Doing business in Honduras is generally open to foreign investors, with the government seeking to attract Foreign Direct Investment (FDI) to stimulate economic growth.
The process involves choosing a legal entity, completing registration formalities, and complying with local tax and labor laws.
Here is a step-by-step guide on how to establish a business in Honduras:
1. Choose a Business Entity and Plan
Honduras allows for 100% foreign ownership in most sectors. The most common legal structures for foreign investors are:
| Entity Type | Description | Key Requirements |
| Limited Liability Company (S. de R.L.) | The most popular choice for small to medium-sized businesses. Liability is limited to the capital contribution. | Minimum 2 shareholders (up to 25) of any nationality. Minimum 1 director/manager. Low minimum capital (around US$250). |
| Public Limited Company (S.A. or S.A. de C.V.) | A more flexible structure, suitable for larger companies planning for growth or external investment. | Minimum 2 shareholders (individuals or entities) of any nationality. Minimum 1 director. Requires a Statutory Auditor. |
| Branch Office (Sucursal) | An extension of a foreign parent company. The parent company is directly liable for the branch’s obligations. | Requires a local representative who is a permanent resident of Honduras. Minimum capital of approximately US$1,300. |
2. Company Registration Process
Company formation is typically a multi-step process that can take a few weeks to complete:
| Step | Action | Authority |
| 1. Deposit Initial Capital | Deposit the legally required initial share capital into a Honduran bank account. | Local Commercial Bank |
| 2. Draft and Notarize Articles | Hire a Honduran notary public to draft and notarize the Articles of Incorporation (Escritura Pública), which defines the company’s structure, purpose, and shareholders. | Notary Public |
| 3. Register with Mercantile Registry | File the notarized Articles of Incorporation with the Mercantile Registry (Registro Mercantil) at the local Chamber of Commerce. This officially registers the company. | Chamber of Commerce / Mercantile Registry |
| 4. Obtain Tax Identification Number (RTN) | Apply for a Tax Identification Number (Registro Tributario Nacional – RTN) for the company, which is essential for all tax and financial transactions. | Honduran Tax Authority (SAR) |
| 5. Acquire Legal Books | Purchase and register the mandatory legal accounting and minutes books. | Authorized Agency |
| 6. Register with Chambers of Commerce | Register the new entity with the local and national Chambers of Commerce and Industry. | Chamber of Commerce |
| 7. Obtain Municipal Permits | Apply for the Zoning Certificate and the Operational Permit (Patente Comercial) from the local municipal authorities. This permit must be renewed annually. | Local Municipality |
3. Post-Registration Obligations
After formal incorporation, you must register with other state entities, especially if you plan to hire employees:
| Obligation | Purpose | Authority |
| Social Security | Register the company and all employees with the Honduran Social Security Institute (IHSS) for health insurance and pensions. | IHSS |
| Professional Training | Register with the National Institute of Professional Training (INFOP). | INFOP |
| Social Housing Fund | Register with the Social Housing Fund (Régimen de Aportación, RAP). | RAP |
| Tax Registration (Sales Tax) | Register with the Tax Authority (SAR) for Sales Tax (VAT). | SAR |
| Register Foreign Investment | While not mandatory for all sectors, it is advisable to apply to the National Investment Council to benefit from the established investor protection framework. | National Investment Council |
Key Regulatory and Business Considerations
- Foreign Ownership: Foreign investment is generally not limited, with 100% foreign ownership permitted in most sectors. However, certain sectors are reserved for Honduran citizens (e.g., small firms with capital less than US$6,300, domestic air transportation, and commercial fishing).
- Labor Law: At least 90% of a company’s labor force must be Honduran, and companies must pay at least 85% of their total payroll to Hondurans.
- Taxation:
- Corporate Income Tax: Generally 25% on worldwide income for resident companies and on Honduran-sourced income for non-resident entities.
- Sales Tax (VAT): The general rate is 15%.
- Withholding Tax: A 10% withholding tax applies to dividends paid to non-residents.
- Investment Incentives: Honduras offers various incentives, especially in strategic sectors. Export-oriented businesses can benefit significantly from operating in Free Trade Zones (FTZs) or utilizing the Temporary Importation Law, which offers tax and customs exemptions.
- Property Ownership: Foreigners have the right to own property, but there are restrictions on land ownership within 40 kilometers of international borders and shorelines, though exceptions exist for designated “tourism zones.”
- Currency: The official currency is the Lempira (HNL). There are generally no government restrictions on foreign investors’ access to local credit markets or on the transfer of profits, dividends, and capital gains abroad.
Recommendation: Given the legal requirements and mandatory notary involvement, it is highly recommended to engage a local corporate attorney or a specialized corporate services firm from the start to navigate the registration process efficiently and ensure full compliance.
