Honduras - Income Tax

Honduras - Income Tax

Taxation of international executives

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Tax returns and compliance

When are tax returns due? That is, what is the tax return due date? 

Tax returns are due on April 30th.

What is the tax year-end?

December 31st.

What are the compliance requirements for tax returns in Honduras? 


Employers estimate the income tax liability of the employees performing monthly withholdings during the fiscal year.


If the non-resident is paid through a Honduran Company, this has to make withholdings in each payment, if the non- resident is paid by another non-resident and the source of the income is Honduran, the non-resident that receives the payment is responsible for filing the income tax return.

Tax rates

What are the current income tax rates for residents and non-residents in Honduras? 


Income tax for residents is calculated by applying a progressive tax rate schedule to taxable income as follows.

Income in Lempiras Tax Rate
From L.001 to L116,402.00 Exempt
From L116,402.01 to L200,000.00 15%
From L 200,000.00 to L500,000.00  20%
From L.500,000.01 onwards 25%


Gross income obtained from Honduran source by nonresident individuals or legal entities, shall pay pursuant to the tax rate detailed as follows:

No. Concept Tax rate
1 Lease of real property and movable goods, exceptthose mentioned in numerals 5 and 7 of this article                                                 25%
2 Royalties from mining and  any other natural resources operations                      25%
3 Wages, salaries, commissions or any othercompensations for services supplied whether within the national territory orout of it, excluding remittances

4 income or profit obtained by foreign entitiesthrough branches, subsidiaries, filial, agencies, legal representatives and anyother that operates in the country              10%
5 Income, profit, dividends or any other form ofparticipation on profits or reserves of individuals or legal entities

6 Royalties and other amounts paid for usingpatents, design, procedures and secret formulas, trademarks and author rightsexcept those indicated in numeral 12.         25%
7 Interest upon commercial operations, bonus,

securities and any other kind of liabilities
8 Income for the operation of aircrafts, ships,and ground vehicles.                        10%
9 Operation incomes of communication entities, useof software, software solutions, telematics and other of the telecommunicationarea                                                 10%
10 Insurance and bond premiums of any kind ofcontracted policy

11 Income derived from public entertainmentevents                                               25%
12 Movies and videotapes for theaters T.V, videoclub, cable TV rights

13 Any other income not mentioned above                                                              10%

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Honduras?

An individual is considered as resident if he/she has remained in the country for three months in a year.

Is there, a minimum number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country for more than 10 days after their assignment is over and they repatriate.

The only condition is the indicated above, i.e. after three month the non-resident becomes a resident for tax purposes. 

What if the assignee enters the country before their assignment begins?

No specific matters would have to be considered; it is important to obtain the immigration and work permit as soon as possible. This is more important when the assignment is going to be for more than one year. 

Termination of residence

Are there any tax compliance requirements when leaving Honduras?

A tax return must be filed before the departure.

What if the assignee comes back for a trip after residency has terminated?

No specific details in the Honduran law about this situation, we can understand that the three months condition will be applicable.

Communication between immigration and taxation authorities

Do the immigration authorities in Honduras provide information to the local taxation authorities regarding when a person enters or leaves Honduras?

We perceive that currently there is no coordination between immigration and tax authorities.

Filing requirements

Will an assignee have a filing requirement in the host country after they leave the country and repatriate? 

Before  leaving the country and repatriate, a tax return should be filed to tax authorities.

Economic employer approach

Do the taxation authorities in Honduras adopt the economic employer approach to interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in Honduras considering the adoption of this interpretation of economic employer in the future? 


Types of taxable compensation

What categories are subject to income tax in general situations? 

Our Income Tax Law estates: “any kind of yield, gain, profit, rent, interest, proceeds, profit, participation, salary, wage, fee and generally any perception in cash, securities, credit or kind, that modifiesy the equity of the taxpayer is considered income.”

Tax-exempt income

Are there any areas of income that are exempt from taxation in Honduras? If so, please provide a general definition of these areas. 

The following incomes obtained by residents are exempted:

Tenth third and tenth fourth months of salary are exempted up to 10 minimum wages,    the minimum wage for 2015 the minimum wage is L 7,292.63 (7,292.63X10= 72,926.30) and for 2016 7759.98(7,759.98X10= 77,599.80)

Vacation bonus is exempted up to 30 days of salary.

Expatriate concessions

Are there any concessions made for expatriates in Honduras? 

There are none in Honduras

Salary earned from working abroad

Is salary earned from working abroad taxed in Honduras? If so, how?

If the individual becomes a resident for tax purposes its taxation will be on a world wide income base.

