Gambling License in El Salvador
El Salvador, located on the Pacific coast of Central America, offers a favorable financial environment for doing business, including gambling. Gambling licensing in El Salvador is conducted regularly, providing stability and transparency for operators. Gofaizen & Sherle provides a full range of services for the registration and support of gambling companies in El Salvador, including assistance in obtaining licenses, tax advice, legal strategies, and reporting.
The Republic of El Salvador, located between North and South America, is a country with one of the freest economies in Latin America. This makes it attractive to entrepreneurs, including those in the online gambling industry. El Salvador uses the US dollar as its national currency and, as of June 2021, has officially recognized Bitcoin, giving the country macroeconomic stability and an innovative approach to financial transactions.
El Salvador’s legislation is open to foreign business, allowing foreign companies to freely own businesses and form joint ventures. The country is also a party to several free trade agreements, which provide access to markets with 1.2 billion consumers.
In terms of online gambling, El Salvador is fast becoming a promising market. Gambling regulation in the country began in December 2021 when a regulatory body was appointed to oversee gambling regulations, which has contributed to the stable and safe development of the market. Online betting and casinos are within the legal field and are actively developing due to the country’s young population and growing market potential.
Advantages of the El Salvador gambling license
Cryptocurrency transactions
El Salvador is one of the few countries where Bitcoin is recognized as an official legal tender. This allows gambling operators to conduct bitcoin transactions with the ability to exchange BTC for US dollars at the market rate through the Development Bank of El Salvador (BANDESAL).
Friendly business environment
El Salvador boasts one of the most open and business-friendly environments in Latin America. The government has implemented various incentives to attract foreign investment, including tax incentives, simplified registration processes, and a favorable legal framework.
Simple company registration
The company registration process in El Salvador is simple and can be completed in just a few weeks due to the government’s efforts to reduce bureaucracy.
Low start-up capital requirements
The minimum capital required for a limited liability company is $2,000 and for a corporation is $10,000. This makes it possible for even small or new companies to start a business in El Salvador.
Access to the global gaming market
El Salvador’s gaming license is recognized worldwide and is not included in any blacklisted countries or regions. This means that operators can legally offer their services worldwide without restrictions.
Single license for multiple activities
The El Salvador gambling license covers both B2B and B2C operations, making it versatile and cost-effective for operators wishing to engage in a variety of gambling-related activities.
Quick licensing process
Obtaining a gambling license in El Salvador is a relatively quick process, usually taking only 2-3 months.
No server location requirements
Operators can host their servers anywhere in the world, allowing flexibility in choosing the most suitable hosting solutions.
Attractive tax regime
El Salvador offers one of the most attractive tax systems in Latin America with a VAT rate of only 13% and a dividend tax of 10%. In addition, companies that make profits outside the jurisdiction are exempt from paying 30% corporate tax. There is no property tax and non-residents are allowed to buy land.
Growing economic zone
El Salvador has signed several agreements to improve trade and economic cooperation with neighboring countries, as well as with the US, EU, China, and South Korea, positioning it as a dynamic hub for business.
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Disadvantages of the El Salvador gambling license
Limited regulatory experience
As a relatively new gambling jurisdiction, El Salvador’s regulatory framework and oversight lack the maturity and established practices found in more experienced gambling markets, which can lead to uncertainty in compliance and enforcement. In addition, legislation to regulate online gambling is still in its formative stages and it is unknown what innovations may emerge shortly.
Potential market volatility
Despite its pro-business stance, El Salvador’s economy and political landscape can be unpredictable, which may pose risks to long-term business operations.
Language barrier
The official language is Spanish, which can pose problems for foreign operators unfamiliar with the language, especially in legal and bureaucratic processes.
Cryptocurrency volatility
Although bitcoin is recognized as a legal tender, its inherent volatility can lead to financial instability for businesses heavily reliant on cryptocurrency transactions.
