UTC:
Capital City:
Language:
Population:
Currency:
Country Code:
Domain:
-6
Tegucigalpa
Spanish
10.8 million
Lempira (HNL)
+504
.hn
Israel-Honduras relations
Honduras and Israel have not signed a double taxation treaty. Both countries share a good mutual relationship, as demonstrated by their diplomatic ties and reciprocal support. On September 1st, 2019 a commerce center was opened in Jerusalem, and in return, Israel did the same by establishing one of its Israel trade and cooperation offices in Tegucigalpa on August 20, 2020.
Since then, the relationship between both nations has been characterized by mutual respect and collaboration, reflecting a shared understanding and common interests on the global stage. In 2022, Israel exported $9.09M to Honduras, mainly plastic lids ($1.93M), raw plastic sheeting ($981k), and industrial printers ($841k). Over the last 27 years, exports from Israel to Honduras grew at an annual rate of 3.08%, from $4.01M in 1995 to $9.09M in 2022.
Details about the Embassy of Israel in Honduras
Address: Centro Civico Gubernamental Blvd Juan Pablo II Torre 1 Piso 12, Tegucigalpa
Phone: + 504-22428975
Website: Click Here
Email: ambassador-sec@tegucigalpa.mfa.gov.il
Details about the Embassy of Honduras in Israel
Address: Agudat Sport HaPoel Street, No. 2 4o. Nivel de Torre Principal Parque Tecnológico de Jerusalén, Israel
Phone: +972 2 9660180
E-mail: honduras@netvision.net.il
Business Activity in Honduras
Honduras, located in the heart of Central America, follows a democratic government reflecting a mixed economy. It is the United States market’s closest neighbor, with fare times of about 2-3 hours during flights, and 48-72 hours by sea. Because of its deep-water port and strategic positioning, Honduras is a convenient partner for the rest of Central America to distribute its commodities.
The primary objective of Honduras is to evolve into the main logistics center for Central America through the developments and modernizations of its infrastructures like roads, ports, and airports. Also, growing the agricultural sector, Honduras is well known for the growing and exporting of crops such as coffee, tropical fruits, and sugar cane, as well as its textile industry.
Residency for Tax Purposes in Honduras
Residence of an Individual
In Honduras, the time an individual has resided in the country is a key factor in determining their tax residency. If a person stays in Honduras for more than 90 days within one year, whether in a continuous period or not, they are considered a tax resident.
To learn about how an individual is considered a resident of Israel, click here.
Residency of a Company
A company is regarded as a tax resident in Honduras if it is incorporated or registered in Honduras. Businesses not incorporated in Honduras are treated as non-residents. However, a non-resident company can be considered to have a Permanent Establishment (PE) in Honduras if it needs to conduct business activities in the country through a fixed location or an independent agent.
To learn about how a company is considered a resident of Israel, click here.
The Tax System in Honduras
The Honduras Tax Authority is called The Revenue Administration Service.
Income Taxation: 0%, 15%, 20%, 25%
Taxation of Companies and Branches: 25%
VAT: 15%
Capital Gains Tax: 10%
Withholding Tax
| Honduras Internal Tax Rate | Israel Internal Tax Rate |
Personal Income tax (Tax brackets) | 0.01 to 199,039.47 HNL- 0% 199,039.48 to 303,499.90 HNL –15% 303,499.91 to 705,813.76 HNL- 20% 705,813.77 HNL and over- 25% | Up to 50% |
Corporate income tax | 25% | 23% |
Capital gains tax rate | 10% | 25%-30% (plus exceptional income tax for high earners at 3%) |
Branch tax | 25% | 23% |
Withholding tax (Non-Resident) Dividends | 10% | 25% or 30% |
Interest | 10% | 15%/25%/23% |
Royalties | 25% | 23%-40% |
VAT | 15% | 17% |
Inheritance Tax | NA | NA |
Inheritance Tax and Estate Tax in Honduras
Honduras does not impose inheritance or estate tax.
