Living In El Salvador: Pros And Cons You Need To Know

El Salvador’s president, Nayib Bukele, has taken the world by storm. His efforts to crush organized crime (the maras) all across the country have paid off, although some Human Rights NGOs tried to downplay him and even called him a totalitarian. Interestingly, he jokingly calls himself “the coolest dictator in the world.”

Safety is non-negotiable for freedom-minded expats like me. It plays a major role in my life, especially as a father, husband, and son. On that front, I recognize that Bukele has made lots of progress, helping Salvadorians feel free from extortion and other crimes the maras used to commit.

However, all that glitters is not gold, and El Salvador is still far from being an ideal expat destination. In a recent podcast episode, I explored whether this country is worth the hype. This article aims to be a more condensed version of it, breaking down the good, the bad, and the ugly to help you figure out it if El Salvador makes sense for you. 

OVERVIEW OF EL SALVADOR

Before considering a country as a Plan-B destination or new place of residence, it’s important to see the big picture. That’s personally what I did when I moved my family out of Abu Dhabi and flocked to Panama City. Not only did I research tax-friendliness but also other aspects that come with living in Panama, such as the cost of living, time zone, and language. Feel free to check out my story here. 

Now, if you’re reading these lines, chances are you are from some Western country like the U.S. or Canada, so you might think the grass is greener in places like El Salvador. It’s true that this little country has gone from being the crime capital of the world to one of the safest places in the Western Hemisphere, but before treating it like a shiny object, make sure you do your due diligence to be sure of your choice (and not have any regrets later). That is exactly what this article will help you with. 

COST OF LIVING IN EL SALVADOR

First and foremost, the legal tender in El Salvador (apart from Bitcoin) is the U.S. dollar. The country dollarized in 2001, as it underwent a period of inflation (reaching 31%), and many Salvadoreans living in the States had already remitted U.S. dollars back to their home country. 

Since that year, El Salvador’s inflation rate has remained relatively stable over time. The country’s use of the U.S. dollar helps American expats and those earning in dollars avoid currency conversions—while potentially benefitting from lower overall living costs. 

As an expat, your lifestyle is different from others, but to help you understand how much it may cost to live here, consider some common expenses. For example, rent in San Salvador, the country’s capital, the most exclusive apartments may be over $1,000 USD, but there are, of course, cheaper options in this city or other towns like San Miguel. According to Numbeo, rents in the U.S. are 177% more expensive than in El Salvador. 

The overall cost of groceries depends on where you buy them. In El Salvador, street vendors are an affordable option, but there are also supermarkets if you prefer something more convenient. Overall, the price of most groceries, such as fruits and vegetables, meat, and other staples, is generally lower than in countries like the U.S. or Canada. To illustrate this, it’s not hard to find six avocados for under $2 USD, a whole pineapple for $3 USD and even a dozen limes for $2 USD. Any grocery store in the U.S. easily charges way more for the same produce. 

As I mentioned in episode 313 of my podcast about my trip to El Salvador, the famous "pupusas" (stuffed tortillas) were incredible. Made with corn or rice flour, they come with a wide variety of fillings to suit all tastes

SALVADORAN FOOD

El Salvador may be the smallest country in Central America, but that doesn’t mean there’s no variety in cuisine. The local dishes are a blend of Indigenous and colonial influences, adding to the richness you can taste here. From the local corn and beans to the cheese Europeans brought in, there’s a wide range of ingredients that make El Salvador’s cuisine worth trying. 

As I discussed in my podcast episode about my trip to El Salvador, the ‘pupusas’ (stuffed tortillas) were fabulous. These are made with corn or rice flour and filled with pretty much whatever you want; you can opt for chicken, cheese, shrimp, etc. The options for the national dish of El Salvador are really varied. 

Despite the country’s generalized tropical climate, Salvadoreans love soups. You can try the ‘sopa de mondongo,’ which is made with various parts of a cow and vegetables, beef soup, or even fish soup. The country’s strong emphasis on agriculture, farming and fishing, as well as its privileged access to the Pacific, almost guarantees that there’s something for everyone—regardless of your dietary preferences. 

