Starting a Business Abroad: A Complete Guide to Setting Up in Cuba as an Expat

Published on January 17, 2026 and written by Cyril Jarnias

Starting a business venture in Cuba is a dream for many expatriates. The island captivates with its tourist potential, highly educated workforce, and strategic position in the Caribbean. But behind the postcard images, the business environment is one of the most unique in the world: a heavily centralized socialist economy, a burdensome legal framework, banking constraints, U.S. sanctions, and fragile infrastructure.

Understanding the Cuban Economic and Political Context

Before imagining a business plan, one must grasp the broad outlines of the Cuban model. The economy is officially socialist and planned: the State still controls the vast majority of productive activity and employment, even though a private sector has been growing significantly for about a decade.

An Educated Country, But in a Deep Economic Crisis

With approximately 11 million inhabitants and a literacy rate close to 100%, Cuba has a highly skilled workforce. The country spends nearly 10% of its GDP on education, well above the global average, and a significant portion of urban youth speaks English. The human foundation for a business project is therefore favorable: engineers, doctors, technicians, IT professionals are plentiful… but often underpaid and inclined to emigrate.

This dual aspect – high-quality human capital and a deep economic crisis – creates a paradoxical context for the foreign entrepreneur: low labor costs and an abundance of skills, but a depleted domestic market and heavy structural constraints.

A Complex and Unstable Monetary System

Since 2021, the Cuban Peso (CUP) has been officially the sole national currency. The Convertible Peso (CUC) was withdrawn from circulation. In practice, the monetary landscape remains confusing, with several layers:

Element	Main Characteristics
CUP (Cuban Peso)	Official currency, local basic salaries and expenses, official rate 24 CUP = 1 USD but largely disconnected from the parallel market
USD/EUR in Cash	Highly sought after, widely used in real transactions, especially for scarce goods and tourist services
MLC (Moneda Libremente Convertible)	Digital currency indexed to the dollar or euro, used via bank cards to purchase in certain special stores
Official Exchange Rate	24 CUP for 1 USD for State operations
Informal Exchange Rate	Highly variable, sometimes over 300 CUP for 1 USD depending on the period

For an expatriate, this duality between the official rate and the informal market radically changes the perception of costs and revenues. Average public sector salaries may seem high at the official rate (over 5,000 CUP, or theoretically over 200 USD), but their real purchasing power is very low at the parallel rate.

A Central Role for the State and Public Enterprises

The State remains the main employer, with about 80–85% of the workforce attached to public or para-public entities. Large conglomerates – notably in tourism, energy, nickel, construction – hold strategic positions. The national private sector, although recognized since the 2011‑2021 reforms, remains regulated and excluded from many activities deemed “strategic” (health, education, defense, telecommunications, media, finance, etc.).

For a foreign entrepreneur, this means that most large-scale projects involve some form of partnership with a state entity or establishment in a special development zone, and that independent maneuvering room is limited to certain well-defined segments.

The Legal Framework for Foreign Investment in Cuba

The cornerstone for any expat wishing to establish themselves in Cuba is Law No. 118 on Foreign Investment, adopted in 2014. It replaces a previous law (No. 77 of 1995) and structures how foreign capital can participate in the Cuban economy.

Objectives and Principles of Law 118

Law 118 clearly aims to attract capital, technology, and external markets, around several main axes:

– Diversify exports

– Substitute imports, especially food

– Create jobs

– Access advanced technologies

– Green the energy mix towards more renewables

– Increase foreign currency earnings

Three Main Forms of Establishment for the Foreign Investor

The law defines three main modalities for investing:

Modality	Description	Control and Structure
Joint Venture	Commercial company under Cuban law, with registered shares, owned by one or more Cuban and foreign investors	Separate legal entity, often with public majority, but not mandatory
International Economic Association Contract	Cooperation agreement between Cuban and foreign partners without creating a new company	Used for hotel management, oil exploration, professional service projects
Wholly Foreign-Owned Company	Company 100% owned by foreign capital	Can be a Cuban subsidiary of a group or a branch of a foreign company

For an expat, the wholly foreign-owned company is the form closest to classic establishment schemes in other countries. But it remains subject to state authorization and is not open to all sectors.