Jurisdiction Reputation
As El Salvador is a lesser-known jurisdiction in the global gambling industry, a gambling license in El Salvador may not have the same level of prestige or credibility as licenses from more established regions, which could affect partnerships and customer perceptions.
Infrastructure development
The country’s infrastructure, while improving, may still lag behind more developed jurisdictions, which may affect operational efficiency and connectivity.
Current Gambling Regulations the Gaming Industry in El Salvador
Gambling has long been illegal in El Salvador, dating back to 1882, and it wasn’t until the mid-1990s that offline casinos began operating legally in the country. Initially, casino licenses were issued by local mayors, which caused disputes between municipal authorities and the central government, which sought to take control of the gambling industry.
This changed in December 2021, when El Salvador’s Ministry of Finance presented a new law to the Legislative Assembly, which was passed on December 31, 2021. Under this law, the National Lottery (Lotería Nacional de Beneficencia de El Salvador, LNB) now serves as the main regulatory body for all forms of gambling, including lotteries, online gaming, and sports betting.
As of 2021, the LNB is the highest regulatory body in El Salvador, responsible for supervising, inspecting, and penalizing gambling-related activities. It is responsible for regulating different types of games, including traditional and electronic lotteries, online gaming, and sports betting. The LNB also has the authority to grant licenses to third parties to operate permitted games and to enter into agreements with them for up to ten years.
Revenues from licensing and new gaming projects are allocated to health and social welfare programs. In addition, gambling establishments that do not receive authorization from the LNB within six months are subject to immediate closure. You can read the legal framework that the LNB follows to regulate gaming activities here.
The financial aspects of online gambling are also overseen by the Ministry of Finance and the Salvadoran General Tax Administration, which provides additional oversight of the industry.
Gambling License changes
El Salvador’s gambling industry is gradually developing, showing steady growth and attractive prospects. In 2024, online sports betting revenue is expected to reach €8.79 million, with a projected CAGR of 6.22% through 2028. This indicates an increase in the number of users of online platforms and market expansion.
In response to this growth, the Salvadoran government is actively working to change legislation to strengthen the regulation of the gambling market. For example, not long ago, the LNB proposed a new bill that would tax all casinos up to 55%. Local authorities are also introducing stricter laws to ensure responsible gaming and prevent money laundering, as well as to create a safe and healthy environment for players.
Online gambling regulation is becoming a key area of local legislation, and new regulations for El Salvador will likely continue to evolve shortly. For up-to-date information, it is advisable to seek legal advice from specialists.
Types of El Salvador Gaming License
El Salvador does not have traditional gambling licenses as is common in other jurisdictions. Instead, legally operating a gambling business requires registering a company with the El Salvador National Lottery (LNB), which has been responsible for overseeing operators and issuing online gambling permits since 2021.
The authorization from the LNB covers both B2B (business to business) and B2C (business to consumer) operations, making it universal for different gambling activities. This allows operators to engage in both providing services to other businesses and direct interaction with end users.
In addition, to operate legally in El Salvador, it is necessary to register with several government agencies such as the Ministry of Finance, the Commercial Registry, the City Council, the General Directorate of Statistics and Census, the Social Security Institute, and the Ministry of Labor. These institutions regulate the legality of the company’s activities, the control of taxes, and the maintenance of financial records.
Requirements for obtaining a El Salvador gambling license
Requirements for obtaining a gaming license in El Salvador include:
- start-up capital – minimum $2,000 for a limited liability company (LLC), minimum $10,000 for a corporation (SA);
- minimum of 2 directors (natural persons, no restrictions on citizenship or residency);
- minimum 2 shareholders (natural or legal person, no restrictions on citizenship or residence);
- a secretary is required;
- registration and representation – the company must register with the El Salvador National Lottery (LNB) and obtain authorization to operate;
- a local office is mandatory;
- appointment of a registered representative is required (can be a resident or foreigner residing in El Salvador);
- accounting and auditing – the obligation to have an external audit, annual financial statements to the Chamber of Commerce, and annual tax audit depending on the company’s income;
- a corporate bank account with a Salvadoran bank.
