Choosing the optimal Business Structure for Expats establishing businesses in the Dominican Republic

If you are planning to do business in the Dominican Republic, it’s essential to understand the different types of business structures available to you. Choosing the appropriate structure will determine the amount of personal liability you assume, the taxes you’ll have to pay, and how you conduct business.

Here are the DR’s four most common business structures and who they make the most sense for.

1. EIRL (Empresa Individual de Responsabilidad Limitada) – An EIRL, which stands for “Empresa Individual de Responsabilidad Limitada,” translates to “Individual Limited Liability Enterprise” in English. The EIRL is the simplest structure designed for individuals wanting to start a business without any partners. Though a single individual owns an ERL there is a clear distinction between personal and business assets.

2. SRL (Sociedad de Responsabilidad Limitada or SRL) – This structure is popular among local and foreign investors. It requires a minimum of two partners. These partners aren’t personally liable for company debts beyond their contributions. An SRL is flexible in structure and offers personal asset protection, making it ideal for medium-sized enterprises or partnerships. An SRL can be set up with a relatively low capital investment, and its profits are taxed at the corporate level.

3. SA (Sociedad Anónima) – This structure is the equivalent of a C-Corp in the United States. Suitable for large businesses, an SA requires a minimum of seven shareholders. Shareholders’ liability is limited to the amount of their investment. This structure involves more administrative responsibilities and formalities, including the need for a Board of Directors and mandatory annual meetings. This structure makes sense for large ventures with multiple investors or businesses planning to go public.

4. SAS (Sociedad Anónima Simplificada) – A Sociedad Anónima Simplificada or Simplified Corporation, combining elements of an SRL and SA, offers flexibility in its management and operations. It requires a minimum of two shareholders, and like an SA, the shareholders’ liability is limited to their contributions. The key difference lies in the reduced administrative formalities and requirements. Like the SA structure, the SAS is best suited for larger ventures with several investors or a business looking to go public.

For foreigners with an entity looking to establish a presence in the DR without officially setting up a new business structure in the country, you have the option to set up a branch office. The branch setup allows your foreign company to carry out activities as a local company, but the parent company remains liable for the branch’s activities.

Before setting up a company in the Dominican Republic, I recommend consulting with an attorney specializing in business formation. An attorney can determine the best entity that suits your needs and minimizes your tax liability.
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Maria Abreu is the CEO and Managing Attorney of Abreu & Associates, a law firm practicing exclusively in Dominican Republic Immigration and Nationality law. She is also the founder of Retire and Invest DR. This organization hosts conference events for foreigners interested in living, retiring, and investing in the DR. You can contact Maria at: mabreu@abreuimmigration.com.