Open Sectors, Closed Sectors

In theory, the law allows foreign investment in all sectors except: sensitive sectors.

In practice, the government publishes a Portfolio of Foreign Investment Opportunities that lists projects and branches deemed priorities. By late 2025, this portfolio included over 400 projects, targeting notably:

– Tourism (hotels, marinas, leisure, tourist real estate)

– Renewable energy (solar, wind, biomass)

– Hydrocarbons and mining

– Agro‑industry and food production

– Biotechnology, pharmaceuticals

– Industrial and logistics infrastructure

– Knowledge economy and IT

The purely local or sensitive sectors – education, health, consumer telecommunications, retail finance – remain largely closed to direct international initiative.

Cuban Private Entrepreneurship: What Links for an Expat?

The famous MIPYMES – Cuban micro, small, and medium-sized enterprises – have profoundly changed the internal entrepreneurial landscape. But they are not, at this stage, the direct vehicle for an expatriate.

What MIPYMES Are… and What They Are Not

Since 2021, Cubans can create private limited liability companies (up to 100 employees), in a wide range of activities, except those deemed strategic (defense, health, education, etc.). Over 11,000 private MIPYMES were already registered by 2024.

The list of prohibited activities for these private enterprises has been expanded to 125 domains, covering notably:

– Education and health (drug production, for example)

– Defense, public security

– Finance, banking intermediation

– Telecommunications and most media

– Certain specific activities (timber extraction, manufacture of specific medical items, etc.)

How an Expatriate Can Interact with This Sector

Even if an expat generally cannot, as a rule, be the owner of a MIPYME without permanent residence, they can:

– Contract with MIPYMES as a supplier or client (distribution, subcontracting, services)

– Provide know‑how and technology within the framework of service or cooperation contracts

– Co‑develop products or tourist circuits with Cuban private actors (casas particulares, private restaurants, agricultural cooperatives)

– Indirectly finance certain activities, for example via commercial agreements, subject to compliance with Cuban laws and, where applicable, American laws

For a foreign entrepreneur, the most realistic strategy often combines a formal investment structure (joint venture, wholly foreign-owned company) and a network of relationships with the national private sector.

Establishment Process: Authorizations, Timelines, Authorities

Unlike many countries where business creation is declarative, in Cuba any foreign investment must be explicitly authorized by the State. This step conditions the entire project.

Who Decides What?

Several authorities are involved:

Entity	Main Role
Council of State	Validates projects involving non-renewable natural resources, major public services, and public works
Council of Ministers	Approves the majority of investments (real estate, renewable energy, joint ventures, foreign-owned companies)
Ministry of Foreign Trade and Investment (MINCEX)	Entry point for applications, negotiation with investors, management of the project portfolio
Ministry of Economy and Planning (MEP)	Leads macroeconomic coherence and public policies, manages public enterprises and MIPYMES
Ministry of Finance and Prices	Defines financial standards, tax regimes, and possible exemptions
Ministry of Science, Technology and Environment	Evaluates the environmental and technological impact of projects
Ministry of Labor and Social Security	Authorizes employing entities, regulates working conditions
Central Bank of Cuba	Regulates currency transfers, bank accounts in convertible currencies

Depending on the sector and nature of the project, the final decision may rest with the Council of Ministers or a specific minister to whom this power has been delegated.

Key Stages of an Investment Project

The typical scheme follows several phases:

The authorities announce an intention to simplify this process, by introducing more digital procedures, shorter timelines, and possibly the principle of “positive silence” (an application not rejected within the timeframe would be deemed accepted). But for now, the process remains heavy and time-consuming.

