DB HONDURAS INGLES : simplebooklet.com

2 3LOCATION: Honduras is located in Central America, bordered to the north by the Atlantic Ocean, to the west by Guatemala, to the southwest by El Salvador and the Pacic Ocean, and to the east by Nicaragua. CAPITAL: Tegucigalpa, Municipality of the Central District, Department of Francisco Morazán; it has approximately 1.6 million inhabitants.TOTAL POPULATION:Approximately 9.7 million inhabitants.IDIOMA OFICIAL: Spanish. AREA:1112,492 km2 MAIN AIRPORT:Palmerola International Airport (XPL), Comayagua, Honduras HONDURASDoing Business Honduras l General Aspects Doing Business Honduras l Political & Economic RegimeExchange Rate: 1 USD - 25.33 HNLSource: december 19, 2024, www.bch.hnThe Republic of Honduras has 3 constituted powers:1. Executive: President and Ministers.2. Legislative: National Congress of the Republic.3. Judicial: Supreme Court of Justice.The National Congress of the Republic is the entity in charge of issuing the laws that regulate the country.2021: National and democratic elections were held on November 28, 2021. In these elections the new President, Deputies to the National Congress and Municipal Mayors were elected. As a result of the national elections described above, was elected:Current Presidentl: Xiomara Castro de Zelaya(term 2022-2026).POLITICAL SYSTEM:Political Party:Libertad y Refundación (LIBRE)ECONOMY:2021 2022 Total Gross Domestic Product (GDP) of US $28.49 billion and per capita of $2,771.72.Approx. 4% growth.Approx. 3.5 % Growth.2023The country has had a stable growth rate of 3-4% on average over the last 5 years. Honduras has a broad legislation that attracts and encourages investments through tax efciencies in Special Regimes, such as:Free Trade Zone Regime.Industrial Processing Zones Regime.Temporal Import Regime.Tourist Free Zone Regime.Agricultural Export Zone Regime.It also offers a series of tax incentives in the tourism sector as well as around outsourcing services (BPO).FOREIGN INVESTMENT INCENTIVES

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4 5Doing Business Honduras l Business Aspects Doing Business Honduras l Business AspectsBUSINESS ASPECTSThe laws establish several types of corporations, among which the corporation and the limited liability company are the most used.The requirements and forms of incorporation, as well as other provisions applicable to corporations, are established in the Commercial Code. Having complied with the legal requirements, for a mercantile corporation in Honduras to be duly constituted, it must be registered in the Mercantile Registry of the domicile of the corporation.Additionally, for tax purposes, every corporation in Honduras must have a National Tax Registry (Registro Tributario Nacional or Tax ID) which is issued by the Revenue Administration Service. The corporation will have its own legal personality, different from the partners that constituted it.HOW TO INCORPORATE A COMPANY?STEPS TO BUILD A COMPANYThe company is incorporated with the execution and subscription of a public deed authorized by a Notary Public authorized to practice in Honduras. The company, after its incorporation before a notary public, must be registered in the corresponding Commercial Registry, depending on the domicile of the company, and before the Revenue Administration Service (SAR) to obtain its National Tax Registry for tax purposes.At least 1 natural or legal person must appear in the articles of incorporation if the corporate purpose is not an activity regulated by the State, or 2 natural and/or legal persons if its purpose is an activity regulated by the State, who will be called shareholders or partners depending on the type of company to be incorporated. 123 4The approximate time to incorporate a company is 2-5 business days after receiving the corresponding information and legal documentation and may vary depending on your domicile.Characteristics and requirements of a Corporation Elements of the LimitedLiability Company Capitalist Nature.There is no limit to the maximum number of shareholders.It may be incorporated by 1 or 2 individuals, ho may be either natural or legal persons, whether Honduran or foreign.The minimum capital required to incorporate a “Sociedad Anónima” (Corporation) is L. 25,000.00 (approximately US$ 1,000.00). The capital may be variable, with a minimum capital that shall not be less than what is required by law, and a maximum that is not restricted by law.The share capital is divided into shares, which must have a nominal value of L10.00 or its multiples.Free transfer of shares, which can be done through:• The simple endorsement of the share certicate or;• With the authorization of the Board of Directors, depending on what is established in the articles of incorporation.The management of a “Sociedad Anónima” (Corporation) can be carried out by:• A Board of Directors; or,• A Sole Administrator. Directors, including the Sole Administrator, may be shareholders or individuals outside the company.The legal representation of a corporation corresponds to the Board of Directors (through its President) or the Sole Administrator.The corporate name may be freely chosen with the mandatory inclusion of the term “Sociedad Anónima” or its abbreviation “S.A.”Free transfer of shares.• Personalist Company.There is no limit to the maximum number of partners. It may be incorporated by 1 or 2 individuals, who may be either natural or legal persons, whether Honduran or foreign.The mínimum capital required for a Limited Liability Company is L. 5,000.00 (approximately US$ 215.00). The capital may be variable, with a minimum capital that shall not be less than what is required by law, and a maximum that is not restricted by law.The capital is divided into social shares, which can only be transferred with the approval of the General Assembly of Partners, and such agreement must be duly executed before a notary public and registered with the Commercial Registry.The management of an S. de R.L. (Limited Liability Company) is entrusted to one or more Managers, who may be shareholders or individuals outside the company, whether Honduran or foreign. However, the person registered as Manager with the tax authority must be either a Honduran national or a foreigner with legal residency in the country.The company name may be freely chosen with the mandatory inclusion of the term “Sociedad de Responsabilidad Limitada” or its abbrevia-tion “S. de R.L.”