- the name of the company must be in the Latin alphabet, it is not allowed to use the names of government agencies or misleading words in the name;
- registration of the trading name and obtaining a taxpayer identification number is mandatory;
- compliance with labor laws and regulations;
Additional requirements:
- compliance with AML/KYC procedures – providing ownership and director data, public access to information;
- start-up capital must be contributed equal to 25% of the required initial capital upon incorporation;
- forecasting and development of a business plan, including technical aspects.
It is recommended to consult a qualified legal advisor of Gofaizen & Sherle for up-to-date and detailed information.
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How to Apply for new gambling license on El Salvador
Obtaining a permit to conduct gambling activities begins with the preparation of the necessary documents:
- a notarized copy of the passport of each director and shareholder;
- a notarized copy of a document confirming the residence address for each director;
- taxpayer identification card (INN) for each shareholder (if available);
- a bank account statement for each director;
- two letters of recommendation from lawyers for each director and shareholder;
- a detailed resume with the applicant’s date and signature for each director and shareholder;
- higher education diploma of the founder;
- a certificate of absence of criminal record.
If the shareholder is a legal entity, company documents (certificate of incorporation, financial report, list of shareholders) should be provided.
The application process itself includes the following steps:
- Request a license form from the El Salvador National Lottery (LNB) website.
- Fill out the form and submit it together with the collected documents to the LNB for inspection.
- The LNB’s Compliance and Inspection Department verifies the documents submitted, the financial condition of the operator, and the technical specifications.
- The LNB Board of Directors decides whether to grant or deny the gambling license and communicates the result to the operator.
- Pay the relevant state fees for processing the application.
The LNB Compliance and Enforcement Department may request additional documents and information. Please note that all documents must be in English or accompanied by a notarized translation.
After the documents have been verified and all requirements have been met, the LNB Board of Directors will make a decision. You will be notified of the result of the evaluation of your application.
For more detailed information and assistance with the application process, it is recommended that you contact Gofaizen & Sherle’s specialists or legal advisors.
How to Establish a New Company in El Salvador
Starting a new company in El Salvador, including a gaming company, requires the following steps:
Choosing an organizational structure.
Determine the most appropriate type of company. In El Salvador, a popular form is the LLC (Limited Liability Company). This allows you to pay a 30% corporate tax on profits earned in the country.
Remote company registration is possible through a power of attorney.
Company name selection and registration:
Select a unique name for your company. Register the name with the Salvadoran Commercial Registry to confirm its availability and compliance.
Preparation of the documentation package.
You will need:
- notarized copies of the passports of all directors and shareholders;
- proof of physical address (e.g., utility bill);
- a bank statement for each director.
Preparing a packet of documents.
You will need:
- notarized copies of passports of all directors and shareholders;
- proof of physical address (e.g., utility bill);
- a bank statement for each director.
Additional documents may include resumes, high school diplomas, and criminal record certificates.
Filing for company registration.
Submit the prepared documents to the appropriate authority responsible for company registration. The application will be reviewed by the competent authorities and, if approved, you will be issued a certificate of incorporation confirming the legal status of your company.
Opening a corporate bank account.
Open a corporate bank account and deposit at least 5% of the authorized capital of the company into it.
Opening an account may require your physical presence, although in some cases the process can be done remotely or through an intermediary.
Registration with state authorities.
You will need within 15 days of receiving your certificate of registration to operate legally:
- registration with the Hacienda tax authority to obtain a taxpayer identification number;
- registration with the Ministry of Finance;
- registration with the Salvadoran Social Security Institute;
- registration with the Ministry of Labor.
The company formation process in El Salvador can take up to 10 working days. It is recommended to consult with our legal professionals to ensure the successful completion of all steps and compliance with the law.
