How capital gains tax works in El Salvador
El Salvador taxes capital gains at a flat 10% on net profits. If the asset is sold within 12 months of acquisition, the gain can be taxed as ordinary income instead, which can push the effective rate up to the personal or corporate income-tax rate that applies.
Securities are also within the capital-gains rules, but the 12-month ordinary-income rule does not apply to securities in the same way it does to other assets. Certain exchange-listed instruments can also be exempt when they meet the stock-exchange and supervisory conditions set by law.
Because El Salvador now excludes foreign-source income from the tax base, gains on foreign assets are generally outside Salvadoran income tax when the source is abroad. Property deals still need separate modelling because a 3% transfer tax can apply above the statutory threshold.
Tax rates at a glance
- Capital gains tax
- 10%Flat rate
- Short-term gains
- Ordinary income
- Securities gains
- 0% / 10%
- Foreign-source gains
- 0%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
InvestorsShareholdersProperty ownersTradersFounders
Watch out for
- The 12-month rule is the biggest trap. A sale soon after acquisition can be taxed as ordinary income rather than as a 10% capital gain.
- Keep acquisition-cost records. Banks, brokers and the tax office will often want documentation for basis, gain computation and source of funds.
- In April 2026, lawmakers approved removing the 3% withholding on capital income and returns from investment in securities, so listed-instrument treatment should be checked at filing time.
- Real estate still has a separate 3% transfer tax above the exemption threshold, so a property sale can produce both a capital-gains issue and a transfer-tax issue.
Frequently asked questions
Does El Salvador have capital gains tax?
Yes. The general rate is 10% on net gains, with some gains taxed as ordinary income if the asset is sold within 12 months.
Are foreign capital gains taxed in El Salvador?
Generally no, if the gain is foreign-source. El Salvador’s territorial rules now exclude foreign-source income from the tax base.
Are securities gains taxed differently?
Yes. Securities gains are covered by the capital-gains rules, but the 12-month ordinary-income rule does not apply in the same way as it does for other assets.