Plan contractor hiring in El Salvador

A Salvador-resident professional can contract in their own name and bill a foreign business for agreed deliverables, with genuine working autonomy documented from the start. Personal service for more than two consecutive days creates a rebuttable employment presumption. The services agreement should define the deliverable, contractor-controlled method, the contractor's own resources, fee, invoice trigger, currency, and due date. Day-to-day conduct must match those terms because dependency, orders, fixed hours, and continuing availability can establish employment. The buyer should approve outcomes and acceptance criteria while leaving the professional to organize how the work is produced.

Sources: Ministerio de Trabajo y Previsión Social, Código de Trabajo, Corte Suprema de Justicia, profesional independiente

If the line is crossed

If the arrangement is employment, the foreign buyer can owe employer registration and missed ISSS contributions even though its legal offices are outside El Salvador. ISSS registration follows the place where the worker performs services. Following its administrative process, the Institute can establish registration and contribution liability retroactively from the relationship's start, with the employer bearing both its own and the worker's unpaid shares. Keep the services contract and actual working records together so the relationship can be assessed accurately. A contractor's tax registration or invoices do not cure a working arrangement that operates as dependent employment.

Sources: Corte Suprema de Justicia, Reglamento para Afiliación del ISSS, Corte Suprema de Justicia, características de un profesional independiente

Factura de Exportación / Factura de Exportación Electrónica, FEXE

Export invoice / electronic export invoice

An IVA-registered contractor must deliver an export Factura for each qualifying service export, using the electronic FEXE once electronic issuance applies to that provider. Ask for the contractor's DGII authorization and check its required start date through the NIT/DUI lookup. The current process distinguishes existing issuers, taxpayers awaiting notification, and people outside IVA registration. A provider entering the system must complete authorization before issuing live documents; a test invoice has no fiscal validity. For electronic billing, retain both the DTE file and its graphic representation. A contractor still lawfully outside electronic issuance uses the applicable paper export invoice.

Issued by: Issued by the Salvador-resident IVA taxpayer and delivered to the foreign business identified as the service recipient.

Timing: Issue at the earliest statutory event: invoice generation, completion of the service, full or partial receipt, or crediting. For regular or continuous services, the end of each agreed billing period is also a trigger when it occurs first.

Sources: Ministerio de Hacienda, Código Tributario, Ministerio de Hacienda, Ley del IVA, DGII, consulta de fecha para ser emisor DTE, DGII, autorización y entrega de DTE

A service invoice carries 0% IVA only when the customer has no Salvadoran domicile or residence and the service is intended for exclusive use abroad. Work performed by the resident contractor in El Salvador enters the local IVA territory first, so a foreign billing address alone does not establish export treatment. The agreement, statement of work, acceptance record, and invoice description should consistently show the foreign recipient and where the deliverable will be used. If exclusive foreign use fails, the ordinary 13% rate applies unless another specific exemption covers the service. The contractor's own IVA status still determines the available tax document.

Sources: Ministerio de Hacienda, Ley del IVA

What an invoice has to show

• Foreign recipient identifier and export-service detail

  A FEXE must identify the foreign customer through its fiscal registration number or another accepted identifier and describe the exported service specifically. Give the contractor the legal name and tax identifier of the entity that actually bought the work. The document must also show the service quantities and prices, total, and separate export tax rate. Match the deliverable description to the statement of work and acceptance record showing exclusive foreign use. A correct identifier links the transaction to the foreign buyer; the invoice's 0% figure alone cannot establish that the service qualifies as an export.

  Sources: Ministerio de Hacienda, Código Tributario

• Electronic generation code, control number, and DGII reception seal

  For ordinary electronic issuance, a FEXE should carry its generation code, consecutive control number, and DGII reception seal before it is filed as the final tax document. The seal records reception by the tax administration; it does not approve the service's commercial facts or export tax treatment. Keep the electronic file alongside the readable representation and reconcile both with the same invoice. Authorized deferred or contingency issuance has separate temporary rules, so an interim document needs follow-up with the supplier for the completed transmission record. A test-system document should never be booked as the final FEXE.

  Sources: Ministerio de Hacienda, Código Tributario, DGII, autorización y entrega de DTE

The contractor bills when the applicable tax-document trigger occurs, while the fee becomes payable on the commercial due date agreed with the buyer. For an IVA-registered service provider, completion, issuance, payment or crediting can trigger documentation before the other events occur. Regular or continuous services also bring the end of the agreed billing period into the calculation. Put the billing period, acceptance process and due date in the services agreement, then repeat the payment term on the invoice. Finance should distinguish an invoice issued to meet the contractor's tax deadline from evidence that payment is already overdue.

Sources: Ministerio de Hacienda, Código Tributario, Ministerio de Hacienda, Ley del IVA, Asamblea Legislativa, Código Civil

When invoices are settled

Set a specific payment due date in the services agreement and invoice; when Salvadoran law governs, missing the stipulated term can put the debtor in default. Special rules may still require a demand, and an obligation without a stated term can require judicial demand outside the Civil Code's other listed cases. Define when acceptance occurs and avoid a due date that depends indefinitely on the buyer's internal approval. The agreed payment clock should be checked together with the governing-law and dispute clauses. A different chosen law can change the consequence of late payment, so the same contractual assumption should be used throughout.

Sources: Asamblea Legislativa, Código Civil

The currency on the invoice

The contractor may invoice in United States dollars or another currency that is legal tender abroad, and the buyer must satisfy the obligation in the currency the contract selects. The United States dollar has unrestricted legal-tender status in El Salvador, and professional fees may be denominated and settled in dollars. The agreement and invoice should use the same currency and should allocate any conversion consequences clearly. A different foreign currency is also legally available under the Monetary Integration Law, including for judicial enforcement of the monetary obligation. Local tax records may still require the contractor's applicable accounting treatment.

Sources: Asamblea Legislativa, Ley de Integración Monetaria

Relying on the services label after the second consecutive day

A services title cannot neutralize the employment presumption that arises after more than two consecutive days of personal work. The buyer should build the relationship around a defined result, contractor-controlled time, independent resources, and freedom from operational orders, then preserve those facts in actual performance. Requiring fixed daily availability, assigning an internal role, or supervising work methods can undermine the autonomy recorded on paper. Review the model when scope becomes indefinite or management practices begin to resemble dependency.

Sources: Ministerio de Trabajo y Previsión Social, Código de Trabajo, Corte Suprema de Justicia, profesional independiente

Treating 0% export IVA as an income-tax exemption

A qualifying export invoice can carry 0% IVA while the contractor still earns Salvadoran-source income from work performed in El Salvador. The income-tax rule looks at services performed or used in the country even when the fee is paid abroad. The resident professional must account for that income and handles payment on account where taxable receipts fall outside source withholding. Keep the agreed service fee and IVA calculation distinct from the contractor's income-tax accounting. If a proposed deduction changes the amount payable, establish its legal basis for the actual payer before changing the invoice payment.

Sources: Ministerio de Hacienda, Ley de Impuesto sobre la Renta, Ministerio de Hacienda, criterios sobre pago a cuenta de profesionales

Booking a qualifying export on a domestic tax document

A domestic Comprobante de Crédito Fiscal is the wrong document for a qualifying export because the Tax Code requires an export Factura. The contractor should use the paper export invoice while that format applies, or a FEXE after designation or valid opt-in. The buyer should verify the contractor's current issuance status and retain the document actually delivered. If the service later fails the export conditions, both the IVA rate and document treatment need a fresh analysis; a cosmetic invoice-label change does not cure the failure.

Sources: Ministerio de Hacienda, Código Tributario