Taxation of Foreign-Owned Companies

The Cuban tax system is designed to make foreign investment attractive in targeted sectors, with significant advantages for joint ventures and international economic association agreements.

Main Corporate Taxes

The corporate regime can be summarized as follows:

Type of Entity	Standard Corporate Income Tax Rate	Exemptions and Reductions
Joint Ventures and Association Agreements	15% on taxable net profit	Full corporate tax exemption for 8 years, extendable; 50% rebates on sales and service taxes, exemption in the 1st year; partial exemptions on environmental taxes, customs, local property tax during the investment recovery phase
Wholly Foreign-Owned Company	Common law rate (often 35%)	Possible tax benefits case by case, granted by the Ministry of Finance and Prices
Exploitation of Natural Resources	Rate can go up to 50%	Decided by the Council of Ministers depending on the type of resource

Furthermore, foreign investors associated with a joint venture or association agreement are exempt from income tax on dividends and profits received. Customs duties on imported equipment and machinery for the project are in principle waived during the investment phase.

Local Taxation and Absence of Generalized VAT

Cuba does not have a VAT in the classic sense. Rather, you find:

– A sales tax (with different rates for wholesale and retail)

– A service tax

– Territorial contributions (1% of local value added, in some cases)

– Customs duties for imported goods outside preferential regimes

Joint ventures generally benefit from rebates of at least 50% on these taxes during the first years.

Labor Force, Labor Law, and Recruitment

For an expatriate, the functioning of the Cuban labor market can seem bewildering. The hiring rules, remuneration, and relations with employees go through specific structures.

Recruiting Cuban Personnel: Quasi-Mandatory Use of a State Employment Entity

The general rule is that foreign-owned companies recruit their Cuban employees and resident foreigners via a state employment entity. This agency, authorized by the Ministry of Labor and proposed by MINCEX, acts as an intermediary:

– The investor pays the agency the agreed salaries and charges

– The agency then pays the employee their remuneration in CUP, often at a level lower than the initial amount, creating a margin for the State

Working Conditions and Salary Costs

The standard workweek is around 40–44 hours, with a regular day of 8 hours. Overtime is limited and subject to a surcharge (minimum coefficient of 1.5) and work on holidays involves double pay.

Official salaries remain very low in CUP by international standards, even if the gross figures may seem high at the official exchange rate. As an illustration, in the private sector, salary scales such as the following can be found:

Position (reference in CUP)	Approximate Monthly Salary
Accounting Assistant	~11,600 CUP
Financial Analyst	~26,600 CUP
General Manager	~38,100 CUP

But the real purchasing power depends on the effective exchange rate at which the employee can convert their CUP into foreign currency (officially or on the informal market), and on their access to complementary income (tips in foreign currency, independent activities, remittances from the diaspora).

Social Rights and Social Climate

Cuban legislation prohibits discrimination based on sex, age, race, religion, nationality, disability, sexual orientation, and skin color. All workers theoretically have the right to unionize, even if the labor federation is closely linked to the government.

The right to strike is not recognized as in liberal economies; disputes are settled through internal mediation, unions, and labor courts. Inspections by the Ministry of Labor can severely sanction labor law violations or breaches of health and safety.

For an expatriate manager, it is therefore crucial to quickly integrate the social and political dimensions of labor relations, beyond just cost considerations.

Residency, Visas, and Long Stays for Entrepreneurs

Starting a business in Cuba is not simply a matter of entering with a tourist visa. The law provides for several long-stay residency statuses, more or less suited to entrepreneurs.

Short-Stay Business Visas

For occasional missions (negotiations, conferences, site visits), there is the business visa (Visa de Negocios). It is distinct from the classic tourist card and requires:

The typical duration is 30 days on a general validity of 90 days, often single entry. The application is made at the competent Cuban consulate or via authorized agencies (outside the United States, where the sanctions regime complicates the procedure).

