Before proceeding to open a corporate bank account, foreign companies must complete the incorporation process in El Salvador. This normally involves registering the company with the relevant government authorities and obtaining the necessary permits and licenses to operate legally in the country. Once the company is officially incorporated, it can proceed to open a corporate bank account in El Salvador with a local financial institution.
Despite the many challenges it faces, the small Central American nation of El Salvador is seeing modest but steady growth. The country’s GDP is projected to grow by 2.4 percent by the end of this year, and by 2 percent in 2023, according to a recent World Bank report.
The private sector remains stable. Meanwhile, the government has implemented many incentives to attract foreign investment. It’s little wonder then, that many foreign businesses and investors are considering domiciling in the country.
Therefore, let us briefly review the steps that foreign companies need to take to open a corporate bank account in El Salvador. The rules on bank accounts in this tiny country of 6.4 million people are very similar to the rules a company must comply with when doing business in Costa Rica. Continue reading to learn more about the requirements needed to open a corporate bank account in El Salvador.
What is a corporate bank account in El Salvador?
A corporate bank account in El Salvador is a specialized financial account held by a business entity or corporation to manage its financial transactions and funds. It serves as a central repository for the company’s revenue, expenses, and capital. Corporate bank accounts offer various features tailored to the specific needs of businesses, such as online banking, wire transfers, and merchant services.
In El Salvador, this usually requires providing legal documentation, such as the company’s registration, tax identification number, and proof of business address. This account allows businesses to receive payments from customers, make supplier payments, pay employee salaries, and invest excess funds. Additionally, corporate bank accounts facilitate financial transparency, making it easier for businesses to monitor their cash flow, track expenses, and maintain financial records for tax and regulatory compliance purposes.
Table of Contents
What is the best bank for a foreign company in El Salvador?
It is crucial to know which banks are available within the country. El Salvador is home to several domestic banks, including:
- Abank.
- Banco America Central.
- Banco Bandesal.
- Banco Cuscatlan.
- Banco ProCredit.
It is also important to know which banks are available before you jump into the market. International banks with a presence in El Salvador include:
- Banco Agricola.
- Banco Atlantida.
- Banco Azteca.
- BICSA.
- Citibank.
- Banco Davivienda.
- Banco Industrial.
- Banco Promerica.
- Scotiabank.
Once a foreign entity has finished the incorporation process, and has decided on which bank to open an account with, there are several steps that the business must follow before the account can be activated. After completing these steps, a business will be ready to open a corporate bank account in El Salvador.
Our recommendation: We recommend that clients, as far as possible, choose a bank if they have a pre-existing relationship with it.
Requirements to open a corporate bank account in El Salvador
You must follow these 4 steps:
- (minimum) outlining their personal data, position in the company, etc.
- To open a corporate bank account with a local bank, the head of the business must travel to El Salvador to be interviewed by a branch manager in person.
- To avoid the in-person interview, hire a trusted/reputable local representative to conduct the interview on the company’s behalf.
- Deposit at least 5 percent of the company’s in-country share capital (minimum $2,000 USD) into the account, which is equal to $500 USD or more, to activate the account.
There is one major quirk that must be mentioned here. While the bank account opening process is relatively easy and can take as little as a week, companies in El Salvador must wait between 3 to 6 months before they can make international bank transfers.
FAQs on banking in El Salvador
Based on our extensive experience, these are the most common queries our clients have
1. Can I open a corporate bank account online in El Salvador?
No. In El Salvador, you cannot do this online. However, you can initiate the process from abroad. You will need the support of a local attorney empowered through a Power of Attorney (POA) to act on your behalf. This attorney can submit the necessary documents and complete other formalities needed to open the account.
2. What documents do I need to open a company bank account in El Salvador?
You must provide the following documents:
- Copy of the articles of incorporation: This confirms the legal formation of your company.
- Certificate of good standing: This is evidence that your company is compliant with all state requirements.
- Commercial license (where applicable): Some industries may require a commercial license to operate.
- Evidence of income: This can typically be proven with a copy of the income tax declaration of the company.
- Passport copies: Passport copies of all shareholders and members of the company are usually required for identification purposes.
3. Who can have access to a company bank account in El Salvador?
Any member of the company who is authorized by the company’s shareholders can have access to the bank account. These authorized individuals must be duly registered with the bank, and their physical signatures will be required for account operations.
4. What is the best bank in El Salvador for foreign companies?
We recommend the following banks for foreign companies: Banco de America Central (BAC) and Banco Davivienda. These banks generally have shorter waiting times for conducting international transfers, which is especially advantageous considering the money laundering regulations in place.
5. Why do companies open bank accounts in El Salvador?
Companies open bank accounts in El Salvador for several reasons, to conduct commercial activities within the country.
The flexibility of holding accounts in both US Dollars and Bitcoin, as El Salvador recognizes Bitcoin as legal tender.
6. Does El Salvador have bank secrecy?
Yes. El Salvador has bank secrecy laws. This information is confidential and can only be disclosed to authorities such as the Attorney General’s Office, and the General Directorate of Internal Taxes when required for auditing processes under this law, and to those who demonstrate a legitimate interest, subject to prior authorization from the Superintendency.
Biz Latin Hub can help you open a corporate bank account in El Salvador
At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with offices in Bogota and Cartagena, as well as over a dozen other major cities in the region. We also have trusted partners in many other markets.
Our unrivaled reach means we are ideally placed to support multi-jurisdiction market entries and cross border operations.
As well as knowledge about banking in El Salvador, our portfolio of services includes hiring & PEO, accounting & taxation, company formation, bank account opening, and corporate legal services.
Contact us today to find out more about how we can assist you in finding top talent, or otherwise do business in Latin America and the Caribbean.
If this article about how to open a corporate bank account in El Salvador was of interest to you, check out the rest of our coverage of the region. Or read about our team and expert authors.
