Nicaragua is the largest country in the Central American isthmus. The population of Nicaragua is slightly over 6 million. Nicaragua's capital, Managua, is the third-largest city in Central America. The multi-ethnic population includes indigenous peoples, Europeans, Africans, Asians. The main language is Spanish. Native tribes on the eastern coast speak their own languages.
Nearly one fifth of Nicaragua is designated as protected areas like national parks, nature reserves, and biological reserves. Nicaragua is bordered by Honduras to the north, the Caribbean to the east, Costa Rica to the south, and the Pacific Ocean to the west. Geophysically, Nicaragua is surrounded by the Caribbean Plate, an oceanic tectonic plate underlying Central America and the Cocos Plate. Since Central America is a major subduction zone, Nicaragua hosts most of the Central American Volcanic Arc.
Nonresident individuals are liable to tax on Nicaraguan-sourced income. Married couples are required to file separate income tax returns.
The tax period for individuals in Nicaragua begins on 01 July of the current year and ends in 30 June the following year. The tax year 2013-2014 is from 01 July 2013 to 30 June 2014. The tax year 2014-2015 is from 01 July 2014 to 30 June 2015.
Taxpayers may request prior approval from the tax authorities to adopt as their tax period one of the following: 01 April to 31 March, 01 October to 30 September, or 01 January to 31 December.
Income earned by nonresident individuals on Nicaraguan sources is generally subject to 20% final withholding tax. Calculation of taxable income depends on the classification of the income.
Visa, Residency & Immigration Laws
Law of Resident Pensioners and Retirees (Decree 628): Nicaragua passed legislation to encourage retirees and pensioners to move to the country. The Law of Resident Pensioners and Retirees gives benefits mostly in the form of tax incentives.
To qualify, you’ll need to prove to the Nicaraguan government that you’re actually a citizen of the country where you claim your nationality, that you’re in good physical and mental health, that you’re in good standing with the local police, and that you have an income equivalent to at least $600 a month from Social Security or a pension. Add an additional $100 for each dependent family member living with you in Nicaragua. The minimum age for eligibility is 45, but this can be waived if the applicant proves a stable income.
Today, Nicaragua offers the lowest cost of living in Central America (lower than Panama) with prices up to 10 times lower than the United States. It also offers an incredible opportunity to purchase stunning beachfront, lake, or colonial real estate at incredible prices–not to mention that property taxes are low as well. Cleaning or gardening help will cost you $7.40 a day. You can have an elegant meal with a glass of wine for about $16.00, or a regular meal with coffee for about half of that. You can enjoy Happy Hours with $1.00 appetizers, beer, and rum. In short, you can create a beautiful life for yourself and stretch your retirement dollars.Nicaragua’s lower cost of living does not mean you have to sacrifice the quality of life you have been accustomed to in the United States or Canada. In fact, you will probably be able to live in Nicaragua with even more luxuries than you had before, simply because the prices are so economical. Never thought you could live in an ocean view home? Well, think again. Many who never dreamed of living in that kind of luxury are enjoying their drinks on the deck of their new homes, watching the sun set over the sea in Nicaragua.
Retiring in Nicaragua
Today, Nicaragua is a premier destination for Americans, Canadians, and Europeans thinking about retiring overseas. Driven by an abundance of great real estate investment opportunities, low property taxes, and a low cost of living with a high quality of life, Nicaragua is a hot destination for would-be expats looking to flee the financial crisis that still looms worldwide and threatens the ability of millions to retire. In fact, Nicaragua tied for first place (cheapest place to live) in International Living’s 2015 cost-of-living index. And for those just turning 50, with Nicaragua in mind, you can retire 10, perhaps 15 years earlier than you planned.
There are other factors that have also played a role in defining Nicaragua’s arrival as a premier retirement destination: its unbelievable physical beauty, comprehensive retiree benefit program, and the many desirable locations scattered throughout the country. Add to that: Sunny skies, warm air, beautiful landscapes, welcoming people, generous laws, and it’s the safest place in Central America.