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6 7Doing Business Honduras l TaxesDoing Business Honduras l Business AspectsAdditionally, there is the option to incorporate in Honduras a Branch of a foreign company, which allows it to operate in Honduras. The Branch can operate in the same manner as a Honduran company. The documents required to incorporate a branch of a foreign company in Honduras are the following: • These documents are subject to registration in the competent Commercial Registry, so that the Branch can be duly incorporated. Additionally, such Branch must have a National Tax Registry (Registro Tributario Nacional or Tax ID) for tax purposes.Apostilled copy of the Certicate of Registration of the Parent Company (foreign) of a recent date, whereby it is established or reected that such Foreign Company is duly registered under the laws of its country of origin. Certication of the Minutes of the Assembly of Shareholders / Partners of the Parent Company, by means of which the opening of the Branch in Honduras is agreed, and the appointment of a Permanent Legal Representative is made. Apostilled copy of the Deed of Incorporation of the Parent Company, duly registered and translated into Spanish if it is in a foreign language.• INCORPORATION OF A BRANCH OF A FOREIGN ENTITY NOTE: The Shareholders’ Meeting must adopt the following resolutions: - Authorize and agree on the opening of the Branch in Honduras. - Dene the corporate purpose of the Branch (generally follows the same purpose as the Parent Company).- Establish the registered ofce of the Branch (typically Tegucigalpa, M.D.C.). - Assign its own Share Capital to the Branch (usually the minimum required by law).- Appoint a Permanent Legal Representative for the Branch, who must reside permanently in Honduras, either as a Honduran national or a foreign resident in Honduras with a Special Residency Permit issued by the Honduran Migration Authority. This Representative must also have a National Tax Registration. DELIVERY TIME: The estimated time for the incorporation of the Branch is three (3) to ve (5) business days, provided that the documents coming from abroad are in Spanish. Otherwise, an ofcial translation of the documents must be obtained from the Ministry of Foreign Affairs before beginning the Branch incorporation process. TAXESThis tax applies to sales made throughout the national territory, and it is applied on a non-cumulative basis at the import stage and at each stage of sale of goods or services. The general tax rate is 15% of the taxable base value of imports or the sale of goods and services subject to the tax. In Honduras, an annual tax known as the Income Tax (Impuesto Sobre la Renta) is established, which taxes income derived from capital, labor, or a combination of both. The following tax rates are included within the income tax structure:A. Rate of Tax Payable by Non-Residents or Non-Domiciled in the Country (Withholding Tax).B. Rate of Tax Payable by Legal Entities Domiciled in the Country (Withholding).Exchange Rate: 1 USD - 25.33 HNLSource: december 19, 2024, www.bch.hn

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8 9Doing Business Honduras l Taxes Doing Business Honduras l TaxesCATEGORY PERCENTAGE1. Income from movable or immovable property, except those covered in items 5 and 7 of this articles.25% 2. Royalties from the operations of mines, quarries, or other natural resources. 25% 3. Salaries, wages, commissions, or any other compensation for services rendered, whether within the national territory or outside of it, excluding remittances.25% 4. Rents or prots obtained by foreign companies through branches, subsidiaries, afliates, agencies, legal representatives, and others operating in the country.10% 5. Rents, prots, dividends, or any other form of prot-sharing or reserves from natural or legal persons.10% 6. Royalties and other sums paid for the use of patents, designs, procedures, secret formulas, trademarks, and copyrights.25% 7. Interest on commercial transactions, bonds, securities, or other types of obligations. 10% 8. Income from the operation of aircraft, ships, and land vehicles. 10% 9. Income from the operation of communications companies, software use, IT solutions, telematics, and others in the telecommunications area. 10% 10. Insurance premiums and bonds from any type of contracted policies. 10% 11. Income derived from public performances. 25% 12. Movies and videotapes for cinemas, television, video clubs, and rights for cable television. 