El Salvador is one of the countries in Latin America that has splendid landscapes and makes a special emphasis on renewable sources of energy. The service sector, international trade, and tourism are the most developed ones in the local economy. El Salvador is also a good business hub for investors. Establishing a company in San Salvador or in any other location in this state can instantly open the next benefits for a non-resident investor.
Arguments in Favor of the Jurisdiction
Purchasing or starting a company in El Salvador may be assessed as a potentially profitable step because this jurisdiction provides:
- access to large regional and world markets;
- ">openness to foreign investments;
- general ease of starting and handling a business;
- excellent modern infrastructure;
- technological hub, especially for cryptocurrencies and digital assets;
- availability of free zones (with income tax, VAT, and customs exemptions);
- convenience of international transactions in any currency, without limitations (including in cryptos).
Legal and Organizational Forms
Company incorporation in El Salvador and/or establishing an official presence in an alternative way is possible in one of these legal forms:
- Limited liability company – the most popular and flexible form of doing business in El Salvador that may be established by two persons at least, whether natural or corporate. Non-residents are welcomed as well. All types of monetary and legal obligations of the shareholders are narrowed to their contributions solely. The minimal starting capital for this entity is USD 2,000.
- Branch – a good alternative to founding a separate entity in El Salvador. A branch can be established by a foreign company to carry out in El Salvador the same types of economic activities as in the country of origin. A parent company will remain 100% in charge of financing the activities and covering the potential losses of a branch.
How to Register a New Entity in El Salvador?
It is possible to establish a company in El Salvador after passing through the next approximate stages:
- Defining the exact list of business purposes and activities.
- Elaborating on and verifying a business name for a future enterprise.
- Collecting and arranging the details from promoters, beneficiaries, the mother company, and managers. Natural persons who are non-residents should get local Tax Identification Numbers.
- Drafting corporate documents, including a deed of incorporation and resolutions of founders.
- Depositing the amount of starting share capital (5%+).
- Paying the registration fee and lodging application documents for consideration. Forming a new entry about a registered company in the Registry of Commerce in case of positive feedback.
- Formalizing a new company to pay taxes and compulsory social security payments.
- Opening corporate bank accounts.
- Applying for and obtaining licenses if amongst the chosen business activities there are regulated ones.
Legal and Regulatory Landscape
The local investment landscape is very favorable to non-resident entrepreneurs. 100% foreign ownership is allowed. The free movement of capital is ensured as well.
All administrative procedures for company registration and further maintenance are simplified and straightforward. There are minimal and reasonable bureaucratic formalities to fulfill. Each company registered in El Salvador should pay an annual renewal fee to keep the so-called business license active. The amount of such a fee depends on the size of the company's assets. Certain types of business activities will still require getting licenses.
Taxation in El Salvador
Any intention to create or buy a company in El Salvador should be assessed along with the next points attributed to taxation in this state:
- Profit tax (for businesses) – 30%
- Income tax (for natural persons) – 30%
- Value-added tax – 13%
- Withholding tax (for non-residents) – (A) general: (1) dividends – 5% (2) interests – 10% or 20% (3) royalties – 20% (B) for tax havens: (1) dividends – 25% (2) interests – 10% or 25% (3) royalties – 25%
- Capital gains tax – 10% or 30% depending on the case.
How Prifinance Attorneys Can Assist You
Whether you wish to buy a ready-made company in El Salvador or create a new one, Prifinance attorneys are prepared to foster the easiest realization of these business goals. Lawyers possess versatile expertise in registering businesses worldwide gained through more than 11 000 projects. Forward the details about your business plan in El Salvador and get 100% professional and personalized legal assistance.