Costa Rica company registration

DOING BUSINESS IN COSTA RICA IN 2019

Since 2003, Healy Consultants Group PLC has assisted our Clients with starting their business in Costa Rica. Our services include i) Costa Rica business registration ii) registration of the company in Costa Rica free zones iii) corporate bank account opening iv) employee recruitment strategies and v) office rental solutions.

Summary table of Costa Rica company registration

Summary	Tax resident LLC	Offshore company	Free Zone company	Representative office	Trust
Also known as	SRL	non resident SA	SA	Oficina de representacion	Fideicomisos
Best use of company?	All products and services	Global trading/holding	Manufacturing and export trading	Marketing & research	Tax planning
How soon can you invoice Clients/sign sales contracts?	2 weeks	2 weeks	3 weeks	Cannot	Cannot
How soon can you hire staff?	2 weeks	2 weeks	3 weeks	2 weeks	Cannot
How soon can you sign a lease agreement?	1 week	1 week	1 week	1 week	1 week
How long to supply corporate bank account numbers?	6 weeks	6 weeks	7 weeks	6 weeks	6 weeks
How long to supply company registration/tax numbers?	2 weeks	2 weeks	3 weeks	2 weeks	2 weeks
Standard corporate tax rate on annual net profits?	30%	0%	30%	0%	0%
Can be legally tax exempt if properly structured?	No	Yes	Yes	Yes	Yes
Resident director/partner/manager/legal representative required?	No	No	No	No	No
Minimum /recommended paid up share capital?	US$1	US$1	US$100,000	None	None
Can bid for Government contracts?	Yes	Yes	Yes	No	No
Corporate bank account location?	Citibank	Banco BCR	Banco Cathay	Scotiabank	Bank of Costa Rica
VAT payable on sales to local customers?	13%	0%	13%	Cannot trade	Cannot trade
Average total business set up engagement costs?	US$10,985	US$12,235	US$16,335	US$11,835	US$18,400
Average total engagement period?	7 weeks	7 weeks	8 weeks	7 weeks	7 weeks

Expand table

Accounting and tax considerations	Tax resident LLC	Offshore company	Free Zone company	Representative office	Trust
Statutory corporate tax payable?	30%	0%	30%	0%	0%
Legally tax exempt if properly structured?	No	Yes	Yes	Yes	Yes
Must file an annual tax return?	Yes	Yes	Yes	Yes	No
Must file annual financial statements?	Yes	Yes	Yes	Yes	No
Monthly VAT reporting to the Government?	Yes	No	Yes	Yes	No
Must appoint an auditor?	No	No	No	No	No
Access to double taxation treaties?	Yes	Yes	Yes	No	No
Withholding tax on payments to foreign shareholders?	15%	0%	15%	None	None
Company Registration	Tax resident LLC	Offshore company	Free Zone company	Representative office	Trust
Resident director/partner/manager/legal representative required?	No	No	No	Yes	No
Minimum number of shareholders/partners?	2	2	2	Parent company	1
Maximum shareholding for foreigners?	100%	100%	100%	100%	100%
Minimum number of directors/managers?	1	1	1	1	1
Minimum / recommended statutory paid up share capital?	US$1	US$1	US$100,000	None	None
Shelf companies available?	Yes	Yes	No	No	No
Time to incorporate a new entity?	2 weeks	2 weeks	3 weeks	2 weeks	2 weeks
Must sign an office lease agreement during incorporation?	No	No	Yes	No	No
Can easily convert to a PLC?	Yes	Yes	Yes	No	No
Can have preference shareholders/partners?	Yes	Yes	Yes	No	Yes
Business Considerations	Tax resident LLC	Offshore company	Free Zone company	Representative office	Trust
Can secure residence visa for business owner?	Yes	Yes	Yes	Yes	No
Good entity for trademark registration?	Yes	Yes	Yes	No	No
Can secure an import and export license?	Yes	Yes	Yes	No	No
Limited liability entity?	Yes	Yes	Yes	No	Yes

Public register of shareholders and directors?	Yes
Sponsorship by a local citizen required?	No
Our Client needs to travel to Costa Rica for business set up?	No
Temporary physical office solutions available?	Yes
You need a local resident as bank signatory?	No
Can be wholly foreign owned?	Yes
The entity will likely be regulated by?	National Registry
Shareholders & directors documents to be attested/translated?	Yes
Each foreign director needs a personal income tax number?	No
Foreign non resident director needs a residence visa?	No
Maximum number of staff allowed?	No maximum number for any entity
Expatriate to local staff ratio?	None
Other useful information
What will be included in my customer sales invoice?	Click link
This country has signed free trade agreements?	Yes
This country is a member of WIPO/TRIPS?	Yes
This country is a member of the ICSID?	Yes
Average custom duties suffered?	2.66%
Government foreign investment approval required?	No
Average monthly office rental? (US$ per sq m)	US$20
Minimum statutory monthly salary?	US$434
Average monthly US$ salary for local skilled employees?	US$800
US$ deposit interest rate? (1 year average)	4.50%
Overseas remittance currency controls?	None
Banking considerations
Multi-currency bank accounts available?	Yes
Corporate visa debit cards available?	Yes
Quality of e-banking platform?	Good
Crowd funding available in this country?	Yes
Group HQ tax incentives?	No
Security deposit to be kept with Government?	No
Can secure trade finance?	Yes
Government grants available?	Yes
Government approval required for foreign owners?	No

Costa Rica business setup summary

Press the link headings below to read detailed, relevant, up to date information.