25% 13. Any other income not mentioned in the previous items. 10% A. TAX RATE PAYABLE BY NON-RESIDENTS OR NON-DOMICILED IN THE COUNTRY (WITHHOLDING TAX) B. RATE OF TAX PAYABLE BY LEGAL ENTITIES DOMICILED IN THE COUNTRY (WITHHOLDING) The Income Tax (ISR) will be charged to legal entities domiciled in the country at a rate of 25% on the total taxable netincome.Additionally, legal entities, except those included in the special export and tourism regimes, without prejudice to what isestablished in Article 22 of the Income Tax Law, will pay a solidarity contribution applicable to the excess of the taxablenet income exceeding One Million Lempiras (L. 1,000,000.00), which will be included in the same annual income taxreturn and payment.This temporary solidarity contribution corresponds to 5% and is regulated as a surtax on the income tax, and it will notbe deductible from the same tax, being subject to the advance payment regime according to the Income Tax Law.Furthermore, legal entities domiciled in Honduras will pay 1.5% on gross income equal to or exceeding Ten MillionLempiras (L. 10,000,000.00) for the taxable period when applying the previously mentioned rate results in less than 1.5%of the declared gross income. The following natural or legal persons are not subject to the payment of the 1.5%: Taxpayers with annual gross income of less than ten million (L.10,000,000.00) must still comply with the ling and payment requirements of the Income Tax Law and the Net Asset Tax.Companies during the 2 years following theirincorporation or during the pre-operationalperiod after the enactment of this law, thatis, until they commence their rst salestransaction in commerce.Natural or legal persons who incur losses due to fortuitous events or force majeure, arisingfrom natural disasters, catastrophes, wars, or states of emergency, duly documented beforethe Tax Administration, may claim such losses for a period of up to two scal years from thedate they occur.1.2.3.

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10 11Doing Business Honduras l Taxes Doing Business Honduras l TaxesDIVIDENDS AND PROFIT SHARING TAXES CAPITAL GAIN TAX The income received by individuals, residents or domiciled in the country, in the form of dividends or any other form of prot-sharing or reserves, in cash or in kind, from any type of entity, whether it has legal personality, is subject to this tax. In particular, the concept of prot-sharing includes:• Capital gains obtained by individuals or legal entities, whether domiciled in Honduras or not, will be subject to a single tax of 10%, and therefore, are not subject to the progressive rate established in the Income Tax (ISR).• Tax rate: The legal entity will withhold a rate of 10% of the gross amount paid or credited as prot-sharing or reserves, and when such distribution is in kind, the withholding base will be the market value of the asset or right transferred.Dividends and distributed prots will be taxed as a single and denitive withholding by the company. • Accounts receivable from partners or related companies that do not arise from a commercial transaction and have a term of more than one hundred (100) calendar days.Capital reductions with the distribution of contributions in the portion corresponding to the capitalization of reserves or prots. A.B.TAX ON NET ASSETSIt is the monetary value of all types of assets owned by the taxpayer, as reected in the Balance Sheet, minus accounts receivable reserves, accumulated depreciation allowed by the Income Tax Law, asset revaluations if they are not disposed of, and values corresponding to investment expansions recorded as projects in process or xed assets that are not in operation. The balance of obligations with nancial institutions directly related to the nancing of xed assets that are in operation will also be deducted. The tax is incurred for legal entities whose net total assets exceed three million lempiras (L. 3,000,000.00), which are reected in the balance sheet of the taxable scal year.The applicable rate for determining the tax incurred on net total assets is 1% on the difference thatresults from subtracting the threshold of three million lempiras (L. 3,000,000.00) from the total net assets reected in the taxpayer’s Balance Sheet. That is, when the net total assets exceed three million lempiras (L. 3,000,000.00), the tax will be applied on the excess of that amount.Legal entities domiciled in Honduras that are classied as merchants under the Commercial Code are required to declare and pay the Total Net Assets tax.

