Tax-free in Central America – All about the residence in Belize, Honduras and Guatemala

In the Tax Free Today world of tax optimisation there are regions that offer many interesting possibilities and this is not only the case with small island States, but also partly the case with continental nations.

Central America stands out in this category, with a network of attractive and interconnected options.

Getting a permanent residence in Panama is a very popular choice among Tax Free Today readers, but when it comes to deciding where we are going to go, we mustn’t forget its neighbouring country to the north, Costa Rica, even though emigrating there is harder.

Even Nicaragua, which is currently being devastated by a civil war, has been mentioned on the Tax Free Today blog.

However, until now, we haven’t really addressed the subject of having a residence in the other three Central American countries with territorial taxation systems.

In these States, like in Panama and Costa Rica, any income earned abroad is tax-free. Immigration doesn’t pose any serious difficulties for entrepreneurs and international investors, either.

We’re talking about Belize, Guatemala and Honduras, three attractive countries to visit and to live in, at least in some areas.

In El Salvador and Mexico, on the other hand, the taxation of income made anywhere in the world operates on the principle of residence (you pay tax on all your income, regardless of where it came from).

Guatemala and Honduras, in particular, are known for their high levels of crime, with the highest rates of murder in the Western world. Nevertheless, tourists can visit most regions without being in any danger. As always in Latin America, in nearly all of the cities there are safe areas and unsafe areas.

The Bay Islands, especially Útila and Roatan, are particularly popular among expats. They are situated 50km away from the coast and are far safer than the continental part because they are highly valued tourist destinations.

They have a good infrastructure with direct flights from the United States, Canada and some Latin-American cities. English is generally the language used, since they were ruled by Great Britain as a part of Belize (known at the time as British Honduras) before they were annexed to Honduras. Furthermore, Roatán will possibly be the site for a Free Private City.

The Bay Islands are surrounded by the second largest coral reef in the world, which extends all the way to Belize.

With hundreds of little islands, Belize is known mainly for being a great place for all kinds of water sports, but exciting experiences can also be had in the rainforest there, with its interesting Mayan ruins that rival those of Yucatán, in Mexico.

Both countries share a border with Guatemala in the centre, which therefore has its own Caribbean coastline.

So these three countries make up an easily accessible corridor, where it’s worth putting a flag. The strategy of forming an offshore company in Belize is particularly well-known, since it offers the best performance/price ratio in the offshore sector.

Companies in Belize are anonymous, tax-free and don’t have to present accounting records and can be formed through Tax Free Today for around €1,500.

These companies are mainly interesting for the cryptocurrency sector, since Belize was one of the first jurisdictions in the world to set legal conditions for cryptocurrency. In this way, we can open an account there, through which we can easily convert money into cryptocurrency and vice versa.

Be that as it may, today we’re not going to focus on options involving these countries’ companies; we’re going to talk about how to get a residence in the three countries: Belize, Honduras and Guatemala. Each one offers specific regional characteristics.

Belize makes immigration extremely easy, but it requires an almost uninterrupted stay during the first year. If you are older than 45, you also have other options without having to spend so much time there.

Emigrating to Honduras is harder than emigrating to Panama, for example. But you can obtain a tax residence and a tax certificate after spending just three months in the country, rather than six, as is usually the case. This makes it particularly interesting for perpetual travellers, who for whatever reason might need this certificate but don’t want to tie themselves to a place for very long.

Finally, Guatemala is a good middle-ground, which offers both easy-to-meet immigration requirements and an attractive tax system and is, at the same time, a country for living in that is full of contradictions, and appears to have the option of obtaining citizenship after just 9 months (we haven’t been able to verify this fact yet).

Emigrating to Belize

We don’t normally talk about Belize as an option for changing residence in the advice we give at Tax Free Today. This is because Belize is only suitable for people who really want to settle down in the country.

Belize can’t serve, in principle, as a proforma residence, in the same way that Panama or Paraguay can. The reason for this are the obstacles due to age or the residence in one of the two possible programmes.

In Belize you can obtain a permanent residence permit after just one year of residence. There are no other requirements, like investing or buying property. But you really have to be primarily in Belize for 50 weeks before you can apply for a permanent residence. Once you’ve obtained a permanent residence permit after a year, you can only leave the country for limited periods of time, so as not to lose it.

