The income and capital tax treaty between Bosnia and Herzegovina and Poland entered into force on 7 March 2016. The treaty, signed 4 June 2014, replaces the 1985 tax treaty between Poland and the former Yugoslavia as it applies in respect of Bosnia and Herzegovina and Poland.
The treaty covers Bosnia and Herzegovina individual income tax and enterprise profit tax, and covers Polish personal income tax and corporate income tax.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Bosnia and Herzegovina applies the credit method for the elimination of double taxation. Poland applies the credit method for income covered by Articles 7 (Business Profits), 10 (Dividends), 11 (Interest), 12 (Royalties), 13 (Capital Gains) and 20 (Other Income). Otherwise, Poland applies the exemption with progression method.
Article 26 (Limitation on Benefits) includes the provision that a resident of a Contracting State will not be entitled to the benefits of the treaty in respect of Articles 10 (Dividends), 11 (Interest), 12 (Royalties) and 13 (Capital Gains) if the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares, debt-claims or other rights in respect of which the income is paid is to take advantage of those Articles by means of that creation or assignment.
The treaty generally applies from 1 January 2017. However, the provisions of Article 24 (Mutual Agreement procedure) and Article 25 (Exchange of Information) apply from the date of its entry into force.
The 1985 tax treaty between Poland and the former Yugoslavia is terminated and ceases to have effect on the dates the provisions of the new treaty apply.
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