Special Transitory Law of Incentives and Preferential Treatments Aimed at Facilitating the Repatriation of Salvadorans

By: Gabriel Lara, associate (glara@romeropineda.com)

The Special Transitory Law of Incentives and Preferential Treatments Aimed at Facilitating the Repatriation of Salvadorans was approved by the Legislative Assembly of El Salvador on November 7, 2023. This law aims to create favorable conditions that allow Salvadorans residing abroad to enjoy temporary benefits for repatriating to El Salvador, regardless of the time, immigration status, and country of origin.

Individuals wishing to avail themselves of the temporary benefits granted by the law must meet the following requirements: 1) Be Salvadorans by birth, or naturalization,in the latter case, provided that nationality was acquired prior to the entry into force of this law; and 2) Reside in any foreign country and duly express their intention to permanently relocate to El Salvador.

The temporary benefits that the law grants to Salvadorans wishing to return to the country are as follows: Household goods importation: Exemption from duties and taxes as a one-time benefit,provided that the value of the family's household goods does not exceed $70,000.00 US dollars. Vehicle importation: Exemption from payment of duties and taxes on the importation of two light motor vehicles,in accordance with the requirements established in the corresponding regulations, per family for personal or family use.

CONDITIONS OF ACCESS TO THE FINANCIAL SYSTEM

Financial institutions regulated by the Banking Law, Cooperative Banking Law, and Savings and Credit Societies Law, supervised by the Superintendency of the Financial System and regulated by the Central Reserve Bank of El Salvador, which capture funds from the public, are obliged to provide financial services to Salvadorans who, under the effects of the law, wish to open bank accounts or use the financial services offered by these entities.

For financial products that require a credit history or record, Salvadorans may present their credit history, tax declarations, or any other document supporting financial activity carried out abroad.

If a financial institution considers that, for any reason, it cannot provide certain financial services or use the financial information supplied by the Salvadoran, it must justify its refusal through a letter addressed to the applicant, explaining the reason for denying the service or the reasons why the elements presented to support creditworthiness and payment capacity are not considered. Supervisory and regulatory authorities will periodically assess the requirements imposed on Salvadorans residing abroad to verify whether they do not constitute an illegitimate obstacle to access financial services. Entities must accept the free translation of requested documents to meet requirements for both account opening and payment verification.

The benefits outlined in the law will have a duration of one calendar year from its effective date and upon submission of the sworn statement established by the law. After the stipulated time has elapsed, the ordinary conditions to which the transit of capital and people is subject will be reinstated.