We often encounter astonishingly confusing questions from clients: "My colleague does the same kind and type of identical work, we work for the same foreign remote company with the same established Gross figure as per agreement. However, his final money in the current part stands and arrives significantly less!" Here we come into direct contact with the power of autonomous self-governments in creating and shaping what we call the "local budget".
Depending on state laws, large cities and municipalities often have autonomy in determining specific tax rates (whether through additional local income taxes, former surtaxes, or independently moving the lower and upper limits of income tax charged by Porezna uprava (FBiH/RS)).
The state gives the legislation base a tax framework. Local government is left to decide how much they will "take" from the workers' income, and that figure results in differences in salaries within the same country.
As standard economics dictates, large metropolises like, say, Sarajevo, record a huge and above-standard influx of central IT employment demand and a huge outflow of funds for managing dense public infrastructure and various traffic solutions in a wide range.
And the logical conclusion and answer to these increased infrastructural needs will be the application of the maximum allowed city tax rate on the total part of income.
If you reside in a large city with a high tax burden, your same Gross salary will result, despite high average earnings at the state level, in a significantly smaller Net amount on your account.
Smaller areas often lower local taxes to the allowed minimum to attract investments and retain residents. For the worker, this means a smaller tax deduction and higher final Net money on the bank account compared to a colleague from the capital.
A classic example of the comparative balance of living costs:
This system actually directly reflects the economic and legal imbalance – although taxation takes a significant fund from your monthly nets despite a great secured higher minimum gross income of the region in metropolises – it is exactly in that place (due to job offers) that the survival of huge and overpriced shackles of real estate takes place, while on the other liberated side, the amount at first glance gives a fantastic usable earning for purchasing efficiency. It is important to choose a calculator for precise city accounting, since average numbers drop when the system automatically detects your municipal range.