One of the challenges of expanding to Nicaragua is setting up your local payroll to comply with local tax regulations and similar laws. You’ll have to choose a Nicaragua payroll option while trying to handle all other aspects of an expansion and your parent company’s daily operations. Plus, you can’t set up payroll until you establish your subsidiary. That’s why G-P is here to help streamline your Nicaragua payroll, ensuring compliance and less hassle.
Taxation rules in Nicaragua
Nicaragua’s taxation laws include contributions to social security for both employees and employers. Employers must contribute 21.5% to 22.5% of wages to social security, depending on the number of employees within the company, while employees contribute 7%. Both are subject to an income cap. Employees’ personal income tax utilizes a progressive scale that’s up to 30% for those in the top income bracket.
Nicaragua payroll options for companies
Nicaragua’s 3 different payroll options are meant to help you find one that works for your business goals. You can choose:
- Internal: An internal payroll is a good option for large companies committed to Nicaragua. Make sure you have the infrastructure in place to run this type of payroll, including a full HR team, a subsidiary, and compliance experts.
- Local outsourcing company: Outsourcing with a Nicaragua payroll processing company works for companies that don’t have the time or expertise to run their own payroll. However, your company will still have to worry about compliance.
- Employer of Record (EOR): G-P streamlines your Nicaragua payroll, ensuring accurate payments and compliance with the country’s laws. With the largest team of HR and legal experts and over a decade of experience, G-P handles the time-consuming complexities of payroll management so you can focus on building your teams.
How to set up payroll in Nicaragua
You cannot set up your Nicaragua payroll until you have a registered entity in the country, but establishing a subsidiary can take a significant amount of time and set back your plans to begin operating there. However, G-P eliminates the need to establish an entity so you can begin operations in Nicaragua starting in just minutes, not months.
Entitlement/termination terms
Entitlement and termination terms can help employees understand the employment relationship and save you from any issues later on. It’s best to add these terms to an employment contract before you set up your Nicaragua payroll. You have to request authorization for termination through the Labor Inspection Department before terminating a specific employee. The employee is entitled to severance pay based on the amount of time they’ve worked for the company.
Streamline global payroll management with G-P.
G-P streamlines each step of the payroll management process with our market-leading global employment platform. Pay your team with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.
Contact us to learn more about how we can support you.