Temporary and Permanent Residence

For a sustainable entrepreneurial project, one must consider a residency status. Cuba offers different channels:

A “non-lucrative” residency category exists for individuals with stable foreign income, but it does not allow local employment. The validity period is often around 1–2 years renewable, with increasing emphasis on continuous presence (long absences can break “continuous residence”).

In the long run, permanent residence can be considered for foreigners investing in a structured manner and demonstrating sustainable integration, but these pathways remain regulated and partly discretionary.

Banking, Currency, and Payments: A Headache for Expats

The financial aspect is one of the most sensitive for a foreign entrepreneur in Cuba. Between U.S. sanctions, internal restrictions, currency shortages, and monetary complexity, it requires meticulous preparation.

Access to the Cuban Banking System

Foreign non-resident individuals have great difficulty opening a local bank account. For residents, conditions vary by bank and period, but often involve:

– Permanent residence or a long-term stay status

– Proof of income or activity

– Sometimes, a significant initial deposit or proof of assets

Foreign-owned companies, once authorized, can on the other hand open professional accounts in the Cuban banking system, both in CUP and foreign currency. They can also, with authorization from the Central Bank, hold foreign currency accounts abroad to facilitate certain international operations.

Bank Cards, Withdrawals, and Fees

The ATM network has expanded in Havana and major cities, with generally correct operation. Visa and Mastercard cards not issued by U.S. banks are often accepted, but fees of around 3% apply on the Cuban side, in addition to those from the issuing bank.

Card payments remain limited to certain hotels, upscale restaurants, or MLC stores; for daily life, cash is king.

Cash Management and Exchange

The foreign entrepreneur must rely on: good knowledge of the local market, a solid network of contacts, an understanding of the regulations and laws in force, and adequate resources to finance their project.

– Significant inflows of foreign currency (EUR, CAD, GBP, etc.) upon entry

– Exchange at official houses (CADECA), banks, or major hotels, at a rate closer to the official one

– The use, cautiously, of the informal market to obtain CUP at a more realistic rate, significantly higher than the official rate

It is necessary to:

– Check the quality of bills (damaged bills are sometimes refused)

– Carefully count the change received

– Request as many small denominations as possible

Specifics for U.S. Persons or Companies

The United States maintains a complex set of sanctions (OFAC). For U.S. persons (citizens, residents, companies, or even persons physically located in the United States), any financial interaction with Cuba must respect these rules:

– Travel strictly limited to 12 categories (family visits, journalistic activities, projects supporting the population, etc.), tourism being prohibited by U.S. law

– Prohibition of direct transactions with certain Cuban entities listed as linked to military, intelligence, or security services

– Obligation to keep records for 5 years of all expenses incurred in Cuba to prove compliance

– Prohibition on importing Cuban goods for commercial purposes, except exceptions for products from certain independent entrepreneurs

OFAC nevertheless authorizes the opening of accounts in the United States by certain independent Cuban entrepreneurs to receive payments for lawful activities. But this does not directly simplify access to financial services on the island for American expats.

Operational Environment: Infrastructure, Security, Logistics

Beyond legal and financial aspects, one must integrate daily realities: power outages, fuel shortages, degraded roads, limited connectivity.

Energy, Water, and Infrastructure

Cuba suffers from an obsolete electrical system, resulting in:

– Daily power outages in some areas, sometimes up to 12 hours, including in Havana

– Even longer outages in the provinces

– Very irregular availability of fuel for generators

Tap water is generally not potable. Bottled water can be hard to find, and ice is often made from tap water. Any restaurant, hotel, or processing business must plan for filtration systems or autonomous supply.

Main roads are fairly decent, but secondary roads can be severely degraded, with potholes and insufficient lighting, making night driving dangerous. Road accidents are a major cause of mortality, and prison sentences can be heavy in cases of proven responsibility for a serious accident.

Transport, Logistics, and Customs

Local public buses are overcrowded and unreliable. Informal taxis – old cars, tuk-tuks (“cocos”), motorcycles – are often in poor condition and lack seat belts. Importing vehicles and spare parts is highly regulated and subject to high customs duties.

