New Foreign Investment Law in Nicaragua

Published on Apr 1, 2025

On February 24, 2025, the new Foreign Investment Law ("Law No. 1240”) was published in La Gaceta, Official Gazette No. 36 of Nicaragua, which was approved by the National Assembly on February 20 of the same year and whose purpose is to establish the legal provisions for the promotion, encouragement, facilitation, formalization, follow-up and management of foreign investments in Nicaragua. 

 

Law No. 1240 revokes the legal framework that until now was applicable for foreign investments, i.e. (i) Executive Decree No. 55-2006, which created the One-Stop Investment Window (VUI) to facilitate the procedures for the formation of companies; (ii) Law No. 344 "Law for the Promotion of Foreign Investments” and (iii) Executive Decree No. 74-2000, Regulation of Law No. 344. 

 

Pursuant to the new law, foreign investors are considered to be those who carry out foreign investment and strategic investment activities in Nicaragua, understood as activities of transfer of foreign capital to Nicaragua that materialize through the incorporation, acquisition or participation in a commercial company or enterprise in Nicaragua or through investments aligned with the objectives of national development and government plans with positive impact on job creation, increase of production and export capacity, transformation or value addition, technology transfer, generation of knowledge for the increase of productivity and competitiveness of the country. 

 

In case of strategic investments, it will be mandatory to subscribe a foreign investment contract, which will be subscribed between the foreign investor and the State of Nicaragua and in which the conditions, rights, obligations and guarantees under which the investment will be made will be established.  

 

The foreign investor shall enjoy the same rights as a Nicaraguan investor, namely: 

 

  1. Enjoyment, use, enjoyment and dominion of the property related to your investment. 

  1. Free access to the purchase and sale of available foreign currency and to the free convertibility of currency, in accordance with the provisions of national laws and regulations on foreign exchange matters. 

  1. Make transfers abroad related to its invested capital or by dissolution, liquidation or voluntary sale of the Foreign Investment; without prejudice to compliance with tax and labor obligations established by national legislation. 

  1. The remittance of any profit, dividend or gain generated in the national territory, after payment of the corresponding taxes. 

  1. The payments and the remission of the same, originated by debts contracted abroad and the interest accrued thereon, as well as royalties. 

  1. Payments derived from indemnification for expropriation. 

  1. To enjoy the incentives established within the national legal framework, such as sectorial laws, current tax legislation and special regimes related to the investment sector. 

 

Likewise, the foreign investor shall have the following obligations: 

 

  1. To carry out its investment with observance and compliance with the national legal framework. 

  1. To conserve, preserve and fully restore the damages caused to the environment and natural resources originated directly or indirectly from its economic activity. 

  1. Submit quarterly reports on compliance with the investment plan to the sectorial governing institutions. 

  1. Provide the Central Bank of Nicaragua, for statistical purposes, all the information it requires for the follow-up and evolution of Foreign Investment in Nicaragua, which will include financial statements and their annexes, amount invested, income and expenditures from and to abroad, internal and external indebtedness, and indicators of production, prices, salaries and employment generated, among others. 

 

Foreign investors must register with the Investment Department of the Ministry of Development, Industry, and Trade ("MIFIC") and obtain the Single Foreign Investment Registration Certificate ("RUIE”) which will be used to carry out the procedures for the materialization of the investment and to obtain the corresponding benefits according to the economic activity to be carried out. 

 

Law No. 1240 also created the National Foreign Investment Commission ("CNIE”) which will be formed by: (i) the Presidential Advisor for Investments, Commerce and International Cooperation, who will coordinate it; (ii) the President of the Central Bank; (iii) the MIFIC and (iv) the Executive Director of the National Commission of Free Zones. Likewise, the CNIE will have the following functions according to law: 

 

  1. To act as the competent authority for the application of this Law. 

  1. To decide on the applications for strategic investments. 

  1. To exercise the functions of governance and strategic direction in the area of foreign investments, in accordance with the National Plan for the Fight against Poverty and for Human Development and the National Strategy for the Promotion of Investments and Exports. 

  1. Submit for the approval of the Presidency of the Republic: 

  1. The inter-institutional articulation actions for the implementation of the National Strategy for Investment and Export Promotion. 

  1. Improvements to the regulatory framework applicable to foreign investments for the development of a favorable investment environment. 

  1. The mechanisms for the promotion, facilitation and encouragement of Foreign Investment. 

 

Regarding the differences, controversies or claims arising between the State of Nicaragua and a foreign investor due to the application, execution or interpretation of the Law and its regulations, it is established that these must be solved first through consultations or requests for friendly negotiation before the MIFIC, which in turn may submit them to the CNIE for its consideration. If there is no solution within the following 30 working days, the foreign investor will have the option of submitting the claim to the national legal norms in force, or to opt to use an international arbitration tribunal in accordance with the agreements to which Nicaragua is a party, however, once the dispute resolution procedure has been initiated either through any of the two ways; the foreign investor will not be able to invoke any other jurisdiction. Likewise, the foreign investor is granted full recognition of international arbitration awards or those issued in accordance with the New York Convention. 

 

Law No. 1240 will become effective on May 24, 2025, however, any foreign investment already existing and operating in the country has a term of 120 calendar days after the entry into force of the law to formalize its registration process before the Investment Department of MIFIC. 

 

Finally, it is important to mention that, to date, MIFIC has not disclosed the new requirements and procedure to register as a foreign investment before the Investment Directorate and the formalization of the CNIE as an authority for the application of the law. 

 

If you require further information or have any questions, please do not hesitate to contact us. 

 

The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, and does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.