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12 13Doing Business Honduras l Taxes Doing Business Honduras l LaborEXEMPT FROM TAX ON TOTAL NET ASSETSINCOME TAX CREDITSThe amounts paid for the Net Asset Tax for the period will constitute a credit against the Income Tax to be paid. For this purpose, the law establishes the obligation to pay the total net assets tax, depending on the amount determined for the Income Tax, meaning that the determination of the net asset tax to be paid must be made comparatively with the Income Tax, resulting from this comparison in the following circumstances:If the Income Tax to be paid for the taxable year is equal to or greater than the tax determined for the net assets, it is understood that the obligation for payment of the latter has been fullled; consequently, there will be no obligation to pay for this concept.If the Income Tax to be paid for the taxable year is less than the tax determined for the total net assets, the difference resulting from the Income Tax and the net asset tax will constitute the tax to be paid for the latter.A.B.1. Legal entities whose total net assets do not exceed three million lempiras (L. 3,000,000.00).2. Legal entities exempt from paying Income Tax. 3. Merchants operating under special regimes such as free zones (ZOLI) and maquilas (RIT) and other lower special tax exemption regimes.4. Legal entities in the pre-operational stage of their activities; that is, until they begin their rst commercial sale transaction.5. Taxpayers who incur operational losses in a period due to fortuitous events or force majeure; such loss must be certied by an auditing rm duly registered with the respective College, without prejudice to subsequent verication LABORDAYTIME WORKING HOURS: Is the one carried out between 5:00 a.m. and 7:00 p.m., and it shall not exceed eight (8) hours per day and forty-four (44) hours per week. In the case of minors under 16 years of age, the ordinary working hours shall not exceed six (6) hours per day and thirty-six (36) hours per week. NIGHTTIME WORKING HOURS: Is the one carried out between 7:00 p.m. and 5:00 a.m., and it shall not exceed six (6) hours per day and thirty-six (36) hours per week. MIXED SHIFT: is the one that includes periods of daytime and nighttime hours, provided that the nighttime period does not encompass less than three (3) hours. The maximum duration of the mixed workday is seven (7) hours per day and forty-two (42) hours per week.Labor relations between private companies and workers in the Republic of Honduras are governed by the Constitution of the Republic, international treaties, and the Labor Code (Legislative Decree No. 189 of May 19, 1959). The Ministry of Labor and Social Security is the ofcial body responsible for applying labor laws and regulations in the administrative sphere, while in the judicial sphere, it is the Labor Courts, the Courts of Appeals, and the Supreme Court of Justice. • WORKING DAYSOvertime is paid with an additional 25% on the daytime salary and with an additional 50% on the daytime salary if it is performed during the night; and with a surcharge of 75% on the nighttime salary if the overtime extends the nighttime hours (Art. 330 Labor Code). The remuneration will be double the ordinary salary if work is performed on a holiday or day of rest by agreement.• According to Executive Agreement SETRASS No. 109-2024 issued by the Ministry of Labor and Social Security and published on February 27, 2024, the current average minimum wage is L. 13,156.53. However, it may vary depending on the industry and the size of the workforce. The complete table can be consulted at the following link:OVERTIMEMIMIMUN WAGEClick aquí

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14 15Doing Business Honduras l LaborDoing Business Honduras l LaborThe following are the severance payments that must be granted to the employee in the case of unjustied dismissal: • • Notice: In contracts of indenite duration, either party may terminate the contract by giving the other party notice:• Severance pays: If the indenite employment • contract is terminated due to unjustied dismissal or for reasons based on Article 114 of the Labor Code, the employee shall be entitled to the following payment:NOTICE PERIOD TIME WORKED AT THE COMPANY24 hoursWorking Less than 3 months1 week From 3 to 6 months2 weeks From 6 months to 1 year1 month From 1 to 2 years2 months For more than 2 yearsPAYMENT AMOUNT TIME WORKED AT THE COMPANY10 days of salary After working more than 3 months but less than 6.20 days of salaryAfter 6 months but less than 1 year.1 month of salaryAfter 1 year but less than 2 years.In the case of unjustied dismissal by the Employer in contracts of indenite duration, the Employee shall have the right to choose one of the following two options at their discretion: 2. Demand reinstatement to their position, with the same seniority, salary, and benets, as well as the amount of wages lost from the time of dismissal until the reinstatement is decreed by a nal resolution; and,2. Demand payment of employment benets and severance, along with the wages lost until the resolution that establishes their rights is nal. • UNJUSTIFIED DISMISSAL1.2.Acquired rights must be granted to the employee during the term of the employment contract, as well as in the case of resignation by the employee or justied or unjustied dismissal by the employer.SALARY: The employer must always provide the employee with the salary corresponding to the time worked in the month, up to the moment of resignation, justied dismissal, or unjustied dismissal.VACATIONS: After 1 year of work 10 days’ salary10 days' salary 12 days’ salaryAfter 2 years 15 days’ salaryTIME WORKED AT THE AMOUNT COMPANYAMOUNT• Thirteenth Month Salary: By decree number 112, dated October 28, 1982, issued by the Sovereign National Congress, the payment of the thirteenth month salary as a bonus is established in favor of all permanent workers, retirees, and pensioners, which will be effective in the month of December each year.