Finally, we cannot forget the sweet treats and desserts. You can find the traditional ‘quesadillas’ (a special kind of cheesecake), milk cake, and even typical Spanish desserts like ‘horchata’ (rice and seed drink), ‘arroz con leche’ (rice with milk) and ‘torrejas’ (French toast with sweet sauce often made during the Holy Week).

Despite the recent healthcare reforms in El Salvador implemented by Bukele, he acknowledges that there is still a long way to go, and inefficiencies in the public health system remain common

HEALTHCARE 

When researching a potential place of residence, the healthcare system is one of the factors you just can’t overlook. If you get sick, you want to make sure you will be taken care of. El Salvador’s healthcare system has undergone some reforms during the last few years, but Bukele admits that there’s still lots of room for improvement. As the public healthcare system is often understaffed and poorly run, inefficient public healthcare is still common. 

If you want to get the best treatment, it might be better to just go for private healthcare to avoid delays and get treated promptly. Regardless of where you live, it’s always best to have proper insurance; you can’t go wrong with Insured Nomads, which offers cost-effective, personalized service for expats. 

Often, schools lack the necessary infrastructure and proper maintenance, so it's better to choose private schools or even homeschooling, which is completely legal in El Salvador

EDUCATION & HOMESCHOOLING

As a family with kids, you want your kids to get the best education possible. El Salvador still needs much improvement, especially in the public school system. Schools may often lack the right infrastructure and maintenance, so it’s better to either choose private schools or even homeschool, which is legal in El Salvador. The law stipulates that parents have the right to choose the best education for their children. 

You could take your kids to a private school to get them fluent in Spanish or simply opt for homeschooling programs like the Expat International School, where we will teach them to find their inner genius and get them ready for success in the real world. If you want to know more, feel free to check our website and schedule a call. 

El Salvador falls behind countries like Nicaragua, Panama, and Costa Rica in terms of taxes, as they use a territorial system, while El Salvador applies it only to remittances

TAXES

Let’s move on to one of the worst things about El Salvador: its tax system. El Salvador is not a great place if what you’re looking for is low taxes. Here, pretty much everything is considered local-sourced income—even if some people claim it has become a territorial tax country. This principle only applies to remittances, which are tax-free.

El Salvador is not as tax-friendly as other Central American countries like Panama, Nicaragua, and Costa Rica—all of which boast territorial taxation. For example, El Salvador has a 30% corporate income tax, and the top personal income tax is also 30%. Just by making over a meagre $22,857.14 USD, you are liable to a 30% income tax plus a fee of $3,462.86. Other taxes include withholding, capital gains, payroll, and social security taxes. Absolutely bonkers. 

However, El Salvador has some benefits, such as no taxes on wealth, inheritance, gifts, and property. I admit that these exemptions provide some relief, but the country is still far from the Bitcoin City ideals Bukele presented at an event in Miami in 2021 (these tax exemptions plus no taxes on income and capital gains). 

When it comes to privacy, one thing that stood out to me negatively in El Salvador is that information about a "Sociedad Anónima" is still publicly available in the Public Registry, meaning anyone can see who the shareholders are

EASE OF DOING BUSINESS 

When it comes to doing business, El Salvador leaves much to be desired. For instance, during my last visit to the country, I discovered that virtually all businesses (including small stores and street vendors) are required by law to have a ‘compliance officer.’ This figure is more common in banking, insurance and finance, but it’s insane that the law forces small businesses to employ this type of person. If you are thinking of starting this business in El Salvador, there are universities dedicated to training students to be compliance officers.

Another aspect that needs to be improved in El Salvador is banking. The locals I talked to are not happy with how the banking system works. It’s hard to get bank accounts, and the service isn’t really good. Also, if you have digital assets, including Bitcoin and other cryptocurrencies, you’ll be scrutinized a lot and need permits. The regulatory requirements are quite burdensome. Lastly, on the privacy front, El Salvador shocked me—and not in a good way. The information on a “Sociedad Anónima” is still publicly available in the Public Registry, meaning that anybody can see who the shareholders are. 