Cost for El Salvador gaming license
The cost of obtaining a gaming license in El Salvador varies depending on several factors. First of all, the cost is influenced by the chosen legal form of the company and the starting capital. For example, the minimum start-up capital for LLC registration is $2,000. This requires the payment of a registration tax of $11.40.
In addition, the total costs include the cost of executing a power of attorney, opening a corporate bank account, and administrative services. These additional costs may include legal and consulting services, document preparation, and notarizations. Thus, the total cost of the license consists of start-up capital, registration tax, and additional administrative costs.
Corporate Taxation and License Tax
Business taxation in El Salvador, including online gambling, is based on a territorial principle and includes several key elements. The corporate income tax rate is 30% of a company’s total income but only applies to income generated within El Salvador. This includes income from the sale of goods, the provision of services, and capital investments in the country.
In addition to this, companies are required to pay a monthly “Pago a Cuenta” tax of 1.75% as an advance payment of income tax. Value Added Tax (VAT) is 13% and applies to all goods and services sold in El Salvador. There is a zero VAT rate for exports of goods and services.
There are special tax rates for non-residents: 5% on dividends, 20% on interest and 20% on royalties. Without tax exemptions, these rates reach 25% for dividends, interest, and royalties.
The country’s tax system offers several tax incentives for foreign investors, including tax vacations for up to 10 years for new investments in certain industries, as well as income and property tax exemptions.
Additionally, the Law for the Promotion of Innovation and Manufacturing of Technologies came into effect in June 2023, which offers a 15-year exemption from income, estate, and capital gains tax, as well as an import duty exemption for new technology companies. Application for this special tax regime is made through the Investment Department of the Ministry of Economy and takes about 20 working days.
FAQ about El Salvador Gaming License
Are gambling activities licensed in El Salvador?
Yes, gambling activities in El Salvador are licensed. Since 2021, the National Lottery (LNB) has been responsible for regulating and issuing licenses for online gambling. Companies must register with the LNB and comply with legal requirements to conduct gambling activities.
What is the process of getting a gambling license in El Salvador?
To obtain a gambling license in El Salvador, you must collect a package of documents, submit an electronic application to the National Lottery (LNB), and undergo an inspection. The LNB checks the documentation and the financial condition of the operator, after which the LNB Board of Directors decides whether to issue a license. In addition, the company must be registered with the relevant government authorities and a corporate bank account must be opened.
How does the El Salvador gambling license work?
The El Salvador gambling license allows companies to operate in the online gambling industry. The license, issued by the National Lottery (LNB), covers both B2B and B2C operations. It grants the right to conduct online gambling and betting, is regulated subject to the standards and requirements set by the LNB, and is valid nationally and internationally.
Is getting a license a long process?
Obtaining a gambling license in El Salvador can take from 2 to 3 months.
Can a license be obtained without a bank account?
No, a bank account is required to obtain a gambling license in El Salvador.
What is the duration of a gambling license?
Today the duration of a gambling license in El Salvador is 10 years.
Can gambling companies in El Salvador be owned by non-residents?
Yes, according to the current legislation, gambling companies in El Salvador can be owned by non-residents.
Are gambling companies in El Salvador audited?
Yes, gambling companies in El Salvador are required to undergo an external audit.
Can an El Salvador gambling company have directors who are not residents?
Yes, gambling companies in El Salvador can have directors who are not residents.
What taxes must an El Salvador company with a gambling license pay?
An El Salvador company with a gambling license must pay a corporate income tax of 30%, a value-added tax (VAT) of 13%, and a “Pago a Cuenta” tax of 1.75% as an advance payment of income tax. Taxes on dividends, interest, and royalties depend on the residency of the recipients of the income.
What is the annual license fee for a gambling company in El Salvador?
There is no fixed annual license fee for an online gambling company in El Salvador, as the cost of a license is calculated individually and depends on many factors, including the type of game, the size of the operation, and the technology used.