customs representative files the declaration.

Who it applies to

Farmers, sole traders and companies that buy equipment in the EU or Serbia for a farm holding, guest accommodation or a kitchen.

What to do

1. Before buying, find the tariff code of the equipment and its duty rate in the Customs Tariff.
2. Agree with the seller which proof of origin they will provide: an EUR.1 movement certificate or an origin declaration on the invoice. Any exporter may make the declaration for a consignment worth up to EUR 6,000. Above that, only an approved exporter may.
3. Ask for an invoice showing the price, a description and the serial number of the equipment.
4. Work out the customs value: the invoice price plus transport, insurance, loading and unloading up to the point of entry into BiH. Transport inside BiH, assembly and maintenance after import are not included if they are shown separately on the invoice.
5. Decide who files the customs declaration: you, if you can present the goods and documents, or a representative. A representative must be registered in BiH and entered in the customs authority's register. The declarant normally needs a registered seat or residence in BiH.
6. If you claim a duty exemption, submit the request together with the declaration.

Example: a tractor from the EU costs 38,000 KM and transport to the BiH border costs 2,000 KM. The customs value is 40,000 KM. With an EUR.1 certificate there is no duty, and VAT is 6,800 KM. This holds if there are no other charges and no transport costs from the border to the first destination in BiH, because those would also be added to the VAT base.

Duty exemptions

Article 207 of the Law on Customs Policy lists the cases, and the Decision published in Službeni glasnik BiH no. 24/18 sets the conditions. Three matter most for farm holdings:

• Production equipment not made in BiH. You need a confirmation from the Foreign Trade Chamber of BiH, proof of a registered production activity, a statement of purpose and an equipment specification certified by you and by the Ministry of Foreign Trade and Economic Relations of BiH. Submit the request to the customs office responsible for the place where the equipment will be used.
• A foreign investor's contribution to a legal entity, except passenger cars. You need the investment contract, proof of registration of the foreign contribution (where registration is required), an equipment specification and the investor's statement that the equipment is not older than ten years.
• Moving a business from another country. The equipment must have been used for at least 12 months before the business closed there, and it must be declared within 12 months of closing. If a farm holding moves, its animals are exempt too. Submit the request to the customs office responsible for the beneficiary's registered seat.

In all three cases, for 36 months after release for free circulation, exempted equipment may not be sold, pledged, lent, given to someone else to use or used for another purpose unless you first notify customs and pay the duty. If you do so without notifying customs, duty is charged at the rate and value on the day of the breach.

VAT follows its own rules. Goods exempt from duty are also exempt from VAT, except those under Article 207(a), indents 1 to 6, of the Law on Customs Policy. These include a foreign investor's contribution and production equipment, so VAT is due on them. Equipment of a business moving from another country (indent 13) is not in that group, so when it is exempt from duty it is also exempt from VAT. A 0% duty because of EU or CEFTA origin is not an exemption under Article 207 but preferential tariff treatment, and VAT is charged on such imports. A VAT-registered taxpayer can deduct VAT paid on import as input tax if the equipment is used for taxable supplies and the import document shows the VAT was paid. Registration is mandatory once turnover in the previous year exceeds 100,000 KM.

Where to go

• Indirect Taxation Authority of BiH (Uprava za indirektno oporezivanje, UIO), nearest customs office. Addresses are on the Contact page: uino.gov.ba, email info@uino.gov.ba.
• For the confirmation that equipment is not made in BiH: the Foreign Trade Chamber of BiH (Vanjskotrgovinska komora BiH).

Before buying expensive equipment, you can submit a written request to the UIO for binding tariff information (obavezujuća informacija o tarifnom svrstavanju robe, Article 16 of the Law on Customs Policy). It binds customs on the tariff code, and the duty rate follows from the code. Check your right to an exemption with the competent customs office before import. Duty rates for individual tariff codes are not given here because they could not be checked in the current tariff.

Laws and sources

• Law on Customs Policy of BiH (Službeni glasnik BiH no. 58/15), Articles 5, 6, 16, 37, 40, 41, 76, 207
• Decision on the conditions and procedure for exemption from import and export duties (Službeni glasnik BiH no. 24/18), Articles 4 to 7, 28 and 29
• Law on Value Added Tax (Službeni glasnik BiH no. 9/05), original text without later amendments, Articles 21, 23, 32, 57
• Law amending the VAT Law (Službeni glasnik BiH no. 33/17), new point 2 of Article 26
• Law on Amendments to the VAT Law (Službeni glasnik BiH no. 80/23), registration threshold of 100,000 KM
• Stabilisation and Association Agreement with the EU, Articles 19 and 21
• CEFTA 2006, Articles 7 and 8
• Law on Customs Tariff of BiH (Službeni glasnik BiH no. 58/12), with the yearly Council of Ministers decision on the Customs Tariff
• UIO: origin of goods and UIO: customs tariff