# Próspera

Próspera, officially known as Próspera ZEDE, is a charter city on the island of Roatán, Honduras. It is one of the three ZEDEs in the country, operating under a distinct fiscal, legal and regulatory framework that grants it autonomy from the national government.
The project is led by Honduras Próspera Inc., which itself is funded by venture capitalists and has a veto vote in Próspera's governing council.

## History
### Background

According to Canadian historian Quinn Slobodian, Próspera is part of a broader trend of projects aimed at implementing libertarian theory in practice.
The first attempts to create jurisdictions similar to Próspera in Honduras emerged with the Special Development Regions (Regiones Especiales de Desarrollo, REDs), which were intended to be administered by a developed guarantor country rather than private entities. However, the REDs were later declared unconstitutional for violating national sovereignty, and the ZEDEs subsequently served as their successors.
In 2013, during the presidency of Porfirio Lobo, the Constitution of Honduras was amended to allow the creation of Zones for Employment and Economic Development (Zonas de Empleo y Desarrollo Económico, or ZEDEs). These zones function as subnational territorial units with a high degree of autonomy, operating under a distinct legal and fiscal system. Unlike conventional local governments, ZEDEs possess independent administrative systems and laws, much like in special economic zones.
Próspera, located on the island of Roatán, is one of the most prominent ZEDEs and has been described as a modern iteration of the charter city model, initially proposed by former World Bank chief economist and Nobel laureate Paul Romer. The idea behind charter cities is to establish new urban areas with governance structures that attract investment by ensuring rule of law, economic freedom, and regulatory efficiency. Próspera's model follows this logic, offering streamlined business regulations, lower taxes, and private arbitration for dispute resolution. It has also been heavily influenced by the Charter Cities Institute (CCI), a Washington, DC-based organization that promotes the development of such special jurisdictions worldwide.

### Development of Próspera

Próspera is backed by multiple investors, including Balaji Srinivasan, Peter Thiel, and Marc Andreessen, through the venture capital firm Pronomos Capital. Construction began in 2021, with initial buildings designed by German architect Patrik Schumacher.

### Repeal efforts

During her 2021 presidential campaign, Xiomara Castro made the repeal of the ZEDE law a key issue. In April 2022, Honduran President Xiomara Castro signed legislation to repeal the ZEDEs, citing sovereignty concerns. Despite this, Próspera continues to operate, arguing that existing ZEDE agreements grant it legal stability for 50 years. In response to the repeal, Honduras Próspera Inc. sued Honduras for up to $10.7 billion in damages, equivalent to one-third of the country's GDP. In July 2022, the U.S. State Department expressed concerns that repealing the ZEDE law might violate international trade agreements, including the DR-CAFTA free trade agreement. As of 2025, ZEDEs—including Próspera—remain operational despite ongoing legal disputes.

### ICSID ruling on Próspera et al. vs. Honduras

In 2024, the International Centre for Settlement of Investment Disputes (ICSID) rejected Honduras' argument that Honduras Próspera Inc. and its affiliates should have exhausted domestic legal remedies before initiating arbitration, ruling that such a requirement was a matter of admissibility, not jurisdiction. The tribunal found that Honduras had unconventionally inserted this requirement into domestic law in 1988, yet it was never recognized in ICSID treaties, including CAFTA-DR. It also highlighted the contradiction in Honduras' position, which both required investors to exhaust local remedies and simultaneously forced them to waive their right to pursue local proceedings before arbitration. The ruling allows Próspera's $10.7 billion claim against Honduras to proceed, following the 2022 ban on ZEDEs by President Xiomara Castro and the 2024 Supreme Court decision declaring the ZEDEs unconstitutional with retroactive effect. The dispute was a major factor in Honduras' decision to withdraw from ICSID in August 2024, raising concerns about the country's commitment to international investment agreements.

## Governance and regulation
### Administrative structure

Próspera is governed by a council composed of nine members, five of whom are elected and four appointed by Honduras Próspera Inc. Decisions require a two-thirds majority, effectively granting Honduras Próspera Inc. veto power. Above this, there is a Committee of Best Practices, an unelected body whose members are appointed by the Honduran government and tasked with approving internal regulations and providing policy guidance.

### Regulatory environment

While subject to Honduran criminal law, Próspera maintains its own civil and commercial codes, allowing businesses to select regulations from approved foreign jurisdictions, propose custom regulations subject to Próspera ZEDE approval, or operate under common law.

### Taxation and residency

Tax rates within Próspera are set at 1% on business revenue, 5% on wages, and a 2.5% sales tax. Bitcoin is recognized as legal tender within the city. Individuals and legal entities wishing to reside or operate in Próspera must enter into a "Coexistence Agreement," outlining rights, responsibilities, and dispute resolution mechanisms. Residency options include a free "Visitor Pass," allowing unlimited daily access and up to 30 overnight stays per year; an e-Residency at an annual cost of $130, intended for those not planning to spend more than 30 days per year within the jurisdiction but allowing business registration and property ownership; and a Residency for individuals working or living full-time in Próspera, which includes all e-Residency benefits plus full access to the jurisdiction, requiring mandatory insurance and an annual fee of $130 plus insurance costs.

## Criticism

As of May 2021, Próspera was 58 acres (0.23 km$^2$), and its charter disallows land expropriation. However, some neighbors of the project in the nearby village of Crawfish Rock expressed a fear that their land might be expropriated after a drawing of later stages of Próspera appeared on the project website including parts of Crawfish Rock. Próspera's CEO has publicly supported legal reform to make the practice of expropriation illegal nationwide.