Despite the many challenges it faces, the small Central American nation of El Salvador is seeing modest but steady growth. The country’s GDP is projected to grow by 2.4 percent by the end of this year, and by 2 percent in 2023, according to a recent World Bank report.
Despite Salvadoran President Nayib Bukele’s disastrous gamble on Bitcoin, the private sector remains stable, and the government has implemented many incentives to attract foreign investment. It’s little wonder then, that many foreign businesses and investors are considering domiciling in the country. And when they do, they will inevitably need to open a corporate bank account in El Salvador.
For foreign business entities to open a corporate bank account in El Salvador, they must first incorporate in the country. Business bank accounts and setting up shop in the country are intrinsically tied together.
As one cannot be done without the other, let us briefly review the steps that foreign companies need to take to open a corporate bank account in El Salvador. The rules for the tiny country of 6.4 million people are very similar to the regulations a company needs to comply with when doing business in Costa Rica. Continue reading to learn more about the requirements needed to open a corporate bank account in El Salvador.
What is a Corporate bank account in El Salvador
A corporate bank account in El Salvador is a specialized financial account held by a business entity or corporation to manage its financial transactions and funds. It serves as a central repository for the company’s revenue, expenses, and capital. Corporate bank accounts offer various features tailored to the specific needs of businesses, such as online banking, wire transfers, and merchant services.
Opening a corporate bank account in El Salvador usually requires providing legal documentation, such as the company’s registration, tax identification number, and proof of business address. This account allows businesses to receive payments from customers, make supplier payments, pay employee salaries, and invest excess funds. Additionally, corporate bank accounts facilitate financial transparency, making it easier for businesses to monitor their cash flow, track expenses, and maintain financial records for tax and regulatory compliance purposes.
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What are the Company incorporation steps to open a corporate bank account in El Salvador?
What follows are the seven essential steps that foreign entities must take in order to open a corporate bank account in El Salvador:
- Obtain local tax ID numbers for shareholders
- Create and sign the company bylaws
- Register the company bylaws, initial balance, and apply for a commerce license
- Obtain a local company tax ID number (NRC)
- Open a corporate bank account in El Salvador
- Deposit the required minimum capital to activate the account
- Register the company with all relevant government authorities
Notice how step no. 6 is the account-opening part of the incorporation process.
There is a surprisingly large quantity of banks found in such a small country, so business entities can shop around to find the bank that gives you the best corporate services, rate, and ease of banking. As in other jurisdictions in the region, local banks tend to require a few extra hoops to jump through compared to international banks.
What is the list of commercial banks in El Salvador?
It is crucial to know which banks are available prior to opening a corporate bank account in El Salvador. El Salvador is home to several domestic banks, including:
- Abank
- America Central bank
- Bandesal bank
- Cuscatlan bank
- ProCredit bank
It is additonaly important to know which banks are available prior to opening a corporate bank account in El Salvador.International banks with a presence in El Salvador include:
- Agricola bank
- Atlantida bank
- Azteca bank
- BICSA bank
- Citibank
- Davivienda bank
- Industrial bank
- Promerica bank
- Scotiabank
Once a foreign entity has gone through the incorporation process and has decided on which bank to open an account with, there are several steps that businesses must follow to activate the account. After completing these steps a business will be ready to open a corporate bank account in El Salvador.
Opening a corporate bank account in El Salvador: 4-step guide
- Assemble supporting documents, including a shareholder list (minimum) outlining their personal data, position in the company, etc.
- To open a corporate bank account with a local bank, the head of the business must travel to El Salvador to be interviewed by a branch manager in person
- To avoid the in-person interview, hire a trusted/reputable local representative to take part in the interview on the company’s behalf
- Deposit at least 5 percent of the company’s in-country share capital (minimum $2,000) USD into the account, which is equal to $500 USD or more, to activate the account
While the company incorporation process in El Salvador can take as little as 16 days on average to complete, other more conservative estimates put the figure at between 5 to 7 weeks before a company is fully set up and ready for business.
There is one major quirk when you open a corporate bank account in El Salvador that must be mentioned here. While the bank account opening process is relatively easy and can take as little as a week, companies in El Salvador must wait between 3 to 6 months before they can make international bank transfers.
Common questions when opening a corporate bank account in El Salvador
Based on our extensive experience these are the common questions and doubts from our clients when looking to open a company bank account in El Salvador.
No, in El Salvador, you cannot open a corporate bank account solely online. However, you can initiate the process from abroad. You’ll need the support of a local attorney who is empowered through a Power of Attorney (POA) to act on your behalf. This attorney can submit the necessary documents and complete other formalities to open the account.
To open a corporate bank account in El Salvador, you must provide the following documents:
– Copy of the Articles of Incorporation: This confirms the legal formation of your company.
– Certificate of Good Standing: This is evidence that your company is compliant with all state requirements.
– Commercial License (where applicable): Some industries may require a commercial license to operate.
– Evidence of Income: This can typically be proven through a copy of the income tax declaration of the company.
– Passport Copies: Passport copies of all shareholders and members of the company are usually required for identification purposes.
Any member of the company who is authorized by the company’s shareholders can have access to the bank account. These authorized individuals must be duly registered with the bank, and their physical signatures will be required for account operations.
We recommend the following banks for foreign companies: Banco de America Central (BAC) and Banco Davivienda. These banks generally have shorter waiting times for conducting international transfers, which is especially advantageous considering money laundering regulations in place.
Companies open bank accounts in El Salvador for several reasons, to conduct commercial activities within the country.
The flexibility of holding accounts in both US Dollars and Bitcoin, as El Salvador recognizes Bitcoin as legal tender.
Yes, El Salvador has bank secrecy laws. This information is confidential and can only be disclosed to authorities such as the Attorney General’s Office, and the General Directorate of Internal Taxes when required for auditing processes under this law, and to those who demonstrate a legitimate interest, subject to prior authorization from the Superintendency.
Biz Latin Hub can help you with opening a corporate bank account in El Salvador
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 unrivaled reach means we are ideally placed to support multi-jurisdiction market entries and cross border operations.
As well as knowledge about how to open a corporate bank account in El Salvador, 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 do 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.
