Before conducting business in Honduras, it's crucial to have a good grasp of the annual entity compliance requirements and the broader regulatory framework in the country. Investors should be aware of these financial regulations before officially registering a company in Honduras, as non-compliance could lead to legal challenges and financial penalties. Financial regulatory compliance is a significant aspect of overall corporate compliance and is typically covered by corporate secretarial services.
If you're thinking about company formation in Honduras, a comprehensive guide to annual entity compliance is indispensable. This overview is designed to assist you in navigating the legal landscape and ensuring adherence to all regulatory requirements.
For businesses already operating in Honduras or those exploring market entry, we provide tailored assistance. Feel free to contact us today to learn more about how we can support your business's unique needs and help you stay compliant in the Honduran business environment.
We recognize the challenges that come with adapting to new legislation, especially when it comes to complying with corporate obligations. To simplify this process, Biz Latin Hub has designed this Annual Fiscal Compliance Calendar.
Types of companies in Honduras
In Honduras there are a variety of company types, but the most commonly used are the following:
- Corporations – A corporation exists under a name and has capital divided into shares. The partners are responsible for the payment of what they have subscribed.
- Limited Liability Companies – A limited liability company exists under a corporate name. The 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
In Honduras, businesses are obligated to adhere to distinct
corporate and mercantile requisites, aiming to guarantee both legal
adherence and operational effectiveness. These requisites include
the yearly submission of financial statements and tax returns, the
meticulous upkeep of current corporate records, and the
organization of regular shareholder meetings, usually conducted on
an annual basis. Additionally, companies must conform to the
stipulations outlined in the Honduran Commercial Code concerning
corporate governance. The stipulations mandate tasks such as
appointing a legal representative, and, depending on the
company's scale and nature, constituting a board of
directors.
Board meetings and annual shareholder meetings where presentations are given, job appointments are made, the company's financial status is reported, profits or losses are discussed, among similar activities, must all be disclosed to financial authorities as part of entity annual compliance.
Requirements for Setting Up a Corporation
If you have not yet set up a corporation, you must complete the following steps:
- Obtain a Certificate of Registration of the foreign company in its place of origin.
- Agree on the appointment of a permanent legal representative in Honduras.
- Ensure that the documents confirming the above are of recent date, duly notarized, and where appropriate, translated into Spanish.
Entity Annual Compliance in Honduras: Tax Considerations
In Honduras, the fiscal year runs from January 1st to December 31st. 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:
| TAX | DETAILS |
| 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 | This annual tax is levied on income from capital, labor, or a combination of both |
Entity Annual Compliance in Honduras: Labor Regulations
Foreign companies doing business in Honduras must comply with labor regulations, which include:
- Providing employees with a trial or probationary period that cannot exceed 60 days and must be paid
- Payment to employees of at least $305 USD per month, which is Honduras's national minimum wage
- Payment to employees of fourteen monthly salaries (12 regular monthly salaries, plus the June bonus payment and Christmas bonus paid in December)
- A standard workday of eight hours
- Entitlement of 10 days of paid vacation per year
To meet entity annual compliance in Honduras, companies must also 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
In order to simplify processes, Biz Latin Hub has designed this Annual Legal Calendar with fundamental responsibilities that every company in Honduras must attend to.
Common Questions on Entity Legal Compliance in Honduras
Based on our extensive experience these are the common questions and doubts of our clients on entity legal compliance in Honduras:
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 Honduras entities to receive 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 unrivaled 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.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.