Taxes in Nicaragua
Property Tax: Property transfers in Nicaragua are subject to a 4% transfer tax. Generally the buyer pays 3%, and the seller pays 1%. Property taxes are 1.5%, paid on the assessed value of the property. Most assessments, however, lag behind the actual current values.
Import Duties: Any amount of local or foreign currency can be imported into or exported out of Nicaragua with proper and legal reasons. Visitors are allowed approximately 400 cigarettes, three liters of alcohol, and one large bottle of perfume duty-free. Samples with no commercial value are also considered duty-free.
As a foreign retiree, you can bring up to $10,000 worth of household goods into Nicaragua for your own home duty-free. If you exceed this amount, you will be required to pay an additional fee.
Income Tax: As a foreign retiree, you pay no taxes on out-of-country earnings. Any income originating from within Nicaragua is taxed at a flat 15%.
Tax Incentives for Retirees: Nicaragua's retirement laws provide significant tax incentives for foreigners. As a foreign retiree, you have the following benefits:
Pay no taxes on any out-of-country earnings.
Bring into Nicaragua up to US$10,000 worth of household goods for your own home, duty-free.
Import one automobile for personal or general use and pay on it no import tax or protective tariff and sell it after five years, again exempt from consumer sales tax.
import an additional vehicle every five years under the same duty exemptions.
Tax Reductions for Foreign Investors: In March 1999, the National Assembly passed very attractive tax-reductions for foreign investors that make Nicaragua one of the most progressive in this area in all of Central America. Among the provisions the law allows for are:
Tax exemptions for NGOs who pursue non-profit work.
Exemptions on import taxes.
Exemptions on sales taxes for hospital investments.
Lower taxes on the import of U.S. cars whose larger engines were being taxed at a higher rate than those smaller ones in Japanese cars.
Elimination of taxes on capital goods, intermediary goods, and raw materials destined for the agricultural sector, small handicraft industry, fishing, and aquaculture.
Though as a foreign investor you can operate your business in Nicaragua without registering it with the government, you'll find that if you do register, you can benefit from various tax incentives. Here is a summary on what the law provides you when you negotiate an investment agreement with the Ministry of Development, Industry, and Trade.
You can repatriate your net investment, less any losses, three years after your initial investment.
You can freely repatriate your profits.
You'll receive prompt and appropriate compensation in case your business or property is expropriated for reasons of public utility or social interest.
You can negotiate additional tax reductions for your business, granted on a case-by-case basis.
