Relocating to Honduras? Let's Talk Taxes...
Nov 05, 2013
Buying a piece of paradise, building your dream home, swimming in the crystal-clear Caribbean and becoming part of a new community… these are all fun and exciting aspects of moving your life – either full or part-time – to Honduras’ mainland.
Figuring out how much you have to pay the Honduras government, let-alone your own home country’s government, to ensure a legal, uncomplicated move or trip? Not so fun and exciting…
However, taxes are a requirement no matter where you live. Moving to a beautiful, faraway country, such as Honduras, unfortunately can’t get you out of paying ‘The Man’ back home. Thankfully, Honduras won’t make you pay as well, which eases the blow a bit.
But more on that later. First, let’s look at your obligations as a US or Canadian citizen living in Honduras, and what kind of tax commitments you’re tied to:
First of all, neither the US or Canada have a tax treaty with Honduras. What does this mean? Well, aside from these countries not being able to investigate your financial holdings in Honduras, not having a treaty means that you could be double taxed on income. Keep in mind though; this only refers to income earned within Honduras.
That being said, if you plan to live off a US or Canadian pension while in Honduras, this doesn’t apply… you will still have to file a tax return in your native country though. The bonus is that you don’t have to file one in Honduras. As long as your income is from outside of the country, no taxes are paid to the Honduran government.
In the event that you do end up picking up an odd job while in Honduras, you will not only have to claim the additional income to your native country for taxation, but you will also pay 10% income tax to the Honduran government.
An interesting tidbit regarding income tax in Honduras; if you choose to start up a government-approved tourism business (restaurant, souvenir shop, hotel, etc), you will pay no income tax on your profits for 20 years! This is incredible incentive for anyone looking to start their own business (especially in the up-and-coming Trujillo!)… even if you make millions of dollars, you won’t pay a cent to the Honduran government.
Property / Capital Gains Taxes
Owning your own piece of paradise in beautiful Trujillo, Honduras is an easy enough process… especially when you work directly with the developer Caribbean Lots.
But, no matter how easy the buying process is, there are still taxes due. The actual amount you pay, of course, depends on the value of your piece of property/home. But annually, the average amount levied is 0.25%... definitely a nice change from what you’re likely used to paying in North America!
So what happens if you end up selling your home in Honduras? You’re obligated to pay the Honduran government a 10% capital gains tax. This tax is unavoidable… both foreigners and nationals are required to pay this when selling property. And remember, if you maintain your citizenship in your native country, they will want a piece of this as well - because it’s considered income.
Talking about taxes and the beautiful Caribbean in the same breath seems like an oxymoron… but, it’s the way of the world, and no matter where you go if you wish to remain lawful, paying taxes is a part of life. Thankfully, in Honduras, they’re much more minimal then they are in North America and many other parts of the world.
Discover this beautiful area of Honduras yourself! Visit Caribbean Lots on a Discovery Weekend and tour the variety of property options, city centre, historic landmarks and the abundance of natural flora and fauna.