Last Wednesday the 12th of August there was published in LA GACETA, Number 151, the Law 694 named: “LEY DE PROMOCION DE INGRESO DE RESIDENTES PENSIONADOS Y RESIDENTES RENTISTAS” which was approved by the National Assembly (Nicaraguan Congress), on June 18th.
With this law, The Nicaraguan Government is changing the previous Law #628 from 1974. The new law has several advantages over the last one, such as more details about the procedure to get Residency in the two standard ways: Retirement with Pension or with Private income. There are more definitions and it is going to be useful for Government INTUR - Instituto Nicaragüense de Turismo or the Tourism Nicaraguan Tourism Institute, which is the government’s Department in charge of applying this Law.
The objective of this Law is the promotion of the Special Tourism, and gives many people the opportunity to come to Nicaragua to live for a long period of time as a Resident (five years). To people who can prove an minimum income, it gives a special fiscal treatment with tax exemptions.
To take advantage of this law and get its benefits, people who are going to apply must prove a monthly income of Six hundred US dollars ($ 600.00) for Retiree (on pension) and Seven hundred fifty US dollars ( $ 750.00) for people with privates incomes; i.e. benefits or incomes from Investments, Certificate of Deposits for five years, Bonus, Revenues, Stocks, Rents, Retirement Plans, etc. Dependants could be parents of the applicant, spouse (husband or wife), children under 21 years old; or any other relative in the four grades who are dependents of the applicant. The applicant must have an income of One hundred fifty US dollars ($150.00) for each dependent.
Nicaraguans who have been living more than ten years abroad and have an income coming from abroad, according to the Law, also can get the benefits of this Law.
The Benefits are:
1.Right to Residency for five years.
2.Exemption from payment of the one way ticket out of the country for the applicant/resident.
3.A tax exemption for a vehicle C.I.F. (Cost, Insurance and Freight), up to twenty five thousand dollars ($ 25,000.00); if the price of the vehicle is over twenty five thousand dollars ($ 25,000.00) the Resident will pay taxes on the difference. This vehicle can be changed with tax exemption every four years. Vehicles can be imported from the country where the applicant comes from or bought in Nicaragua in both cases there will be a tax exemption.
4.A tax exemption of twenty thousand dollars ($ 20,000.00) for household goods. There is a comprehensive list of articles that can be considered household goods. i.e.: “household goods are the new or used goods that help or allow living comfortably in a house”.
5.A tax exemption of fifty thousand dollars ($ 50,000.00) of the VAT (value added tax) on construction materials to build a house to live in.
6.Tax exemption of the VAT on rental cars of the Resident, for his personal use in Nicaragua.
Requirements: People who want to apply and get these benefits must submit these documents:
1.Application form.
2.Income certification
3.Birth Certificate
4.Two pictures
5.Health Certificate
6.Photocopy of the passport
7.Marriage License (where relevant)
8.Police Record Certificate
9.List of the household goods and vehicle’s documentation
10.Naturalization Certificate for people who have a different nationality than where they were born.
The whole documentation must be Apostilled (given Consular Legalization) and Authenticated in the country where the documents come from, for the Nicaraguan Consulate.
Obligations:
1.Live in Nicaragua at least six months per year, it could be continuous or discontinuous. However, with INTUR’s authorization there could be exemptions, e.g. heath reasons or having investments in real estate over Seventy five thousand dollars ($ 75,000.00) in Nicaragua.
2.Submit every year to INTUR, documentation to prove that his/her income (in the amounts specified above) comes into Nicaragua.
3.The renewal every five years of the Residency according to the Residency Law of the Immigration Department
Prohibition:
1.The Resident can’t work in Nicaragua with government money; but could do private investments in a business and make investments in real estate over Seventy five thousand dollars ( $ 75,000.00) in Nicaragua in accordance with the Ministry of Economy and Development’s approval. People such as scientists or professors in Universities or Research Institutes will be able to work in Nicaragua.
2.People who build a house for personal or private use, with tax exemptions in construction materials, can’t transfer/sell the house for ten years or they must pay the taxes on those materials.
The age to apply:
The legal age to apply for both Retiree and Private Income applicants is forty five years old, however the same Law in article 23 exempts people who are previously retired for disability (medical reasons) or with private income clearly proven. That means, to apply as Resident with Private Income there are in fact no limitations.
The previous Law of 1974’s effect and Existing Residents:
People who got residency before this law went into effect will not be affected, even if their incomes are lower than that required by the new law; the law doesn't have a retroactive effect, so the people who actually are resident under the previous law don’t have to prove or raise their incomes and will get the same benefits as new residents.
REGULATIONS:
INTUR is at the present time working on the regulations of this Law, that is, the rules of application.
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