How do I start a business in El Salvador?

To start a business in El Salvador, follow 7 steps: Reserve company name, Draft and notarise the deed of incorporation, Register with the Commercial Register, Obtain Tax ID (NIT) and IVA Card, Register at the Mayor's Office, Register with ISSS and AFP, Apply for Free Zone or DPA status. The process takes approximately 136 days and costs around $2425 USD.

What types of business entities can I register in El Salvador?

El Salvador offers 4 entity types: Limited Liability Company (min capital: $2000, foreign ownership: 100%); Stock Corporation (min capital: $2000, foreign ownership: 100%); Branch of Foreign Company (min capital: $0, foreign ownership: 100%); Free Zone Company (min capital: $2000, foreign ownership: 100%).

Can foreigners own a business in El Salvador?

Yes, foreigners can own businesses in El Salvador. Limited Liability Company allows up to 100% foreign ownership. Stock Corporation allows up to 100% foreign ownership. Branch of Foreign Company allows up to 100% foreign ownership. Free Zone Company allows up to 100% foreign ownership.

What is the minimum wage in El Salvador?

The minimum wage in El Salvador is $365/month (USD). Average monthly wage is approximately $540. Standard work week is 44 hours with 15 paid leave days per year.

How much does it cost to run a business in El Salvador?

Estimated monthly overhead for a small business (5-10 employees) in El Salvador is approximately $6000. Office rent averages $12/sqm/month. Skilled workers average $1100/month. Typical break-even: Tech 16 months, Services 10 months, Retail 14 months.

Countries El SalvadorBusiness Guide

🇸🇻

Start a Business in El Salvador

Complete guide: entity types, registration, costs, taxes, labor laws, and break-even analysis

~136 days

Setup Time

~$2,425

Setup Cost

30%

Corporate Tax

100%

Foreign Ownership

#91

Ease of Business

Entity Types

Entity	Min Capital	Foreign %	Liability	Min Shareholders	Best For
Limited Liability Company Sociedad de Responsabilidad Limitada (SRL)	2,000 USD	100%	Limited	2	Smaller foreign-owned operations - lower capital and simpler governance than the SA
Stock Corporation Sociedad Anonima (SA de CV)	2,000 USD	100%	Limited	2	Most common entity for medium and larger foreign investors - flexible share structure and full foreign ownership
Branch of Foreign Company	None	100%	Unlimited	0	Foreign companies extending operations - parent retains liability
Free Zone Company	2,000 USD	100%	Limited	2	Export-oriented operations in textiles, BPO, or manufacturing - 100% income tax exemption for up to 15 years

Registration Steps

Reserve company name

Apply for a trade name search and reservation at the National Registration Centre (CNR) commercial register

1-3 days

~$25

Centro Nacional de Registros (CNR)

Draft and notarise the deed of incorporation

Articles must be executed before a Salvadoran notary; foreign founders may use apostilled powers of attorney

2-7 days

~$600

Salvadoran notary

File the public deed with the Commercial Register at CNR; registration takes 5-10 business days

5-14 days

~$250

Commercial Register at CNR

Obtain Tax ID (NIT) and IVA Card

2-5 days

Free

Ministerio de Hacienda

3-10 days

~$50

Local Mayor's Office (Alcaldia)

Register the company and each employee with the Salvadoran Social Security Institute (ISSS) and a Pension Administrator (AFP)

2-7 days

Free

ISSS and AFP

Apply for Free Zone or DPA status

If export-oriented, apply for Free Zone or Active Service Park (DPA) status with the Ministry of Economy for tax holidays up to 15 years

30-90 days

~$1,500

Ministry of Economy (MINEC)

Total Estimated

136 days max$2,425

Tax Framework

Corporate Income Tax30%

Standard 30% on annual income above USD 150,000; 25% on income up to USD 150,000. Free Zone and DPA companies enjoy up to 15 years of full income tax exemption. Bitcoin Law (2021) makes BTC legal tender alongside the US dollar; capital gains on Bitcoin are tax-exempt for individuals.

IVA13%

Personal Income Tax0-30%

Capital Gains Tax10%

Dividend Withholding5%

Tax Treaties4 countries

Tax Incentive Zones

Free Zones (Zonas Francas) and Active Service Parks (DPA) provide 100% income tax exemption for 10-15 years, 0% import duties on equipment, and 0% municipal taxes. Bitcoin Bonds (Volcano Bonds) and the proposed Bitcoin City offer additional digital-asset incentives. Tourism Law grants 10-year income tax exemptions for qualifying hotel and resort projects.

Labor Laws & Costs

$365/mo

Minimum Wage

$540/mo

Average Wage

44 hrs/week

Work Hours

15 days/year

Paid Leave

4.3 weeks/year

Severance

14.5% of salary

Employer Social Security

10.05% of salary

Employee Social Security

Required

Foreign Worker Permit

Foreign Worker Quota: Foreign workers may not exceed 10% of the workforce except for technical and management roles where local talent is unavailable

Visa & Immigration

Visa-free or visa-on-arrival

Citizens of US, EU, UK, Canada, Mexico, and around 90 countries enter visa-free or with a visa-on-arrival for up to 90 days. Tourist card available at airports for around USD 12.

