Starting a business in
🇸🇻El Salvador
Checked November 9, 2026 · How we score
Corporate tax
30%
Top income tax
30%
Setup from
$2,500
all-in, first year
Time to form
4 weeks
visit usually needed
What is the corporate tax rate in El Salvador?
The headline corporate tax rate in El Salvador is 30% in 2026, and individuals pay up to 30%. 30% on taxable income; 25% for companies with taxable income of up to US$150,000. Territorial: only Salvadoran-source income is taxed. A 1.75% monthly advance payment on gross revenue is credited against annual tax. Free-zone companies, tourism and some digital-asset activity enjoy incentives.
| Corporate income tax | 30% 30% on taxable income; 25% for companies with taxable income of up to US$150,000. Territorial: only Salvadoran-source income is taxed. A 1.75% monthly advance payment on gross revenue is credited against annual tax. Free-zone companies, tourism and some digital-asset activity enjoy incentives. |
|---|---|
| Personal income tax (top) | 30% Progressive scale reaching 30% above about US$22,857 of annual net income; non-domiciled individuals pay a flat 30% on Salvadoran-source income. Only income earned or used in El Salvador is taxed. |
| Tax system | Territorial (foreign income untaxed) |
| Capital gains tax | 10%A flat 10% on gains from assets held more than a year; gains realised within 12 months are taxed as ordinary income. Gains on assets outside El Salvador are generally outside the territorial net. |
| Dividend withholding (non-residents) | 5% |
| VAT / GST | 13% |
| Social security | IVA (VAT) is 13%. Employee contributions are about 3% (health) plus 7.25% (pension) and employers pay about 7.5% plus 8.75–10%, with salary ceilings. A 30% tax applies to non-residents' net rental income. |
Forming a company in El Salvador
| Usual entity | S.A. de C.V. (variable-capital corporation) |
|---|---|
| Minimum capital | $2,000 |
| Setup cost (all-in) | $2,500–$6,000 |
| Annual running cost | $3,000–$7,000 |
| Time to incorporate | 4 weeks |
| Form remotely as a foreigner | No |
| Local director required | No |
| Local address required | Yes |
| Owners on public register | No |
| Statutory audit for small companies | Yes |
| Business banking for non-residents | Moderate |
Residency and visas
El Salvador's Freedom Visa offers citizenship in return for a US$1 million investment in bitcoin or USDT, capped at 1,000 applicants a year, and is the most expensive Caribbean-area route. Ordinary residency is available through temporary residence for investors and retirees, with residency leading to naturalisation after five years. Confirm current terms with the Dirección General de Migración.
| Digital nomad visa | No |
|---|---|
| Golden visa | No |
| Citizenship by investment | From $1M |
| Ease of residency for founders | 3/5 (1 = easiest) |
Taxes for individuals living in El Salvador
El Salvador taxes only Salvadoran-source income, so income earned abroad by a resident is not subject to Salvadoran income tax. Becoming a Salvadoran tax resident also depends on staying 200 consecutive days a year or earning your main income there, and your previous country of residence may still tax you.
| Foreign income of residents | Not taxed |
|---|---|
| Income tax structure | Progressive rates |
| Inheritance / estate tax | 0%No inheritance or gift tax; transfers of real estate carry registration and notary costs. |
| Wealth tax | No |
| Annual property tax on your home | No |
| Exit tax when you leave | No |
| When you become tax resident | Resident if you stay more than 200 consecutive days in a calendar year or your main source of income is in El Salvador. |
Special tax regimes
Freedom Visa / bitcoin citizenship
Applicants who invest US$1 million in bitcoin or USDT, with a US$999 initial deposit credited toward the total, can apply for Salvadoran citizenship. The programme is capped at 1,000 per year. Bitcoin lost its compulsory legal tender status in January 2025 under the IMF loan agreement, but the Digital Assets and related laws still apply.
Territorial taxation
Only income arising in El Salvador is taxed, so foreign earnings of residents are outside the Salvadoran tax net.
Free zones and investment incentives
Export, logistics, tourism and approved digital-asset companies can access income tax exemptions and customs relief under free-zone and investment laws.
Pros and cons
Why founders pick El Salvador
- Territorial taxation: foreign income of residents is not taxed
- Uses the US dollar
- Pro-crypto framework and Bitcoin law legacy
- Low cost of living and company setup
Watch out for
- 30% corporate tax is high for a territorial jurisdiction
- Bitcoin legal tender status was rolled back in 2025 under the IMF deal
- Freedom Visa costs US$1 million
- Banking and governance risks; security-related emergency powers remain in force
Best for: Crypto holders and founders comfortable with unconventional regimes · Remote workers who want territorial taxation in a dollarised economy · Investors interested in the Freedom Visa programme
El Salvador: common questions
Is El Salvador a tax haven?
Not usually, but it is a low-tax option for some founders: territorial taxation (foreign income is not taxed). Companies pay 30% corporate tax and the top personal income tax rate is 30%. It does offer special regimes for some newcomers, such as Freedom Visa / bitcoin citizenship.
What is the corporate tax rate in El Salvador?
30% on taxable income, with a reduced 25% rate for companies earning up to US$150,000. El Salvador taxes only Salvadoran-source income, so foreign-source profits of local companies are generally outside the tax base.
Does El Salvador tax foreign income?
No. The tax system is territorial, so only income earned or used in El Salvador is taxed for individuals and companies. Your home country may still tax you, so check the rules where you were previously resident.
Is Bitcoin still legal tender in El Salvador?
Not as compulsory money. In January 2025, under an IMF agreement, El Salvador amended its Bitcoin Law so acceptance became voluntary for businesses and Bitcoin can no longer be used to pay taxes. The US dollar is the unit of account and legal tender.
What is El Salvador's Freedom Visa?
A citizenship-by-investment programme launched in 2023 that requires US$1 million in bitcoin or USDT, capped at 1,000 applicants a year. It is roughly ten times the cost of Caribbean citizenship programmes.
Is there income tax for individuals in El Salvador?
Yes. Rates run progressively up to 30% above about US$22,857 of annual net income, but only Salvadoran-source income is taxed. Capital gains are taxed at a flat 10%.
Sources
- Ministerio de Hacienda de El Salvador
- PwC Worldwide Tax Summaries: El Salvador
- El Salvador Dirección General de Migración y ExtranjerÃa
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Not tax or legal advice. Rates and rules change; we check official sources and update every page, but verify with a licensed adviser in the country before acting. Spotted something out of date? Use the correction form below.