When thinking of moving to Nicaragua there is some good news with regards to taxes.
Nicaragua does not tax foreign-earned income. You are liable for any income sourced from Nicaragua though. The general rate for non-residents is 15%.
Personal Income Tax Rates
Residents are subject to income tax according to the progressive tax rates shown below:
Taxable income (NIO**)
Over | Not over | Minimum tax charge (NIO) | Tax on excess (%) |
|---|
| 0 | 100,000 | 0 | 0 |
| 100,000 | 200,000 | 0 | 15 |
| 200,000 | 350,000 | 15,000 | 20 |
| 350,000 | 500,000 | 45,000 | 25 |
| 500,000 | and above | 82,500 | 30 |
The corporate tax rate in Nicaragua is 30% or 1% on income over 40 million Cordobas (US$1.48 million) for small to medium sized businesses.
Pro Nicaragua is one tax incentive program for investors. Under it, you can set up your own free trade zone and enjoy a 10-year tax exemption.
Industries targeted by the program include tourism, food processing, outsourcing services, footwear manufacturing, auto-part manufacturing, and forestry.
If setting up tax residence in Nicaragua, you should note that Nicaragua has an inheritance tax of 1% to 4% of a property’s registered value.
Other tax rates in Nicaragua include:
Sales Tax In Nicaragua (VAT)
Most goods and services sold in Nicaragua are taxed at a rate of 15%. This is expensive but is offset by the cheaper costs of goods and services in Nicaragua.
Income Tax In Nicaragua
Whether you’re a resident of Nicaragua or not all income earned in Nicaragua is subject to income tax. Personal income tax rates for non-residents are a flat 15% on all taxable Nicaragua earned income.
Residents will pay a graduated percentage of tax on all Nicaraguan sourced income, capped at 25%. Both marriage partners are required to report and file separately.
The fiscal tax year runs from July 1st to June 30th.
Property Taxes In Nicaragua
Typically, property taxes in Nicaragua run 1%. So a purchase of a home at a price of US$100,000 would have an associated annual property tax of $1,000.
Rental Income Tax In Nicaragua
Rental income in Nicaragua is treated as regular income, so non-residents will pay 15% and residents will pay a maximum of 25%.
Deductions to the rental income may apply thereby so the tax rates indicated are based off of taxable rental income only, and not necessarily the full rental income amount.
Capital Gains Tax
Capital gains are treated as regular income in Nicaragua, thus the taxable portion is taxed at the same rate.
Inheritance Tax In Nicaragua
To be filed under occasional gains. The tax is 1% up to $50,000. From $50,000 to $100,000 the rate is 2%. Anything over $100,000 is 3% inheritance tax.
Tax Incentives
Export Tax
Exports of goods or services domestically produced are charged at 0%.
Imported goods which are going to be exported are also tax exempt. E.g. importing packaging which you will use to export coffee from Nicaragua.
Pensioners And Retirees In Nicaragua
You can import household goods up to $20,000 tax free. Also, you can import a car valued up to $25,000 and it will be exempt from tax providing it is not older than seven years. You can only import one care every five years using this exemption.
Building materials up to $50,000 can also be imported at 0% tax providing they are for construction of a house.
* Table taken from PWC’s article Nicaragua: Individual – Taxes on personal income.
**Nicaraguan córdobas
