How to Register a Citizens' Association in the Federation of Bosnia and Herzegovina (FBiH) | A Complete Guide

Want to Register a Citizens' Association? Here Is What You Need to Know

If you are planning to establish a sports club, a cultural and artistic society, a humanitarian organization, an environmental association, or another non-profit organization, one of the most common forms of organization in the Federation of Bosnia and Herzegovina is a citizens' association.

Although the registration process is not particularly complex, many founders make mistakes right at the beginning that later slow down registration or complicate the operation of the association. An improperly drafted statute, incomplete documentation, or a misunderstanding of tax and accounting obligations are just a few of the issues that frequently arise in practice.

In this guide, you will learn:

• What a citizens' association is

• Who can be a founder

• What the registration process looks like

• What documentation is required

• Whether an association can generate income

• When it enters the VAT system

• Whether it can employ workers

• What obligations arise after registration

• What the most common mistakes are during foundation

What Is a Citizens' Association?

A citizens' association is a voluntary, non-governmental, and non-profit organization established by at least three founders to achieve shared goals and interests.

Unlike commercial companies and sole proprietorships, the purpose of an association is not to make a profit for distribution to its members. All funds generated by the association must be used to achieve the objectives specified in its statute.

Most commonly established are:

• Sports associations

• Cultural and artistic societies

• Humanitarian organizations

• Youth associations

• Environmental associations

• Professional associations

• Organizations implementing projects funded by grants and funds

When Is Registering a Citizens' Association the Right Choice?

An association is the appropriate organizational form when several individuals want to act jointly in an area of public interest where the primary goal is not making a profit.

Practical example: A group of sports enthusiasts wants to found an athletics school and apply for public calls funding sports projects. In this case, registering a citizens' association is a much more suitable solution than establishing an LLC (d.o.o.) or a sole proprietorship (obrt).

If the primary goal is making money and distributing profits to the owners, then registering a sole proprietorship or a commercial company should be considered.

Who Can Found a Citizens' Association?

An association can be founded by at least three founders.

Founders can be natural (individual) or legal entities, in accordance with the Law on Associations and Foundations of the Federation of Bosnia and Herzegovina.

During the foundation, a founding assembly is held, where the most important acts are adopted and decisions necessary for registration are made.

How to Register a Citizens' Association?

The registration procedure generally involves the following steps:

1. Agreement among founders on the goals and activities of the association.

2. Holding the founding assembly.

3. Adopting the statute.

4. Electing the president, legal representative, and other bodies of the association.

5. Preparing and submitting documentation to the competent registry.

6. Registration of the association in the official register.

7. Making a seal (if required), opening a transaction bank account, and organizing the start of operations.

If the documentation is properly prepared, the registration process is significantly simpler and faster.

What Documentation Is Required for Registration?

The exact list of required documentation may depend on the competent registry, but it usually includes:

• Decision on establishment

• Minutes of the founding assembly

• Statute of the association

• Decision on the election of representatives and governing bodies

• List of founders

• Prescribed forms and other documentation requested by the competent authority

The most common reason for a case being returned for supplementation is precisely incomplete or improperly prepared documentation.

Can a Citizens' Association Generate Income?

Yes.

This is one of the questions clients ask us most frequently.

An association can generate income through:

• Membership fees

• Donations

• Grants

• Sponsorships

• Projects

• Other permitted sources of financing

Also, under conditions prescribed by law, it may perform certain commercial activities related to the objectives for which it was founded.

Important: Any generated surplus revenue cannot be distributed to members or founders; it must be used to fulfill statutory goals.

Can an Association Issue Invoices?

Yes.

When legal conditions are met and when performing permitted activities, an association can issue invoices for services rendered or goods delivered.

In doing so, it is necessary to maintain proper business documentation and correctly record all business transactions.

Does an Association Pay Taxes?

One of the most common misconceptions is that associations do not pay taxes. That is not true.

Depending on the nature of its operations and the types of income generated, an association may have obligations regarding:

• Corporate income tax

• Personal income tax

• Contributions for employees

• Other tax liabilities prescribed by applicable laws

Therefore, it is recommended that an association maintains proper accounting and monitors its tax obligations from the very beginning.

When Does an Association Enter the VAT System?

Like other legal entities in Bosnia and Herzegovina, an association becomes a VAT payer when it meets the legal requirements for mandatory VAT registration.

The current threshold for mandatory registration is 100,000 KM of taxable turnover achieved within the previous 12 months.

From the moment of registration, the association has the same rights and obligations as other VAT payers.

(Read more about this topic in our guide: “When and How to Enter the VAT System?”)

Can an Association Have Employees?

Yes.

An association can conclude employment contracts and hire workers when the need arises.

In that case, it has the same obligations as any other employer, including:

• Employee registration

• Payroll calculation

• Calculation of contributions

• Calculation of income tax

• Maintaining prescribed records

• Fulfilling obligations toward competent institutions

What Obligations Arise After Registration?

Obligations do not end with registration—that is when regular operations begin.

Depending on its activities, an association may be required to:

• Keep financial books

• Prepare financial reports

• Retain business documentation

• Maintain membership records

• Report changes to competent authorities

• Adopt necessary internal regulations

• Comply with accounting, tax, and labor regulations

This is precisely where mistakes are most frequently made, which can later lead to misdemeanor fines or administrative issues.

Most Common Mistakes When Registering an Association

Based on our experience working with clients, here are several frequently repeated mistakes:

• Using a statute downloaded from the internet without customizing it to specific needs

• Unclear definitions of the association's goals

• Incomplete registration documentation

• The false belief that an association has no accounting obligations

• Failure to keep financial books after registration

• Untimely reporting of changes to competent institutions

Proper preparation before registration can prevent most of these problems.

Frequently Asked Questions

• How many founders are needed to register an association? At least three.

• Can an association have a transaction bank account? Yes. After registration, it can open an account in a commercial bank.

• Does the president of the association have to be employed? Not necessarily. It depends on the organization of work and specific circumstances.

• Can an association make a profit? It can generate a surplus of income over expenses, but it cannot distribute it to members or founders.

• Can an association apply for public calls and grants? Yes. That is one of the most common reasons why associations are established.

• Does an association have to maintain accounting? Yes. Associations have accounting obligations in accordance with regulations governing financial operations and reporting.

Conclusion

Registering a citizens' association is an excellent choice for anyone wishing to act in an organized manner in sports, culture, education, humanitarian work, environmental protection, or other activities of public interest.

However, registration is only the first step. Foundation is followed by accounting, tax, and administrative obligations that must be properly fulfilled to ensure the association operates legally and avoids unnecessary complications.

If you plan to establish a citizens' association or need assistance with registration, drafting documentation, accounting, or tax advisory, contact Agencija Poslovnost. We will help ensure your registration process is simple, orderly, and fully compliant with applicable regulations.