El Salvador has dramatically lowered its residency requirement, offering a 0% tax on Bitcoin gains for those who qualify.
Under Decreto 531, effective March 31, 2026, the physical presence needed for temporary residency was cut from nine months to just 90 days per year. Combined with a 2024 income tax reform that exempts foreign-source income, this creates an effective 0% tax rate on overseas earnings and Bitcoin capital gains.
The legal framework is built on several pillars. The 2021 Bitcoin Law provides a 0% capital gains tax on Bitcoin transactions and eliminates wealth, inheritance, and gift taxes. The 2024 reform exempted all foreign-source income. The new decree simply makes qualifying for these benefits far easier.
The incentives are explicitly designed to attract entrepreneurs, remote professionals, and investors who earn money outside El Salvador. The country already hosts major crypto firms like Tether and Boltz, and President Nayib Bukele's governance has significantly reduced violent crime.
However, the benefit is not straightforward for citizens of countries with worldwide taxation, like the United States. US citizens remain taxed on global income regardless of residency. Establishing Salvadoran tax residency does not automatically eliminate home country obligations and could create complex compliance situations.
El Salvador's move is a bold play in the global competition for digital wealth, positioning itself against other crypto-friendly jurisdictions like the UAE and Singapore.