El Salvador

Corporate - Corporate residence

Last reviewed - 20 December 2019

A company incorporated in El Salvador is a resident entity in the country for tax purposes and subject to CIT on Salvadorian-source income. Also, branches from foreign companies authorised in El Salvador and entities operating as a permanent establishment (PE) are considered resident entities for tax purposes and subject to CIT on Salvadorian-source income.

The general rule for the determination of the corporate domicile is that it will be the one established on the incorporation document.

Permanent establishment (PE)

A foreign resident creates a PE in El Salvador when corporate activities are performed through one of the following:

  • A fixed place of business where partially or totally developed business activities or personal independent services are carried out (e.g. branches, offices, factories, workshops, locations of natural resource exploitation).
  • A different person, who is not an independent agent, who has the following qualities: (i) acts on behalf of the subject, (ii) has authority to conclude or carry out contracts in the subject’s name, and (iii) habitually exercises this authority to conclude or carry out contracts in the subject’s name.
  • A construction/installation project or a supervision activity that exceeds six months.