• Fourteenth Month Salary: By decree 135-94 dated October 12, 1994, the payment of the fourteenth month salary as social compensation is established as a right for all permanent employees and workers, which will be effective in the month of June each year.WORKERS’ ACQUIRED RIGHTS

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16 17Doing Business Honduras l LaborDoing Business Honduras l LaborThis type of hiring is not prohibited; however, there is a provision in the Labor Code that regulates this situation, resulting in joint liability, in certain cases, for the company that hires personnel through outsourcing. Therefore, it is important to consult with your legal team.This provision states: “Those who contract for the execution of one or more works or tasks for the benet of others, for a specied price, and who assume all risks to carry them out with their own means and with technical and managerial freedom or autonomy, are contractors and, therefore, true employers of their workers, not representatives or mere intermediaries.However, the beneciary of the work, the owner of the project or industrial facility, unless it pertains to tasks unrelated to the normal activities of their company or business, shall be jointly liable with the contractor for the value of the wages and benets and severance payments owed to the workers. This joint liability does not prevent the beneciary from stipulating guarantees with the contractor and from seeking reimbursement from them for what has been paid to those workers.”• OUTSOURCING CONTRACTINGREGULATIONSInternal work regulations: It is the set of mandatory regulations that determine the conditions to which the employer and employees must adhere in the provision of services.Every employer that employs more than 5 permanent workers in commercial enterprises, more than 10 in industrial enterprises, or more than 20 in agricultural, livestock, or forestry enterprises is required to have an internal work regulation.In mixed enterprises, the obligation to have an internal work regulation exists when the employer employs more than 10 workers.In any case, the internal work regulation must always be approved by the Secretary of State in the Ministry of Labor and Social Security.Hygiene and Safety Regulations:Employers with 10 or more permanent workers must develop a special hygiene and safety regulation and submit it for review and approval by the General Labor Inspection. CONCEPTAn employee who personally provides their services for the benet of the employer for a SPECIFIC TIME. Under the employment relationship, there is a continuous subordination of the employee to the employer. An employee who personally provides their services for the benet of the employer for an INDEFINITE TIME. Under the employment relationship, there is a continuous subordination of the employee to the employer.Contractors, by denition, do not have a relationship of subordination with the Company. The Contractor will have independence regarding how they will carry out the work for which they were hired.It is important to note that the Contractor may have their own employees to carry out the assigned work; however, according to the provisions of the Labor Code, if the Contractor performs work related to the normal activities of the Company, the Company will be jointly liable with the Contractor for the wages, benets, and severance payments thatthe Contractor fails to pay to their own employees.APPLICABLE CONTRACTIndividual Employment Contract for a Denite Term.Fixed-term contracts are an exception to Employment Contracts, since they can only be used in cases where the accidental or temporary nature of the service to be provided or the work to be performed by the employee so requires.Individual Indenite EmploymentContract.Indenite-term contracts are the general rule for employment contracts and are applicable to projects that are, by their nature, permanent or continuous within the company.Professional Services Agreement.TYPE OF RELATIONSHIP AND APPLICABLE LEGISLATIONIt is an employment relationship governed by the Labor Code and other applicable labor laws.It is an employment relationship regulated by the Labor Code and other applicable labor laws.It is a commercial relationship regulated by the Commercial Code.TYPES OF EMPLOYMENT CONTRACTSDEFINITE TERM EMPLOYMENTINDEFINITE TERM EMPLOYMENT PROVISION OF PROFESSIONAL SERVICES