In practice, it isn’t necessary to stay permanently in Belize. In reality, they tolerate leaves of up to two weeks, but these cannot be regular and must be justified exceptions. You would have to spend most of the year in Belize, although perhaps yacht owners have an elegant solution to this.

Given that Belize only gives out a 30-day Visa on arrival, you would have to renew it every 30 days. You won’t have problems doing this for the first 90 days. Once this amount of time has passed, it is important to reiterate that you intend to apply for the permanent residence after 350 days.

It would be worth seeking the services of a lawyer to avoid problems with prolonging the visa. Monthly renewal of the visa costs $25 for the first six months and after that it costs $50.

After the 11th renewal, you can finally apply for the permanent residence permit. As well as having to prove their presence in the country, the applicant must prove their integration in the local community through two patrons who endorse them. As a general rule, they can be priests, doctors, local lawyers or any other people who hold positions of authority.

Applying for permanent residence costs between $2,000 and $5,000, depending on your nationality. US nationals pay just $1,000. Once you’ve obtained permanent residence, you can work in any local job. The local tax system is in place, which follows the territorial principle, however, domestic income is taxed at 25%, above amounts of $14,500.

Given that hardly any requirements are imposed until permanent residence is acquired, the programme is quite attractive if you’re really planning to emigrate for the long term.

After 5 years, we can aspire to having Belizean citizenship. The passport offers the possibility to enter 101 countries, but not the Schengen Area. Since Belize allows dual citizenship, its passport can be useful as a second document.

You can’t obtain citizenship through the programme called Qualified Retiree Programme (QRP), but this still has other advantages. With this programme, you do not have to live permanently in the country for a year, but rather you only have to spend 30 days of the year in Belize, if you fulfill the age and minimum income requirements.

The QRP programme is exclusively for retirees and pensioners aged over 45 who receive a lifetime monthly payment from the State or elsewhere, but in any case from outside of Belize, of at least $2,000.

Instead of retirement or a pension, the residence can also be obtained with life insurance with interest, as long as the insurance guarantees payment until death. But, due to the current low interest rates, this could be quite difficult at a young age. You can sign your wife and children under 18 up; children under 23 need a certificate of registration in a local school.

In the Qualified Retiree Programme an obligatory presence of 30 days is stipulated, which must be spent uninterrupted in Belize. It is not a permanent residence, nor is it possible to obtain citizenship. On the other hand, the people who participate in this programme have some advantages. As well as total tax exemption, it is also possible to import your own boat, plane or car for personal use.

Once the HIV tests and security test by the Belizean authorities have been done, nothing stands in the way of a retirement in the island world. The application only costs $150; if it is successful you have to pay an admission fee of $1,000 plus $750 for every family member. The annual renewal fees of the QRP card only amount to $50. Similar to the Thailand Elite Visa, this programme is run by the national Tourist Office.

Emigrating to Honduras

The emigration process to Honduras is far more regulated than it is in Belize. There are 4 categories of different visas to emigrate with, which are interesting for foreigners. As well as family reunification, there is a visa for pensioners, landlords and investors.

Whoever receives a guaranteed lifetime income worth a minimum of $1,500 can use it to obtain their residence permit (Retired). If the income is made up of other capital investments like shares, rentals or charging of interests, it is necessary to prove income of $2,500 (Landlord). You have to prove it with the corresponding bank statements for more than three months.

While on land you need to have a sum of $100,000, on the attractive Bay Islands, like Roatán, you only have to invest $50,000 for an investor visa. But it’s not enough to just acquire a property.

The investment has to be accompanied by a business plan and must aspire to creating local revenue. However, a common way of getting around this is to transform your own property into a Bed & Breakfast or rent out tourist accommodation in one way or another. This practice is still currently accepted.

To obtain a residence it isn’t necessary to travel to the capital, Tegucigalpa. Although it isn’t possible to do everything in Roatán, you can go to the coastal city of La Ceiba, which is only 90 minutes away by ferry. Here it is only necessary to visit in order to obtain a residence permit.

A residence permit obtained through one of these three categories is the equivalent of a permanent residence and lasts for the rest of your life. It isn’t necessary to comply with a fixed stay.

