Blog

Hiring Employees in Nicaragua

Read

Hiring Employees in Nicaragua
0
(0)

If you’re considering expanding or relocating your business to a new country, one of the most important aspects to consider is that country’s tax system. Tax laws can either hurt or help businesses, and you must know how that country’s taxes will affect your company.  

This tax overview will investigate three areas of Nicaragua’s tax system: personal taxes, corporate taxes, and value-added taxes. 

SERVIAP can help with your global expansion needs. Contact us today to learn how you can expand your business with PEO in Nicaragua. 

Nicaragua Personal Taxes 

Here’s everything you need to know about personal taxes in Nicaragua: 

Who is Taxed? 

In Nicaragua, both residents and non-residents are subject to taxes for income earned within the country. An individual is determined to be a resident of Nicaragua if they have spent 180 days or more residing in the country. 

What is the Tax Rate? 

For non-residents, there is a single 15% flat tax rate for all taxable income generated from Nicaraguan sources. For residents, there is a progressive tax structure that goes up to 30% for all taxable income over 500,000 Nicaraguan córdobas (NIO), which is just over $14,000 USD. 

The 30% tax rate is among the highest in Central America. However, the progressive scale does offer relief to some taxpayers. 

National vs. International Income 

Nicaraguan residents are subject to income tax on all money earned worldwide. Non-residents, on the other hand, are responsible for taxes only on income generated from Nicaraguan sources, and the country does not tax any income that comes from foreign sources. 

Capital Gains, Exemptions & Other Considerations 

Nicaragua does not have a separate law for individual capital gains, instead treating them as ordinary income. The same is true for rental income. Property taxes typically run at 1% of the purchase price, and there is also an inheritance tax that can reach 3% for estates over 100,000 NIO. 

Nicaragua Corporate Taxes 

Here’s everything you need to know about corporate taxes in Nicaragua: 

Who is Taxed? 

In Nicaragua, companies are considered tax residents if they are registered as a Nicaraguan business or have their fiscal or managerial home in the country. However, Nicaragua also taxes companies with permanent establishments, or PEs — places or people through which a foreign company conducts business. 

For both tax resident companies and those with PEs, corporate taxes only apply to income generated from Nicaraguan sources, including active and passive income. 

What is the Tax Rate? 

The Nicaraguan corporate income tax rate is determined by two systems, with companies being responsible for paying the higher of the two rates: 

  • 30% of the net taxable income, meaning gross receipts less expenses 
  • The definitive minimum tax, which is 1% to 3% of all gross income earned during the fiscal year 

The 30% corporate rate is at the top of the range in Central America, equaling the rates in El Salvador and Costa Rica. It is also roughly seven percentage points higher than the average worldwide income tax rate of 23%.  

While there are many available deductions, companies may be unable to enjoy those lower rates with the progressive definitive minimum tax. 

What is Taxable Income? 

For both resident and non-resident companies in Nicaragua, taxable income is calculated in two ways. The first method determines taxable income by subtracting expenses and deductions from gross income to arrive at net taxable income. In the second method, a progressive tax scale is applied to gross income during the tax year. 

These two tax amounts are compared against each other, and the company is required to pay the higher of the two amounts to the Nicaraguan government. 

Tax Incentives & Deductions 

In Nicaragua, corporate capital gains are taxed at a lower rate of 10%. Several laws are in place that grant tax exemptions for certain kinds of work, including encouraging tourism and renewable energy initiatives. 

Nicaragua has also established free trade zones for several industries, including processing, production, and outsourcing. Companies who set up businesses in these zones enjoy a ten-year exemption from corporate taxes, which they can extend to a total of 20 years.  

Raw materials, equipment, and other key goods are also exempt from import duties. 

Nicaragua VAT Taxes 

Value-added taxes, better known as VAT taxes, are a common form of consumption tax. The value-added portion is the difference between a company’s sales and its cost of purchasing services or goods from another business. Here’s what you need to know about VAT taxes in Nicaragua: 

Who is Taxed? 