Relocation to Honduras
Honduras, a country located centrally in Central America, allows easy access to North, Central, and South American markets through trade and the logistics with the US. The free trade agreements such as CAFTA-DR are very effective because they reduce tariffs and relieve trade barriers, leading to increased investment as well as the improvement of rules on intellectual property, e-commerce, and procurement of government contracts.
The main attractions of this country include competitive labor costs, which are highly desirable for manufacturing and textiles, and economic growth, driven by state initiatives to improve the economy and business environment, leading to the country’s progress. Investment incentives such as tax breaks, customs duty exemptions, and a streamlined business registration process are some of the benefits guaranteed by this system.
Honduras has a wealth of natural resources like minerals, agricultural products, and forests, which allows for business to thrive. Basic infrastructure such as ports, roads, and telecommunications lead to a good business environment. The tourism industry has grown fast, and is based on nature assets and cultural heritage that will provide more jobs for employees.
The Jewish community in Honduras accounts for about 275 Jews, one of the smallest Jewish populations in Central America. The Comunidad Hebrea de Tegucigalpa represents the Jewish community and is affiliated with the World Jewish Congress.
Real Estate Taxation in Honduras
A transfer tax applies to any acquisition of real property in Honduras, whether it involves a legal or beneficial interest. Real estate transactions are subject to a transfer tax of 1.5% for every HNL 1,000.
Transfer of Funds from Israel to Honduras
According to section 170(a) of the Israeli income tax ordinance, any transfer of payment to a non-Israeli resident is subject to 25% of withholding tax. The tax authority can allow, under certain circumstances, to reduces or dismiss the withholding tax. Our firm handles withholding tax matters with the Israeli Tax Authority.
In providing advice regarding the transfer of money abroad, in addition to the issue of withholding tax, our office handles the requirements of the foreign banks, such as an accountant’s approval regarding the payment of taxes and examines additional actions required in light of the uniform standard of CRS between the countries – automatic exchange of information between countries which is carried out first through the banks and then between the tax authorities of each two countries.
The banks raise many difficulties and charge high fees for converting shekels into other currencies, so it is important to consult before transferring the funds – Contact us.
For more information on money transfers abroad, click here.
Types of Business Entities in Honduras
Main forms of legal entities in Honduras include:
Limited Liability Company (SdeRL)
The Limited Liability Company is the most preferred legal structure used by entrepreneurs setting up businesses in Honduras. It requires at least 1 director and 2 shareholders of any nationality, and they are not required to be residents of Honduras. The shareholders may be individuals or corporate bodies. Furthermore, it requires a minimum share capital of US$250 to be incorporated.
Public Limited Company (SA)
The Public Limited Company requires at least 2 shareholders, who can either be individuals or legal entities, to be incorporated. A Public Limited Company must also appoint at least 1 director who can be of any nationality and must not be a resident of Honduras. Furthermore, it requires a minimum share capital of US$1,250 to be incorporated.
Branch Office (Sucursal)
A foreign company can operate in Honduras through a branch office, which is considered an extension of the parent company and not a separate legal entity.
Representative Office (Oficina de Representacion)
Foreign entities can set up representative offices in Honduras to serve as a link with their parent company, but these offices aren’t considered legal entities and cannot engage in commercial activities. They must appoint at least one resident representative, regardless of nationality. The office is limited to conducting market research and promoting the parent company’s products and services.
Incentive Laws in Honduras
Honduras is a preferential choice for both local and foreign investors engaged in sectors such as tourism, agro-industry, manufacturing, exports, and services. The government’s innovative legal structure for businesses has been created to support the areas of private investment as well as gain a more competitive edge. Some of the key incentives include tax benefits, pre-operating expenses, and accelerated depreciation.
Moreover, the Honduran government has approved important laws, such as the Law for the Promotion and Protection of Investments and the Law of Free Zone, which offer certain tax benefits to those investors. These measures are part of Honduras’s efforts to create a favorable investment climate.
