Do you intend to set up a business in Costa Rica? Find, in this article, some information on the different steps and procedures to follow.
Costa Rica is open toward foreigners who wish to set up a business in the country, especially if they intend to provide jobs to the local people. In fact, many expatriates have succeeded in this adventure before you. So if you also wish to invest in the country, it is best to inquire on the local market and on procedures related to the setting up of a business.
Good to know:
The country enjoys an ideal geographical position, a favorable political climate along with economic and social stability. Its workforce is particularly educated while its infrastructure is proper, especially in terms of import-export.
Procedures regarding the setting up of a business in Costa Rica are not as complicated as they seem. In fact, with the assistance of a local lawyer, you can even take over an existing company (preferably without restructuring and liabilities problem) called “shelf corporation”. Procedures should last a few months and cost a maximum of US$ 1,000. As regards hiring a lawyer, make sure to choose the one with whom you will feel comfortable to work.
Costa Rican laws also allow foreigners to set up a new business in the country. However, they are required to obtain a resident permit beforehand. If you intend to invest between US$ 50,000 and US$ 200,000, you can apply for an Inversionista which is a resident permit that has been specifically designed for investors. It will also allow you to work for your own company. The same applies to the Representante permit, which is another type of business permit.
On the other hand, retirees and annuitants are allowed to set up a business in Costa Rica without having the right to work in it. Therefore, local staff must be hired. In case you wish to hire foreigners, the number should not exceed 10% of the company's total number of employees. Moreover, your foreign employees must hold a work permit or a resident permit.
Nowadays, Costa Rica's economy is based on tourism and new technologies. It has even been nicknamed “Latin America's Silicon Valley” as it hosts many international IT companies. Note that the government provides many incentives such as tax exemptions and subsidies for companies involved in tourism, forestry, import-export and agriculture.
In fact, Costa Rica's investment climate is known for being one of Latin America's more balanced and secured ones. Hence, the number of foreigners who have set up a business there to benefit from these competitive tax rates and other benefits. Many of them have invested in the following: ecological tourist accommodation, guest houses, import-export, franchising, consulting firms, restaurants and bars.
Costa Rica also hosts free zones, known as Zonas francae, which welcome investments of a minimum of US$ 150,000. If this applies to you, you'll be exempt of the following:
- taxes on import and export
- real estate transfer taxes
- capital tax for 10 years
- income tax (100% for the first 8 to 12 years, then 50% during the following 4-6 years)
- property taxes
- tax on some consumer goods.
Good to know:
You can set up either a Sociedad Anonima (Anonymous Company) or a Sociedad de Responsabilidad Limitada (Limited Liability Company).
First of all, you are required to call at the Registro de Personas Jurídicas to check availability of the name you have chosen for your company. You also have to seek an appointment with a notary for the legalization of public documents such as the company's incorporation at the Mercantile Section of the Public Registry. Fees of some 150,000 colons apply.
You are then required to deposit the capital in a bank account, pay the registration fees and stamp duty. In fact, 25% of the total sum has to be deposited in a local bank account if the capital is to be paid in cash. This sum may be recovered once the company has been registered with relevant authorities. If the capital is not paid in cash, you are allowed to deposit it later in the form of a written pledge before a notary.
More clearly, the following fees apply:
- stamp duties: Colegio de Abogados – 10,000 colons, Educación y Cultura – less than 800 colons, tax stamp – less than 650 colons
- registration fees for the Registro Nacional – less than 40,000 colons
- municipal taxes: 0.2% of the company's capital
- agrarian stamp: less than 70,000 colons
- legalization of accounting books with the Registro de Personas Jurídicas: less than 20,000 colons.
You will also pay a tax upon incorporation, amounting to 50% of the basic salary of an office employee 1, provided procedures are completed in January. Otherwise, it will be calculated on a pro-rata basis.
Thereafter, you have to call as the Registro de Personas Jurídicas to register the company's incorporation card at the Mercantile Section of the Public Registry. You will then be authorized to legalize your company's account books. This process can be carried out online against 5,000 colons, 780 colons per line and 20 colons for the Archivo Nacional stamp.
At the Registro Unico de Contribuyentes of the Dirección General de Tributación Directa, you will be required to fill in the D-140 form so as to register the company as a taxpayer. You then have to register it at the Instituto Nacional de Seguros (INS) for employment insurance which will be deducted at a yearly rate of 2.17% of each employee's salary. You also have to apply for a health permit at the Ministerio de Salud. Fees of some US$ 30 to US$ 100 apply. Do not forget to register the company as an employer at the nearest Caja Costarricense de Seguro Social office to its address.
Finally, you have to apply for a municipal business permit at the Instituto Nacional de Seguros (INS). Fees of some 10,000 colons to 100,000 colons apply, varying according to the type of activity, the number of employees and the company's geographical situation.
Registro de Personas Jurídicas www.registronacional.go.cr
Registro Único de Contribuyentes, Dirección General de Tributación Directa www.haciendadigital.go.cr
Instituto Nacional de Seguros www.ins-cr.com
Ministerio de Salud www.ministeriodesalud.go.cr
Costa Rican Investment Promotion Agency www.cinde.org
Costa Rican-American Chamber of Commerce www.amcham.co.cr
International Chamber of Commerce in Costa Rica www.icccostarica.com
Doing Business – Costa Rica www.doingbusiness.org