If you are planning to do business in Honduras or intend to domicile there, you will need to be aware of the entity annual compliance in Honduras, as well as regulatory compliance requirements.
It is important to understand this before you register a company in Honduras; failure to comply with financial regulations can cause legal problems or lead to financial penalties. Financial regulatory compliance is a crucial aspect of corporate compliance, and one of the key services offered as part of a corporate secretarial services package.
If you are considering the possibility of incorporating a company in the Central American country, the following guide will give you an overview of the entity annual compliance in Honduras.
If you already have ongoing operations in Honduras, or have questions about entering the market, contact us today to discuss how we can help support your business.
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Types of companies in the country
In Honduras there are a variety of company types, but the most used in practice are the following:
- Corporations – A corporation exists under a name and has capital divided into shares, whose partners are responsible for the payment of those they have subscribed
- Limited Liability Companies – A limited liability company exists under a corporate name and whose partners are only required to pay their contributions, and are not responsible for the financial liabilities or the debt of the company as a whole
- Branch of foreign company – The foreign parent company regulates the rules and assumes the responsibilities before third parties
Entity annual compliance in Honduras: Corporate requirements
Corporations must have a legal representative present in Honduras, whether it’s a Honduran or resident foreigner, in order to meet entity annual compliance. They also must have a legal domicile inside the country, have the respective tax identification of the company, and clearly disclose who will be the partners, shareholder details, etc.
Requirements for setting up a corporation
- Certificate of registration of the foreign company in its place of origin
- Agreement of the assembly appointing a resident and permanent legal representative in Honduras
- These documents must be of recent date, be duly notarized and, where appropriate, translated into Spanish
Board meetings and annual shareholder meetings where presentations are given, appointments made to fill a job vacancy, the company’s financial status reported, profits or losses discussed and similar activities, must also be disclosed to financial authorities as part of entity annual compliance.
Entity annual compliance in Honduras: Tax considerations
In Honduras, the fiscal year runs from January 1 to December 31. To start commercial operations, companies must have a Unique Taxpayer Registry which is obtained via the ATV portal of the Ministry of Finance.
The main taxes that must be declared and paid are:
|Income Tax||This annual tax is levied on income from capital, labor or a combination of both|
|Sales Tax||Applied in a non-cumulative manner on imports and the sale of goods and services|
|Municipal Taxes||Paid to the Municipal Mayor’s Office where the company is domiciled, and is calculated based on the value of the gross sales per year|
Entity annual compliance in Honduras: Labor regulations
Foreign companies doing business in Honduras must comply with labor regulations, which include:
- Trial or probationary period that cannot exceed 60 days and must be paid
- Payment of at least $305 USD per month, which is Honduras’s national minimum wage
- Companies are required to pay fourteen monthly salaries (12 regular monthly salaries, plus June bonus payment and Christmas bonus paid in December)
- A standard work day of eight hours
- Employees are entitled to 10 days of paid vacation per year
In order for entity annual compliance in this Central American nation to be met, companies also must provide their employees with social security. The employer/employee contributions are as follows:
- The employer covers 10.66 percent of the employee’s salary to monthly social security payments
- The employee must contribute 6.5 percent of their salary to monthly social security payments
Common Questions for Entity Legal Compliance in Honduras
Based on our extensive experience these are the common questions and doubts of our clients when looking to operate within the country
The following are the most common statutory appointments for Honduran legal entities:
– An appointed Legal Representative who will be personally liable, both legally and financially for the good operation and standing of the company. This should be a local national or a foreigner with the right to live/work in the country.
Yes, a Registered Office Address or local Fiscal Address is required for all entities in Honduras for the receipt of legal correspondence and Governmental visits.
Biz Latin Hub can help you with entity annual compliance in Honduras
At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with offices in Bogota and Cartagena, as well as over a dozen other major cities in the region. We also have trusted partners in many other markets.
Our unrivalled reach means we are ideally placed to support multi-jurisdiction market entries and cross border operations.
As well as knowledge about entity annual compliance, our portfolio of services includes hiring & PEO accounting & taxation, company formation, bank account opening, and corporate legal services.
Contact us today to find out more about how we can assist you in finding top talent, or otherwise doing business in Latin America and the Caribbean.
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The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.