If you’re an entrepreneur or digital nomad considering El Salvador as your next base, you’re probably already weighing the country’s tax regime and regulatory climate. But there’s another layer to consider: the legal framework around the misuse of corporate assets. In 2025, understanding these rules isn’t just about compliance—it’s about protecting your freedom to operate efficiently and minimizing unnecessary risks imposed by the state.
Understanding Misuse of Corporate Assets in El Salvador
El Salvador takes the misuse of corporate assets seriously, with clear criminal liability for violations. The legal backbone for these policies is found in two key statutes:
- Código Penal de El Salvador, Artículo 220 (Administración fraudulenta)
- Código de Comercio de El Salvador, Artículo 18
Both laws are designed to prevent company insiders—directors, managers, or employees—from using corporate assets for personal gain or unauthorized purposes. This is especially relevant for international founders who may be used to more flexible regimes elsewhere.
Key Legal Provisions at a Glance (2025)
| Law | Article | Focus | Criminal Liability |
|---|---|---|---|
| Código Penal | 220 | Fraudulent management of corporate assets | Yes |
| Código de Comercio | 18 | Corporate governance and asset use | Yes |
What Counts as Misuse of Corporate Assets?
Under Salvadoran law, misuse typically includes:
- Using company funds for personal expenses
- Transferring assets to related parties without proper authorization
- Engaging in transactions that benefit insiders at the expense of the company
For example, if a director authorizes a loan from the company to themselves without board approval, this could trigger criminal liability under Article 220 of the Penal Code.
Pro Tip: How to Stay Compliant in 2025
- Document Everything: Keep meticulous records of all asset transfers and expenses. Transparency is your best defense.
- Board Approvals: Ensure all significant transactions—especially those involving insiders—are approved by the board and properly minuted.
- Segregate Personal and Corporate Assets: Never mix personal and company funds, even for short-term convenience.
- Regular Audits: Schedule periodic internal or external audits to catch issues early and demonstrate good faith compliance.
Why This Matters for International Entrepreneurs
While El Salvador’s regulatory environment is often praised for its openness—especially with its embrace of Bitcoin—its criminal statutes on corporate asset misuse are robust. In 2025, a misstep here can mean not just fines, but criminal prosecution. For those seeking to optimize their tax and regulatory exposure, this is a crucial area to get right.
Checklist: Avoiding Criminal Liability in El Salvador
- Review all company policies on asset use
- Train staff and directors on legal obligations
- Consult Salvadoran legal counsel before executing related-party transactions
- Monitor regulatory updates—laws can evolve quickly
Summary: Key Takeaways for 2025
El Salvador enforces strict criminal liability for misuse of corporate assets, anchored in the Penal Code (Article 220) and Commercial Code (Article 18). For digital nomads and entrepreneurs, the message is clear: operate transparently, document every transaction, and keep personal and company assets strictly separate. This approach not only keeps you compliant but also maximizes your operational freedom in a jurisdiction that rewards savvy, well-informed business owners.
For further reading on Salvadoran corporate law, consult the official government portal at https://www.asamblea.gob.sv/.