Amendments to the Law on Contributions in the FBiH, effective from July 1, 2025, represent one of the relief measures for the economy in recent years.
By reducing the total employer-paid contribution rate from 10.5% to 5.0%, the Government of FBiH aims to stimulate employment, increase the competitiveness of businesses, and ease the burden on the real sector.
Read more below.
What are the exact amendments to the Law on Contributions in the FBiH?
Only the contributions paid by the employer “on top of” the gross salary are being reduced — these are the so-called contributions on salary, known as the difference between gross 1 and gross 2.
- Gross 1: the amount agreed with the employee, from which taxes and contributions are deducted to calculate the net salary.
- Gross 2: the actual cost to the employer, which includes gross 1 plus employer-paid contributions.
The law does not foresee any reduction in contributions from the salary (employee-paid), nor changes in income taxation. As a result, net salary remains unchanged.
What does this mean in practice?
Example 1 – Minimum wage
For the same gross salary (gross 1), the employer now pays fewer contributions to the state. In the case of a minimum gross salary of 1,562.00 BAM:
- The net salary remains 1,000.00 BAM, without meal or transport allowance.
- The total employer cost decreases from 2,126.82 BAM to 2,040.91 BAM.
- The savings amount to 85.91 BAM per employee per month — a real cost reduction of 4.04%.
Example 2 – Average salary
For the same gross salary (gross 1), the employer now pays fewer contributions to the state. In the case of an average gross salary of 2,472.00 BAM:
- The net salary remains 1,565.11 BAM, without meal or transport allowance.
- The total employer cost decreases from 3,142.57 BAM to 3,006.61 BAM.
- The savings amount to 135.96 BAM per employee per month — a real cost reduction of 4.33%.
Conclusion – Who feels the effect?
This amendments to the Law on Contributions in the FBiH directly benefits employers. Employees do not see increased earnings because the net salary remains unchanged. Also, the law does not require employers to allocate the saved amount to increase salaries, bonuses, or improve working conditions.
If you have any additional questions, feel free to contact us. Our payroll experts will be happy to provide all the necessary information and support.
