Doing business in Nicaragua, especially for foreign investors, is supported by a simplified registration process through a One-Stop Investment Window and various incentives in key sectors.
Here is a guide on the main steps, legal structures, and investment opportunities in Nicaragua.
1. Choose Your Business Structure
Foreign investors can hold 100% ownership in Nicaraguan companies. The most common structures are:
| Legal Entity | Spanish Name | Key Requirements | Notes |
| Corporation | Sociedad Anónima (S.A.) | Minimum 2 shareholders (individuals or corporations). One director (must be a shareholder). Minimum capital of C$10,000 (approx. $400). | Suitable for larger businesses or those issuing public shares. Requires a legal auditor. |
| Limited Liability Company | Sociedad de Responsabilidad Limitada (SRL) | Minimum 2 partners, maximum 30. No shares; ownership is based on participation quotas. | Generally simpler administration and less compliance than an S.A. |
| Branch Office | Sucursal de Empresa Extranjera | An extension of the foreign parent company. Requires a local legal representative. | Parent company is fully liable for the branch’s debts. Foreign documents must be apostilled and translated. |
2. The Company Registration Process
Nicaragua has a streamlined system through the Ventanilla Única de Inversiones (VUI), or the One-Stop Investment Window, which aims to expedite the process.
Key Steps:
- Draft and Notarize the Act of Incorporation:
- The Act of Incorporation (which includes the company bylaws) must be prepared and executed before a Nicaraguan public notary.
- It must specify the company’s name, objectives, capital, and shareholder details.
- Appoint a Legal Representative:
- A resident legal representative is mandatory. This person must be a Nicaraguan national or a foreign national with legal residency in the country.
- Buy and Register Corporate Books:
- Acquire the mandatory corporate and accounting books (e.g., Shareholder Register, Minutes Book, Accounting Ledger) from a local bookstore.
- These books must be stamped by the Commercial Registry.
- Submit Documents via VUI / Commercial Registry:
- Submit the notarized Act of Incorporation and all supporting documents to the VUI, which processes it with the Commercial Registry (Registro Mercantil).
- Pay the registration fees, typically 1% of the company’s capital, capped at a maximum fee (approx. $1,200).
- The company is officially registered and recognized as a Trader (Registro como Comerciante).
- Obtain the Single Registration Document (DUR):
- Apply for the DUR through the VUI. This integrated document serves as your registration for:
- Taxpayer ID (Registro Único de Contribuyente – RUC) from the General Directorate of Revenue (DGI).
- Municipal License from the local municipality.
- Social Security Registration (INSS) for employer obligations.
- Apply for the DUR through the VUI. This integrated document serves as your registration for:
- Register as a Foreign Investor (Optional but Recommended):
- If your investment is above $30,000, you may register your investment with the Ministry of Development, Industry and Trade (MIFIC) to obtain the Unique Foreign Investment Registration Certificate (RUIE), which is helpful for various administrative processes, including residency applications.
3. Key Investment Sectors
Nicaragua’s economy is diversified, with significant growth potential in several areas, often benefiting from the Free Zone Regime (Zona Franca).
| Sector | Investment Opportunities |
| Light Manufacturing | Textile and Apparel (historically strong), Footwear, Auto Wire Harnesses, Medical Devices, and electronics assembly. Many benefit from the Free Zone Regime. |
| Agribusiness | Processing and export of traditional products (coffee, sugar, beef) and non-traditional exports (cocoa, cigars, shrimp, vegetables, organic honey). Known as the “breadbasket of Central America.” |
| Outsourcing Services | Business Process Outsourcing (BPO) and Information Technology Outsourcing (ITO) due to competitive labor costs and a young, bilingual workforce. |
| Tourism and Real Estate | Development of resorts, hotels, and luxury properties, especially along the Pacific Coast (e.g., San Juan del Sur) and in colonial cities (e.g., Granada). |
| Mining | Exploration and production of mineral resources, particularly gold and silver. |
4. Taxation and Incentives
- Territorial Tax System: Nicaragua operates a territorial tax system, meaning only income generated within or having an effect in Nicaragua is subject to domestic income tax. Foreign-sourced income is not taxed.
- Corporate Income Tax (CIT): The greater of:
- 30% of net taxable income.
- A definitive minimum tax of 1% to 3% on gross income.
- Value Added Tax (VAT): The general rate is 15%.
- Tax Incentives:
- Free Zone Regime: Businesses operating under this regime (e.g., in manufacturing or outsourcing) can benefit from significant exemptions, including a 100% exemption from corporate income tax and customs duties on imports of machinery and raw materials.
- Pro Nicaragua Tax Incentive Program (Law 344): Grants tax exemptions for investments in targeted sectors like food processing, services, and tourism.
Key Cultural and Practical Advice
- Language: Spanish is the official language. All legal and official documents must be in Spanish.
- Building Trust: Business culture is often family-oriented and relationships-driven. Expect to invest time in developing personal trust with partners and clients before moving to formal business discussions.
- Professional Assistance: It is strongly advised to hire a local legal firm or corporate services provider to navigate the incorporation process, ensure legal compliance, and manage ongoing tax and labor obligations.