It is striking that after 3 months of residence you have a tax residence, which normally happens after 183 days. Therefore, Honduras can be a good option for those who need a tax certificate so that they are relieved of the obligation to pay taxes in their country of origin. Despite the territorial taxation system, Honduras isn’t a typical tax haven. Local income is taxed at a maximum of 25%, with a tax-exempt amount of just $5,000.

In Honduras, it is necessary to have a valid address to be able to acquire more than 0.72 acres of land. After 5 years it’s possible to obtain citizenship, but dual citizenship is only allowed in certain cases, for example, by birth or marriage.

Hondurans have a relatively good passport, with 138 countries that they can enter without a visa, including the Schengen Area and Russia.

Emigrating to Guatemala

Guatemala offers 3 ways to get a residence permit to potential immigrants.

The most tedious way leads to a residence permit that has to be renewed every two years. However, after the first two years, you can apply for a permanent residence permit.

The simplest way is by getting a visa for pensioners or investors.

For the temporary residence permit you have to bear in mind that you need to do a lot of paperwork and running around, since the local authorities have to certify everything two or three times. The only really important condition is finding a patron to sponsor the applicant. This can be an individual or a company, but has to meet certain requirements that make it difficult for you to do it through your own company, for example.

After 2 years of temporary residence you can apply for permanent residence, as long as you have stayed in Guatemala at least once a year. After waiting another 5 years, you can obtain the country’s citizenship. This can be an interesting option, given that having a dual citizenship is allowed and that it currently includes entrance to 137 countries without a visa, including the Schengen Area and Russia.

It is very interesting that the waiting time for citizenship is reduced to a just 9 months here, as long as we have successfully applied for an investor visa. Along with the Pensioner visa, this is the second way to get a residence in Guatemala.

The investor visa requires an investment in 5-year Guatemalan government bonds worth $60,000, as well as the usual documents, like the certificate of good behaviour, medical certificate etc.

If the applicant wants to obtain citizenship within 9 months, they will have to reside in the country for three weeks in the first year and four weeks in the second year. Similar to the temporary residence permit, a local patron will have to sponsor the applicant.

By contrast, a patron is not needed for the Pensioner visa, but it is necessary instead to prove an income of $1,000 plus $200 for every family member. This can come from either a pension or from other sources, such as rent, shares and so on. However, you can’t apply for citizenship as a pensioner. And this status expires if you are away from Guatemala for a year.

As well as its territorial tax system, Guatemala only imposes a maximum income tax of 7%, which is why it’s not a bad place to create a local business. Francisco Marroquín University, in Guatemala City, is an influential private university that follows a Libertarian philosophy. It’s worth visiting the campus if you’re in the city.

Overshadowed by their Latin American neighbours?

Guatemala, Honduras, Belize might not be the most popular options. This might be because they are often associated with poverty and crime, despite the fact that the quality of life is relatively high in some places. As is often the case in Latin America, we shouldn’t label any one country, but rather find different areas.

Nevertheless, there is strong competition in the immigration market with countries like Panama, Costa Rica and Paraguay. For this reason, not much attention is usually paid to the three countries that we’ve talked about here. However, they can be perfectly suited for an online entrepreneur and for investors who aren’t considering settling down for the long term in the country that is their tax residence.

For older people (45 and over) with passive income, the QRP Programme in Belize might be an attractive option for gaining tax freedom with just a 30-day holiday on a tropical island.

And whoever has $60,000 can become a Guatemalan citizen in less than a year by investing in State bonds, while having to stay in the country for only four weeks of the year. Until now, very few people were aware of this possibility.

Finally, Honduras can be interesting because of the Private Free City that we will introduce you to soon…

If you are interested in emigrating to one of the three countries, Guatemala, Belize or Honduras, do not hesitate to send us a message. We have qualified contacts in all of the countries who can help you successfully obtain a permanent residence permit or even citizenship.

If you’re not clear which is the best option for your residence, you can start by reading our encyclopaedia for the emigrant in which we set out the emigration conditions and characteristics of more than 60 countries in the world, or if you prefer to have our active support, you can book a consultation with us.

Because your life is yours!