Advantages and disadvantages
Advantages of Costa Rica company registration
1. Our Clients can register a limited liability company in Costa Rica with a minimum of i) two shareholders and ii) one director of any nationality. The minimum paid-up capital required for establishment of the Costa Rican company is US$1. The incorporation procedures can be completed within 4 weeks and do not require our Client to travel;
2. Our Clients also find it convenient to establish a holding company in Costa Rica because:
  - The earnings of a Costa Rica company are subject to tax only if they have been sourced from Costa Rica. Consequently, dividends and interest distributed by foreign subsidiaries are exempt from tax;
  - Foreign entrepreneurs investing in Costa Rica face low political risk, thanks to the country’s history of democratic stability. Its institutions are notably ranked as the 3^rd best in Central and South America after Uruguay and Chile by the World Economic Forum.
3. Costa Rica has been positively ranked in the 47^th position (out of 137 countries) in the Global Competitiveness Index 2017-2018 edition. The nation’s i) well-developed financial market, ii) educated and trained labour force along with its iii) capability to innovate has enabled the nation to make it to the top half of the list.
Disadvantages of Costa Rica company registration
1. Costa Rica has signed only one double tax avoidance treaty with Spain;
2. Outside of Costa Rica free trade zones, taxation can represent significant amounts because:
  - Standard corporate tax rate is 30% and dividends paid to non-residents are subject to withholding tax levied at 15%;
  - Registration for sales tax is mandatory for all companies, which must charge such tax at 13% on their invoices;
  - Employers must pay social security contributions representing 26% of their employees’ gross salaries. They must also withdraw personal income tax from their employees’ wages at rates of up to 15%;
  - For all reasons listed above, the total amount of taxes paid by a business registered in Costa Rica represented on average 58% of its earnings in 2014, ten points higher than the Latin American and Caribbean’s average.
3. The Costa Rica Colon (CRC) is no longer pegged to the USD since January 2014, creating (limited) currency exchange risk for foreign investors;
4. Costa Rica is infamous for its poor infrastructural facilities such as its ground transport system and sewage networks. This is majorly due to the nation’s lack of investment on public systems as well as its poor project planning.
Best uses for a Costa Rica company
1. Costa Rica is an attractive location for running manufacturing operations, because:
  - Our Clients can register their company in one of the Costa Rica exporting processing zones, where their business will benefit from reduced corporate tax rates of up to 6%. Their operations will also benefit from other tax incentives, including i) no import duties ii) no value added tax and iii) no dividends withholding tax;
  - Costa Rica being a member of the Central American Free Trade Agreement, products manufactured locally can be sold free of custom duties to consumers in the United States, as well as other Central American markets including: i) El Salvador ii) Guatemala iii) Honduras iv) Nicaragua and v) the Dominican Republic;
  - Costa Rica’s strategic location in the middle of the American continent makes it an ideal business gateway to the Americas. With ports on both the Pacific and Atlantic oceans, it serves as an operations base for world markets. Costa Rica is only a five hour flight from New York and an hour flight from other markets like Panama and Ecuador;
  - Labor regulations are quite flexible. Minimum salaries are set by industries: read more about current minimum salary levels. It is also easy to dismiss employees, who are only entitled to i) one month of advance notice and ii) up to 20 days of severance pay, even after several years of employment by our Clients;
  - Costa Rica’s has an educated workforce with one of the highest literacy rates in Latin America at 97%. Most of the population speak English, so communicating with employees will not be challenging for our Client.

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Company purpose?
Will the LLC be a trading company or a holding company?
Will the entity be a subsidiary of a foreign company?
The LLC will be tax resident? Having local customers and local staff and local suppliers?
The entity will receive investment income or professional services fees or sales from trading with multi-national customers?
Is double taxation treaty access important?
Do you need our help to legally minimize your international tax obligations?
Do you need our help to increase e-commerce sales (click link)?
Company structure?
Will the shareholders be individuals or corporate?

In what country do you require a corporate bank account? Refer to this web page (click link) for ideas

Do you need multi-currency corporate visa debit cards?

Do you need a resident director?

Nationality of shareholders and directors?
Expected annual sales and net profits?
Does the entity need a special regulatory license or import or export license?
Additional comments?
Tell us about your existing business?
Name of your existing company?
Your business web site address?
What products and services does your company supply?
How many years are you operating this business?
Is your Firm regulated by a Government agency?
In what country are the majority of your customers?

In what country are the majority of your suppliers?
Tell us about you?
Your name?
Your email address?
What country are you based in?

Specifically, what deliverables (click link) do you need?
What is your US$ budget for the services you need?
What does quality customer service mean to you?
How do we contact you?
For now, do you prefer Healy Consultants PLC staff to phone you, or just email reply you with some corporate solutions?
If a phone call, on what number can our senior Consultant call you?
If an email, what email address can our Consultant email you at?
What is your preferred date and time for a phone call?
In what language do you prefer we communicate with you?
What matters would you like to discuss during the call; the agenda?

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