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18 19Doing Business Honduras l Labor Doing Business Honduras l Intellectual PropertyDURATIONThe Contract must specify a specic date for its termination or provide for the occurrence of any event or circumstance that necessarily must end the employment relationship. For example, the completion of a job or participation in a particular project.Maximum duration of the contract: 1 year, and it may be extended if, due to the nature of the work, it becomes necessary.The Contract does not specify a date for its termination.The service contract is temporary, as its duration will be in accordance with the time stipulated for the contractor to complete the work. For this reason, the duration of the contract is limited.COMPENSATIONThe employer pays a compensation, which for the purposes of the contract is referred to as “salary.”The employer pays a remuneration, which for the purposes of the contract is referred to as “salary.”The remuneration is categorized as “fees,” which are xed and calculated based on the work the Contractor will perform.SEVERANCE PAYMENTSIn the event of unjustied dismissal by the employer, the employee shall be entitled to compensation in the form of payment for the wages that would have accrued until the end of the contract.Due to the existing employment relationship, the employee is entitled to compensation payments (notice period, severance pay).It does NOT generate the payment of compensation. However, it is important to note that if there was any type of subordination between the Company and the Contractor, then Labor Law considers this agreement to be a Labor Agreement, and the Company will be obligated to pay the compensation.SOCIAL SECURITY AFFILIATIONSThe afliation to the social security system is carried out by the Company (employer).The afliation to the social security system is carried out by the Company (employer).The afliation to social security must be done directly by the Contractor as an independent worker.DEFINITE TERM EMPLOYMENT INDEFINITE TERM EMPLOYMENT PROVISION OF PROFESSIONAL SERVICESINTELLECTUAL PROPERTYThe registration of a trademark is granted for a period of 10 years, renewable indenitely for equal periods, as long as it is requested within the year prior to its expiration. In the absence of any opposition, the registration process takes approximately 8 to 10 months.The exclusive right over a trademark is acquired by registering it with the General Directorate of Intellectual Property (DIGEPIH). In case of not using the trademark in Honduras, the owner of a trademark can pay what is known as a rehabilitation fee, which consists of an annual payment that prevents the trademark from being susceptible to cancellation for non-use requested by a third party.In the case of Patents of Invention, the State grants the special right that it grants in relation to acts of exploitation of an invention, as long as the invention is capable of industrial application, novelty and has an inventive level.Invention patents are granted for a period of twenty (20) years, non-extendable, counted from the date of ling of their application with the Industrial Property Registration Ofce in Honduras.In Honduras, the patent confers on its owner the right to exclude third parties from the exploitation of an invention. By obtaining a patent, the right to license the invention is acquired.On the other hand, the patent prevents others from obtaining a subsequent patent on an equivalent solution, thus preventing anyone from being able to claim and prevent the rst inventor from using their solution in the future, regardless of whether or not the patent has been granted.BRANDS INVENTION PATENTS

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20 21Doing Business Honduras l Real EstateDoing Business Honduras l Agency, Distribu and Representation AgreementsArticle 103 of the Constitution of the Republic establishes that “The State recognizes, promotes and guarantees the existence of private property in its broadest concept of social function and without any limitations other than those that the law for reasons of necessity or public interest”. The Property Institute in Honduras is the State institution in charge of establishing regulations, administering and supervising the property registries of goods: movable, immovable and intellectual property, both for national citizens and foreigners throughout the national territory. Its primary mission is to protect and ensure property rights in a comprehensive manner, guaranteeing legal security in the possession of property. REAL ESTATE: • Impuesto de Tradición: • The value equivalent to 1.5% of the value of the sale. This tax must be paid within 3 • calendar days following the formalization of the sale, otherwise a ne of 20% will be paid on the tax owed. • • Derechos Registrales del Instituto de la Propiedad: • L.200.00 will be paid as a base registration fee, when the act or contract is of indeterminate value or when it does not exceed L.1,000.00; and, in the event that the value exceeds L.1,000.00, additional L.1.50 per thousand or fraction of a thousand will be paid.