Nicaragua imposes a VAT tax on most goods and services consumed by individuals, including the grant use of assets. Imported goods are also subject to the Nicaraguan VAT tax. However, exports are considered exempt from VAT taxation. 

What is the Tax Rate? 

The standard VAT tax rate in Nicaragua is 15% of the sale price. These taxes are collected at the time of sale and are remitted monthly to the Nicaraguan government. 

Some several goods and services are considered exempt from VAT taxes, including: 

  • Staple food products 
  • Used goods 
  • Most medicines 
  • Real estate sales 

  • Educational expenses, including textbooks and tuition 

There is also a credit and transfer system for companies that pay VAT taxes to produce other goods or services subject to VAT taxes. A company’s VAT tax liability is determined by comparing the amount of VAT paid on the input materials with the amount of VAT collected. 

Is Nicaragua Right for Your Business? 

SERVIAP is a leading Professional Employer Organization (PEO) ready to help your business expand operations throughout the Western Hemisphere. PEO is a model of co-employment, where we assume total responsibility for your talent, allowing you to focus on the strategic activities of your organization.  

Contact us today to learn more about how you can expand your business in Nicaragua. 

Contact Us 

({
,
formId: “4f609ddb-8f77-426d-8e9e-de115378f21f”
});

How useful was this post?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.

As you found this post useful...

Follow us on social media!

We are sorry that this post was not useful for you!

Let us improve this post!

Tell us how we can improve this post?

Articles

Stay informed on the latest topics in the world of global expansion.

What Employers Should Know: June 2025 Payroll Deadlines in LATAM

Global Labor Updates

5 (1) For companies managing payroll across Latin America, June marks an important month with multiple legal deadlines. From mid-year bonuses to profit-sharing obligations, it’s...

Read Blog Post

How do Tariffs Affect the Global Economy: Consequences For International Teams

Global EOR

5 Read

Tariffs, once used for protecting local industries, are now powerful levers that influence expansion.

Read Blog Post

What is Neurodiversity in The Workplace And How to Support it

Talent Acquisition

5 Read

Fostering a truly inclusive workplace means going beyond compliance and actively celebrating neurodiversity in the workplace.

Read Blog Post

PEO vs EOR Services: 2 Options to Choose

Global EOR, International PEO

5 Read

Understanding the key differences between PEO vs EOR services is crucial when choosing the right solution for your business.

Read Blog Post

New Minimum Wage in El Salvador: What it Means For Global Companies

News El Salvador

4 Read

The new minimum wage in El Salvador became effective on June 1st, 2025, and requires a varying increase across different sectors.

Read Blog Post

Serviap Global Celebrates 15 Years

Featured, News

5 (2) In 2025, Serviap Global celebrates 15 years of history, an achievement that mirrors the rapid transformation of the employer of record (EOR) industry...

Read Blog Post

How to Pay Contractors Internationally: a Quick Guide

Independent contractors, Talent Acquisition

0 (0) Hiring international contractors can help you grow your business, reduce costs, and access specialized skills, but navigating how to pay contractors across borders...

Read Blog Post

How Can a US Company Hire a Foreign Employee?: 3 Useful Options

Recruitment, Recruitment process outsourcing (RPO)

0 (0) Even with recent tariffs and economic uncertainties, many American businesses are looking beyond borders to tap into international talent. But how can a...

Read Blog Post

Working Hours in Mexico: Country Plans 8-Hours Reduction by 2030

News Mexico

0 (0) Recent years in Mexico have been marked by recurrent discussions in labor reform, including the increase of minimum wage and the fight against...

Read Blog Post

4 Global Expansion Tips With Aaron McDaniel

Global EOR, Remote working

Expanding globally in 2025? The goal is not just about targeting the biggest markets. Read and discover global expansion tips to grow with confidence.

Read Blog Post

Serviap Global Wins at the 2025 Excellence in Customer Service Awards

Awards

The Serviap Global team has been recognized in the Exceptional Customer Experience category.

Read Blog Post

Live Webinar: What You Must Know About Global Expansion in 2025, with Aaron McDaniel

Featured

Learn insightful tips for global expansion expansion in our live webinar, featuring Aaron McDaniel.