For personal luggage, rules are strict: beyond certain weight and value ceilings, duties are applicable. Many products (telecommunication equipment, high-power electrical appliances, weapons, controlled substances, certain animals and plants) are prohibited or require prior authorization.

Security, Crime, and Technology

Economic deterioration has led to a rise in opportunistic crimes (pickpocketing, snatch theft) and violent crimes (armed robbery, assaults). Online romantic or financial scams are frequent. The State, however, maintains tight security control, especially over activities deemed political.

Digitally, Internet access has significantly improved since the arrival of 3G/4G and the installation of submarine cables. But:

– The average speed remains very low (around 2–3 Mbps for fixed)

– Outages are frequent, and electrical blackouts interrupt communications

– Barely a little over 70% of the population is connected

– ETECSA, the sole operator, controls all networks and applies extensive surveillance and censorship

Many independent news sites or foreign financial services are blocked, and targeted Internet shutdowns have been observed during protests. For an entrepreneur, this imposes:

– Working with tools tolerant of low bandwidth

– Using reputable VPNs (if available) to secure exchanges and bypass certain blocks, while remaining aware of regulatory risk

– Planning offline work solutions when the connection drops

Sectoral Opportunities for a Foreign Entrepreneur

Despite these constraints, certain areas offer real potential, provided the business model is adapted to the Cuban context.

Tourism and Expanded Hospitality

Tourism remains a pillar of the Cuban economy: beaches, colonial architecture, cultural and musical heritage, nature… Before the pandemic, the island welcomed up to 5 million visitors per year. Even if visitation hasn’t returned to that level, the rebound potential is there.

For an expat, options are not limited to hotel management (often in partnership with large groups and state companies):

– Development of tourism-real estate complexes in designated areas

– Structured leisure offerings: golf courses, marinas, diving centers, spas, water parks

– Health tourism (through partnerships with state entities)

– Creation of thematic circuits (cultural, ecotourism, gastronomic) in cooperation with MIPYMES and local cooperatives

Renewable Energy and Energy Efficiency

Cuba has set an objective to transform its energy mix, heavily dependent on fossil fuels, towards renewable sources. This opens prospects for:

In these areas, foreign investment is welcomed, with tax incentives, access to concessions, and the possibility to establish in special development zones.

Agro‑Industry, Food Processing, and Cold Chain Logistics

Recurrent food shortages show how much domestic production is insufficient and suffers from a lack of inputs, technology, irrigation, and logistics. Opportunities exist for:

This is, however, a politically sensitive sector, requiring close partnerships with authorities and agricultural cooperatives.

Biotechnology, Health, IT Services

Cuba has developed a recognized biotechnology and pharmaceutical hub, with research centers and exported products (vaccines, medicines). Associations are possible for joint production or marketing on third markets.

On the digital side, despite infrastructure limits, the country has many developers, engineers, and creatives. An investor can consider collaborations in:

– Export-oriented software development

– Outsourced IT support services

– Creation of digital content for foreign markets

These activities must, however, account for connectivity restrictions, state regulation of the sector, and, for American actors, sanctions rules.

Summary: For Which Expatriate Profiles Can Cuba Be a Viable Business Destination?

Starting a business in Cuba is nothing like a “plug and play” project. The country is more suited to medium‑to‑long‑term strategies, driven by investors who are:

– Capable of mobilizing significant capital

– Accustomed to navigating highly regulated environments

– Ready to co‑build with public partners

– Endowed with a high tolerance for administrative complexity, uncertainty, and delays

For an individual entrepreneur or a classic small structure, direct establishment as a wholly foreign-owned company is often too burdensome. Other avenues may then be more realistic:

For those considering on-site installation, obtaining residency (via investment or work) is an essential step. It opens the door to more extensive rights – and possibly to direct participation in certain private structures – but at the cost of a long, heavily controlled, and sometimes opaque process.