• • Impuesto sobre Ganancia de Capital: • A one-time fee of 10% will be paid on the • value of the sale, this fee will have to be paid • within 10 business days after the act has been held. MOVABLE PROPERTY:In the case of the purchase and sale of vehicles, a single fee of L. 300.00 is paid, as a registration fee before the Property Institute. REAL ESTATETAXES PAYABLE FOR PURCHASES AND PURCHASES IN HONDURAS a. Be Honduran or Honduran commercial company;b. Be afliated with the corresponding Chamber of Commerce; and c. Have a license issued by the Ministry of Economic Development (SDE). AGENCY, DISTRIBUTION AND REPRESENTATION AGREEMENTSThe activities of representation, distribution and agency of products and services in Honduras are regulated by the Law of Representatives, Distributors and Agents of National and Foreign Companies. In accordance with Honduran legislation, natural or legal persons who, by contract or by the effective provision of the service, represent, distribute or procure the products or services of a grantor or principal, national or foreign, exclusively or not, in all or part of the national territory. To be a concessionaire, the following are required to:In tenders carried out by State agencies, preference will be given on equal terms to participating commercial houses that have permanent representatives in Honduras. The following are just causes that entitle the grantor, without liability, to terminate or refuse to renew the agency, representation or distribution contract:• The failure of the concessionaire to comply with the essential obligations of the contract or the contractual relationship;• Fraud or abuse of trust in the procedures entrusted to the concessionaire, without prejudice to the criminal liability incurred and the obligation to compensate for any damages that may arise;• The continued decline in sales or placement of agreed goods and services, due to the negligence or ineptitude of the concessionaire;• The unfounded refusal of the concessionaire to render the reports and accounts or to carry out the settlements related to the business, in the time an manner that has been agreed or is established by commercial usage or customs;• The disclosure of previously established condential information of the industry, business or trade in question;• Bankruptcy, insolvency, suspension of payments or any other legal disqualication to exercise trade; and• Any act attributable to the concessionaire that is detrimental to the introduction of the product or service in the market or sale of the products or services.•

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22 23Doing Business Honduras l Agency, Distribu and Representation AgreementsDoing Business Honduras l Financial MarketThe compensation that concessionaires may demand from their grantors for the modication, refusal to renew or terminate their contracts, without just cause, may be negotiated between the parties. In the absence of an agreement, the concessionaire will be entitled to be compensated in an amount that will be calculated as follows:Expenses incurred by the concessionaire that cannot be recovered due to the modication, refusal to renew or terminate the contract or contractual relationship.The value of inventories in goods, when due to the modication, refusal of renewal or termination of the contract, the concessionaires cannot use them in the course of commercial activity. This value shall be calculated taking into account the cost of acquisition, freight to the place of establishment of the concessionaire, the taxes, expenses and services that the concessionaire has had to pay to obtain the stocks.The value of the investments made for the benet of the grantor, to the extent that the concessionaire cannot take advantage of them, in accordance with the percentage table for depreciation of machinery and movable property that governs for Income Tax purposes.The amount of the gross prot obtained by the concessionaire in the exercise of representation, agency or distribution, for the sale of the goods or services during the last ve years, or if it does not reach this term, ve times the average amount of the annual gross prot obtained during the last years, whatever they may be.The value of the credits that the concessionaire has granted during the concession. In this case, the grantor will be subrogated to the rights of the concessionaire; however, the grantor is not obliged to recognize the value of the credits that are more than six months past due when the legal action is initiated.1.2.3.5.4.FINANCIAL MARKETThe Honduran nancial market is made up of 15 commercial banks, 2 state-owned banks, 12 insurance institutions and 10 pension funds (public and private). The banks’ loan portfolio is distributed in the order in which the following items are detailed:The ntech (nancial technology) sector in Hondu-ras is growing and has the potential to signicantly transform the country’s nancial landscape. Fintechs use innovative technologies to offer nancial services more efciently, accessible, and economically.NATIONAL COMMISSION OF BANKS AND Is the body in charge of supervision, regulation and control of the country’s nancial system. Its main function is to ensure the stability, soundness and transparency of the Honduran nancial system. is the country’s main monetary entity and aims at monetary and nancial stability. 1. Construction and Real Estate;2. Consumption;3. Commerce;4. Services;5. Manufacturing Industry; 6. Agriculture and Livestock; and 7. Other.FINTECH SECTOR