Read Blog Post

Serviap Global is a Finalist at the 2025 TIARA Talent Solutions Awards US

Awards

Serviap Global becomes a finalist in Client Service at the 2025 TIARA Talent Solutions Awards US.

Read Blog Post

How to Use AI in Hiring International Workers

Recruitment, Recruitment process outsourcing (RPO), Talent Acquisition

How to use AI in hiring? Discover the history, benefits, and challenges of AI assistance in global talent acquisition.

Read Blog Post

How U.S. Tariffs Benefit Canada and Mexico: A Strategic Advantage in Global Trade

News

5 (1) US tariffs on other countries strengthen the position of Mexico and Canada as key partners for companies looking to expand, hire talent, and...

Read Blog Post

Borderless Talks Ep. 6: Women in Remote Work And The Evolution of The EOR Industry

Featured, Global EOR, Remote working

Episode 6 of Borderless Talks invites Brend Limón to discuss the evolution of global collaboration from the perspective of women in remote work.

Read Blog Post

Serviap Global is a Finalist at the 2025 Latin America Inspiring Workplaces Awards

Awards, Featured

Serviap Global is nomitated as a finalist among 8 other global companies at the IW Awards 2025.

Read Blog Post

How to Manage International Teams: 5 Tips for Leaders

Global EOR, Remote working

Efficient international teams take hard work and ongoing efforts in communication and culture. Here are 5 considerations to improve remote teamwork.

Read Blog Post

2 Options for Hiring Remote Foreign Employees Without a Local Entity

Global EOR, Independent contractors

The complexities of hiring remote foreign employees can be simplified with these two options: EOR collaboration and hiring independent contractors.

Read Blog Post

Infographics: Can we Overcome The Global Talent Shortage in 2025?

Recruitment, Talent Acquisition

Discover some key tips to help you beat the global talent shortage and getting ahead.

Read Blog Post

Borderless Talks Ep. 5: Advantages of Chinese companies in Latin America

Featured

Listen to the fifth episode of Borderless Talks with Serviap Global's Sales Executive from China, Sally Chen.

Read Blog Post

6 Important Documents to Hire Employees Abroad

Recruitment, Talent Acquisition, Visas and Immigration

Get to know some of the important documents and steps to hire employees abroad for global companies.

Read Blog Post

Global Hiring Trends in 2025: Which Industries Are Leading International Expansion?

Global EOR, International PEO

In 2025, many sectors will be at the forefront of international expansion and global hiring trends, from technology, to manufacturing, and so on.

Read Blog Post

Infographic: Working Hours in Latin America by Country

Infographics, International PEO

The maximum working hours in Latin America vary from country to country. Getting an overview of their work practices is essential to enter this region's...

Read Blog Post

Hiring In Colombia: 10 Key Factors To Know Beforehand

News Colombia, Talent Acquisition

Discover important aspects of the Colombian market based on the World Bank's Business Ready 2024 ranking.

Read Blog Post

How Does EOR Work?: Your 6-Steps Easy Guide

Global EOR, International PEO

An Employer of Record helps you enter new markets in a matter of weeks or even days. But do you know how does EOR work?

Read Blog Post

New “Unidad de Medida y Actualización” in Mexico: What it Means for Employers in 2025

Global EOR, News Mexico, Payroll outsourcing

The "Unidad de Medida y Actualización" index was increased by 4.21% in 2025 and reflects in the payment increase of fines and other obligations.

Read Blog Post

Borderless Talks Ep. 4: Top Global Expansion Mistakes to Avoid in 2025

Featured, Global EOR, Podcast

Listen to the fourth episode of Borderless Talks with Global Expansion Expert, Klaus Wehage.

Read Blog Post

Infographics: International Maternity Leave Standards

Global EOR

Browse our maps to discover the main differences in guidelines for international maternity leave rights.

Read Blog Post

Borderless Talks Ep. 3: Zain Ali on Global Hiring Solutions

Featured, Podcast

Listen to the third episode of Borderless Talks with Zain Ali, CEO of Centuro Global.

Read Blog Post