8 weeks

Processing time

$400

Estimated cost

Investor Residence

Investor

Permanent residence available for foreign investors with a minimum investment of USD 100,000 in a Salvadoran company or qualifying real estate

Freedom Visa (proposed)

Remote Work

El Salvador has signalled a remote-worker visa pathway alongside its Bitcoin and Adopting Nation policies; some founders also use the investor route

Work Permit Process: Employer applies for a work permit (residencia temporal por trabajo) at the Directorate General of Migration; processed in 6-10 weeks

Business Environment

#91/190

Ease of Business Rank

16 days

Starting a Business

31 days

Registering Property

786 days

Enforcing Contracts

31/100

Corruption Perception

70%

Internet Penetration

USD

Currency

UTC-6

Time Zone

GoodCould be betterHover a dot for the threshold and source. Sources: World Bank, Transparency International, ITU.

Spanish

Investment Zones & Provinces

San Bartolo Free Zone

Free Zone

Ilopango (San Salvador metro)

Incentives

100% income tax exemption for up to 15 years0% customs duties on imports0% municipal taxesAdjacent to San Salvador International Airport

Key Sectors

Textiles and ApparelBPO and Call CentresLight ManufacturingLogistics

Combined tax holidays and proximity to the airport reduce export costs by 30-40%

American Industrial Park (Free Zone)

Free Zone

El Pedregal (north of San Salvador)

Incentives

15-year income tax exemption0% customs duties and IVA on inputsModern industrial infrastructure

Key Sectors

TextilesElectronics AssemblyPlasticsFood Processing

Combined tax holiday and competitive labour rates reduce manufacturing costs by 35-45%

Bitcoin City and Volcano Energy Cluster

SEZ

La Union (eastern El Salvador)

Incentives

Proposed zero-tax Bitcoin City powered by geothermal energyVolcano Bonds funding infrastructureFirst-mover positioning in digital-asset SEZs globally

Key Sectors

Bitcoin MiningGeothermal EnergyCrypto and Web3 CompaniesTourism

Geothermal energy at USD 0.04-0.06 per kWh and proposed zero-tax regime can reduce mining and energy-intensive operating costs by 50-70%

Break-Even Analysis

Retail (months)

F&B (months)

Tech (months)

Manufacturing (months)

Services (months)

Typical Operating Costs in El Salvador

Per-person or per-unit costs. Multiply by your team size for total estimates.

Office Rent	$12	per sqm/month
Skilled Worker Salary	$1,100	per 1 worker/month
Unskilled Worker Salary	$400	per 1 worker/month
Electricity	$0.18	per kWh
Business Internet	$35	per 1 connection/month
Est. Monthly Overhead (5-10 staff)	$6,000	total/month

Sources: World Bank Open Data, ILO, Numbeo Cost of Living Index, local government publications. Salaries reflect market averages and may vary by city, industry, and experience level. Last updated 2025.

Break-Even Calculator

Total Investment (USD)

Monthly Revenue (USD)

Monthly Costs (USD)

Tax rate applied: 30% (corporate rate)

months to break even

$6,300

monthly net profit

151.2%

annual ROI

$98,000

total cost to break even

Break-even progressFast recovery

Next Steps

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Key Considerations for Foreign Investors

El Salvador uses the US dollar as legal tender (since 2001) and Bitcoin as legal tender (since 2021), eliminating FX risk for USD-denominated investors

Free Zones and Active Service Parks offer 10-15 year income tax exemptions, attractive for textiles, BPO, and export manufacturing

Capital gains on Bitcoin are tax-exempt for individuals, with the proposed Bitcoin City and Volcano Bonds positioning the country as a digital-asset SEZ pioneer

Security has improved dramatically since the 2022 state of exception, materially changing the operating environment versus the prior decade

Standard corporate tax of 30% on income above USD 150,000 is high by regional standards; Free Zone status is the main lever for tax efficiency

Limited double tax treaty network (only 4 treaties) can lead to higher effective tax for cross-border structures versus Panama or Costa Rica

Geothermal energy at USD 0.04-0.06 per kWh is among the cheapest in Latin America and underpins both Bitcoin mining and energy-intensive manufacturing

Last updated: 2025-Q4

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Start a Business in El Salvador

Entity Types

Registration Steps

Tax Framework

Labor Laws & Costs

Visa & Immigration

Business Environment

Investment Zones & Provinces

Break-Even Analysis

Next Steps

Legal & Registration

Financial & Tax

Operational

Immigration & Visas

Key Considerations for Foreign Investors

Start a Business in El Salvador

Entity Types

Registration Steps

Tax Framework

Labor Laws & Costs

Visa & Immigration

Business Environment

Investment Zones & Provinces

Break-Even Analysis

Next Steps

Legal & Registration

Financial & Tax

Operational

Immigration & Visas

Key Considerations for Foreign Investors