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24 25Doing Business Honduras l FAQ Doing Business Honduras l FAQFAQWhat are the alternatives for operating in Honduras?It can be either through a commercially constituted company in the country or through a branch of a foreign company, with the requirement that such branch must also be incorporated in Honduras. What types of business entities exist, and which is the most commonly used?Corporation and Limited Liability Company (LLC). The Corporation, due to its capitalist nature, is the most commonly used. Additionally, if the purpose is to engage in activities subject to special regulation or supervision by the State, the law requires it to be a Corporation.How is a business entity constituted in Honduras? Business entities in Honduras are constituted through the granting of a public deed of incorporation before a Honduran public notary, either by means of a Power of Attorney (properly apostilled) or directly by the shareholder(s); and the registration of such deed of incorporation in the Commercial Registry of the corporate domicile.What is the estimated time for incorporation?From 2 to 5 business days from the moment of granting the deed of incorporation; this may vary if the corporate domicile is outside the capital.Is it possible to incorporate a business entity with a single shareholder?Yes, in Honduras, it is possible to incorporate entities with a single shareholder, as long as their purpose is not subject to special regulation and supervision by the State. Can shareholders be foreign?Yes, shareholders can be natural or legal persons, whether Honduran or foreign.Can the legal representative of the company be foreign?Yes, there is no prohibition against the person occupying the position of legal representative being foreign; however, it is required that the legal representative of the company registered with the tax authority is domiciled in the country.Must the legal representative of the company have a National Tax Register (Tax ID) in Honduras?Yes, the person notied as the legal representative of the company before the tax authority must have their personal Tax ID.At what point is the business entity duly incorporated and can start operating? Once the company is registered in the competent Commercial Registry, it is duly incorporated and authorized to begin its operational activities. In any case, other permits and/or administrative licenses may apply depending on the purpose of the company.FAQWhat is a distribution agency contract in Honduras?A distribution agency contract in Honduras is an agreement whereby a person (agent) agrees to promote the sale of products or services in the name and on behalf of another person (principal), in exchange for a commission or other form of agreed remuneration.What are the legal requirements for a distribution agency contract in Honduras?In Honduras, a distribution agency contract must clearly specify the obligations and rights of both parties, including exclusivity (if applicable), territory of operation, duration of the contract, remuneration conditions, and termination and dispute resolution clauses.contract in Honduras?Conicts in a distribution agency contract in Honduras are usually resolved through direct negotiation between the parties. In the event of disagreement, alternative dispute resolution methods such as mediation or arbitration can be used, or the case can be taken to the competent courts according to current Honduran laws.What is the procedure for transferring ownership of real estate in Honduras?In Honduras, the transfer of ownership of real estate is carried out by means of a Public Instrument before a Notary Public authorized by the Supreme Court of Justice. The process includes verifying the seller’s ownership, drafting and signing the deed of sale, and registering it in the Real Estate Registry.What rights do tenants and landlords have in a lease?Tenants have the right to enjoy the leased property under the agreed conditions, while owners have the right to receive timely payment of the rent and to keep the property in habitable condition.What are the main tax obligations that real estate owners in Honduras must comply with?Owners of real estate in Honduras are subject to the payment of the Real Estate Tax, which is calculated annually based on the cadastral value of the property. In addition, they must comply with the declaration and payment of Income Tax (ISR in spanish) if they obtain income from leasing, selling or other real estate transactions subject to this tax.

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26 27Doing Business Honduras l FAQFAQWhat is the role of the National Commission of Banks and The CNBS is the regulatory and supervisory entity of the nancial system in Honduras. Its main function is to ensure the stability, transparency and security of the country’s nancial system by supervising banks, nancial institutions, insurers and other regulated entities. In addition, it promotes the protection of the rights of users of nancial services and encourages nancial inclusion.market for investors?In the Honduran nancial market, investors have access to a variety of nancial instruments, including bank deposits, government bonds, corporate bonds, stocks, micronance, among others.      Both Non-Banking Electronic Money Institutions (INDEL) and Electronic Payment Service Providers (EPSPE) must carry out their authorization and registration processes, respectively, before the Central Bank of Honduras (BCH). What kind of rights does intellectual property protect in Honduras?In Honduras, intellectual property protects rights such as patents, trademarks, copyrights, and industrial secrets.How do you register a trademark in Honduras?To register a trademark in Honduras, an application must be led with the General Directorate of Intellectual Property of Honduras (DIGEPIH), of the Property Institute (IP), accompanied by the description of the trademark, its specic use and the payment of the corresponding fees.What is the duration of copyright protection in Honduras?In Honduras, copyright protects the work for the life of the author plus 50 years after his death.