Taxation of investment income and capital gains

Are investment income and capital gains taxed in Honduras? If so, how? 

Honduran investment income for both residents and non-residents is subject to Honduran income tax.Capital gains are subject to a 10% tax.

Dividends, interest, and rental income

These income are taxable in Honduras.

Gains from stock option exercises

This income is taxable in Honduras.

Foreign exchange gains and losses

Gain is taxable and the loss is a deductible expense.

Principal residence gains and losses

Gain is taxable and the loss is a deductible expense.

Capital losses

Capital losses can be deducted from capital gains.

Personal use items

Personal items should not be taxable.


Gifts should be taxable, but particular cases should be evaluated.

Additional capital gains tax (CGT) issues and exceptions

Are there additional capital gains tax (CGT) issues in Honduras? If so, please discuss?

See general comments above. 

Are there capital gains tax exceptions in Honduras? If so, please discuss? 

See general comments above. 

Pre-CGT assets

See general comments above.

Deemed disposal and acquisition

See general comments above.

General deductions from income

What are the general deductions from income allowed in Honduras? 

The following items of expenditure may be deducted from taxable income:Medical and Educative expenses L 40,000.00.

  • 1Welfare Insurance Regime, Collective Capitalization Pillar Colectivo (Régimen del Seguro de Previsión social, Pilar de Capitalización ColectivoL. 8,882.30x2.5%X12= L. 2665
  • Welfare Insurance Regime,  Complementary Individual Account Regime ( Regimen del Seguro de Previsión Social, Pilar Complementario de Cuentas Individuales),  Monthly Salary less L. 8,882.30 X 1.5%

Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in Honduras?

No details on this respect are indicated in the Honduran tax legislation.

Calculation of estimates/prepayments/withholding

How are estimates/prepayments/withholding of tax handled in Honduras? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on. 

Income tax is calculated on an annual basis, in payments to non- residents the tax must be withheld in each payment. 

When are estimates/prepayments/withholding of tax due in Honduras? For example: monthly, annually, both, and so on.


Relief for foreign taxes

Is there any Relief for Foreign Taxes in Honduras? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?


General tax credits

What are the general tax credits that may be claimed in Honduras? Please list below.


Sample tax calculation

This calculation assumes a married taxpayer resident in Honduras with two children whose three-year assignment begins 1 January 2013 and ends 31 December 2015. The taxpayer’s base salary is USD100,000 and the calculation covers three years.

  2013 2014 2015
Salary 100,000 100,000 100,000
Bonus 20,000 20,000 20,000
Cost-of-living allowance 10,000 10,000 10,000
Housing allowance 12,000 12,000 12,000
Company car 6,000 6,000 6,000
Moving expense reimbursement 20,000 0 20,000
Home leave 0 5,000 0
Education allowance 3,000 3,000 3,000
Interest income from non-local sources 6,000 6,000 6,000

Exchange rate used for calculation: USD1.00 = HNL 22.00


Other assumptions

  • All earned income is attributable to local sources.
  • Bonuses are paid at the end of each tax year, and accrue evenly throughout the year.
  • Interest income is not remitted to Honduras.
  • The company car is used for business and private purposes and originally cost USD50,000.
  • The employee is deemed resident throughout the assignment.
  • Tax treaties and totalization agreements are ignored for the purpose of this calculation.
Calculation of taxable income
Year ended 2013 2014 2015
Days in Honduras during year 365 365 365
Earned income subject to income tax      
Salary 100,000 100,000 100,000
Bonus 20,000 20,000 20,000
Cost-of-living allowance 10,000 10,000 10,000
Net housing allowance 12,000 12,000 12,000
Company car 6,000 6,000 6,000
Moving expense reimbursement 20,000 0 20,000
Home leave 0 5,000 0
Education allowance 3,000 3,000 3,000
Total earned income 171,000 156,000 171,000
Other income 0 0 0
Total income 171,000 156,000 171,000
Medical expenses (HNL 40,000/22=USD 1,818.00) 1,818 1,818 1,818
Total taxable income 169,182 154,182 169,182
Calculation of tax liability
  2013 2014 2015
Taxable income as above 169,182 154,182 169,182
Honduran tax thereon 38,856 35,162 38,856
Domestic tax rebates (dependent spouse rebate) 0 0 0
Foreign tax credits 0 0 0
Total Honduran tax 38,856 35,162 35,162


1Individuals which montly salary is equal or less than L.8,882.30 are not subject to this regime

© 2016 KPMG Impuesto y Asesoría, S.A., a Honduran corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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