Nicaragua Investment Income Tax Guide 2026

Overview — Investment Income Taxation

Nicaragua's tax system applies withholding taxes and income tax on investment income. Dividends paid by Nicaraguan companies are subject to 15% WHT for both residents and non-residents. Interest income is also subject to 15% WHT. Capital gains are taxed as ordinary income under PIT or CIT, or at the optional 15% definitive WHT rate. Nicaragua's territorial system means that foreign investment income (dividends, interest, capital gains from foreign sources) is generally not taxable in Nicaragua.

Dividend Taxation

Dividends paid by Nicaraguan companies are subject to 15% withholding tax. This applies to:

• Nicaraguan resident individuals: 15% WHT on dividends received
• Nicaraguan resident companies: 15% WHT on dividends received (may be creditable against CIT)
• Non-residents: 15% WHT on dividends (standard rate, may be reduced under Spain DTT)

The 15% WHT is a final tax for individual shareholders. For corporate shareholders, the WHT may be creditable against the corporate CIT liability.

Interest Taxation

Interest income in Nicaragua is subject to 15% withholding tax:

• Bank interest: 15% WHT on interest from bank deposits
• Corporate bond interest: 15% WHT
• Interest paid to non-residents: 15% WHT (subject to DTT relief under Spain treaty)
• Corporate interest income: Included in taxable income and subject to CIT at 30%

Capital Gains on Investments

Capital gains from the sale of investments are subject to the following treatment:

• Habitual traders: Gains treated as ordinary income and taxed at PIT rates up to 30% or CIT at 30%
• Definitive WHT option: 15% WHT may apply as a final tax on capital gains
• Occasional gains: 10% rate for non-habitual, one-time transactions
• Corporate investors: Capital gains included in CIT computation at 30%

Comparison with Regional Peers

Nicaragua's 15% WHT on dividends and interest is moderate compared to regional peers. In Central America: Costa Rica taxes dividends at 15%, Guatemala at 5%, Honduras at 10%, El Salvador at 5%, and Panama at 10%. Nicaragua's treatment of capital gains as ordinary income (up to 30%) is less favourable than some peers, but the optional 15% definitive WHT provides flexibility.

FAQs

Are dividends from Nicaraguan companies subject to tax?

Yes, dividends are subject to 15% withholding tax. This is a final tax for individuals.

Is interest on bank deposits taxed?

Yes, interest on all bank deposits in Nicaragua is subject to 15% WHT.

How is investment income from foreign investments taxed?

Under the territorial system, foreign investment income is generally not taxable in Nicaragua.

Does Nicaragua have a participation exemption?

Nicaragua does not have a broad participation exemption for dividends. The 15% WHT applies to all dividend distributions.

Disclaimer

This guide provides general information about Nicaraguan investment income taxation for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Nicaraguan tax advisor or the Dirección General de Ingresos for advice specific to your situation. InvestmentKit does not provide tax advice.