Considering taxes, regulations, and banking, El Salvador is not competitive at all. If you seek a good jurisdiction for wealth protection, you might want to look into other countries in Latin America. I chose Panama because of its favourable tax system, status as a hub for travel across the continent and the globe, and relatively easy path to citizenship. 

My experience with Salvadorans was extremely positive. I currently live in Panama, where the locals are friendly, hospitable, and polite, and I expected the same in El Salvador — and I was right

THE LOCALS

Lastly, in this overview of El Salvador, I think it’s important to know about the locals and their culture. As an expat or visitor, knowing things like etiquette, traditions, and even a few basic Spanish phrases is important to connect with Salvadoreans better. 

Now, my experience with Salvadoreans has been very positive. I currently live in Panama, where locals tend to be friendly, hospitable and polite, so I figured El Salvador would be somewhat similar—and I was right. The culture here is laid-back and family-oriented, and people will be more than happy to help you when you need it.

El Salvador offers various residency options, including passive income and pensioner visas, but its citizenship program is less competitive, requiring a $1,000,000 USD investment for instant citizenship

VISAS TO LIVE IN EL SALVADOR

When doing my due diligence in El Salvador, I also talked with the lawyers about the available residency and instant citizenship options. Before recommending anything to my clients, I want to make sure what I offer is legit and makes sense for me; only then do I suggest whether to go for something or not. El Salvador, unfortunately, is not the best Plan-B destination. Here are the residency permit options:

PASSIVE INCOME VISA 

This visa is meant for individuals who earn passive income worth at least $1,500 USD from dividends, rentals, trusts, and the like. It is valid for one year and can be renewed annually. However, you must stay in the country for eight months a year and cannot leave for more than three months at a time. 

PENSIONER VISA

This visa is tailored for retirees with a guaranteed pension of at least $1,100 USD from either a public or private pension fund. It is also valid for one year and renewable annually, while the stay requirements are the same as with the passive income visa.

COMPANY FORMATION ROUTE

This is the option for those who want to set up a business. The requirements are burdensome, including starting a company in El Salvador, employing yourself, and paying necessary taxes, social security costs, and payroll. The stay is the same as with the other visas, yet there is no clear information regarding renewals. 

PERMANENT RESIDENCY & CITIZENSHIP

Under all of the visas above, you must hold temporary residency for three years to get permanent residency. If you want to go all in and get instant citizenship, you can invest $1,000,000 USD, which can be paid in Bitcoin. However, considering other citizenship-by-investment programs, like those in the Caribbean and Malta, El Salvador is still not as competitive. 

The Salvadorean passport offers visa-free access to 132 countries (including the Schengen Area and hard-to-get-to countries like Iran and Russia), which is good but not excellent. Malta’s passport, for instance, gives access to 172 countries.

I believe things could improve in El Salvador, and I’m waiting to see what happens. With a better fiscal situation, I might even consider obtaining residency in the country, but for now, I don’t see it as a viable Plan-B destination

CONCLUSION: STILL A LONG WAY TO GO

El Salvador's safer environment has certainly improved the lives of locals and expats living here, and while security is essential for conducting business and living with peace of mind, there are still many issues to tackle. The fiscal and regulatory burden is excessive, hindering the country's attractiveness compared to other places like Panama, Paraguay and other Latino nations, and the paths to temporary and permanent residency require a huge level of commitment that pretty much eliminates El Salvador as a Plan-B destination. 

Either way, going from “mob rule” to being a safe country is a huge milestone, and I think this can improve in the upcoming years. I reserve the right to see what happens; if the tax and business situation gets better, I might even try to pursue residency in the country. If you’re looking into securing your Plan-B and are serious about it, don’t forget that you can work with us, and I’ll see if our services can help you realize your expat goals.