Nicaragua has a population of more than 6 million people, with the largest industries including services, imports and exports. There are several types of company formations allowed in Nicaragua, and the corporate tax rates vary based on income ranges.

Payroll and Labor Considerations in Nicaragua:

  • The minimum wage is NIO 4,286 – 9,592 per month, depending on the industry
  • Overtime cannot exceed 3 hours per day or 9 hours per week. All overtime is compensated at double the normal wages
  • Severance pay is required in case of dismissal without cause if the employee has an indefinite contract. The benefit is determined by the employee length of service
  • Income tax on a progressive scale, with ranges from 15-30%. Non-residents are taxed at a flat rate of 20%

HR and Statutory Requirements

  • All employees are entitled to 15 days of vacation every 6 months of continuous work with the same employer
  • There is no statutory sick leave. Employment contracts and work policies determine sick leave
  • Females are entitled to 4 weeks of rest and 8 weeks after the delivery for maternity leave
  • Fathers or partners in a notarized union are entitled to 5 calendar days of leave with pay and without loss of social benefits in the event of their partner’s childbirth
  • The legal retirement age is 60
  • All employees are required to participate in the Pension Savings System after 15 days of employment
  • Employees are entitled to old age pension if they have made contributions for 750 weeks (14 years)
  • The retirement age for teachers is 55

Holidays in Nicaragua

  • January 1 – New Year’s Day
  • April 14 – Maundy Thursday
  • April 15 – Good Friday
  • May 1 – Labor Day / May Day
  • May 2 – Day off for Labor Day / May Day
  • July 19 – The Sandinista Revolution Day
  • September 14 – Battle of San Jacinto
  • September 15 – Independence Day
  • December 8 – Feast of the Immaculate Conception
  • December 25 – Christmas Day

To get started in Nicaragua, or to improve operations and compliance, talk to our team. Our cloud-based payroll platform with customized reporting gives you real-time access to your payroll across all countries and currencies. With automated updates to in-country regulations you can ensure compliance for your payroll. We provide a dedicated US-based service team and direct access to in-country experts to help when questions come up. Talk to our team today and get payroll in Nicaragua under control and in compliance. To learn more or get started, click here