Company Registration in Costa Rica

Advantages of Company Registration in Costa Rica

• Costa Rica demonstrates strong economic performance. After the global financial crisis, the country recovered quickly and subsequently achieved steady growth. Investors from around the world actively contribute to Costa Rica’s economy, making it one of the leading countries in Latin America in terms of investment inflows.
• Costa Rica applies a territorial tax system, meaning taxes are levied only on income earned within its territory. This feature is particularly attractive to non-resident entrepreneurs looking to register an offshore company in Costa Rica and conduct business activities outside the country.
• A company in Costa Rica can be fully owned by non-residents. The country’s legislation does not require the participation of Costa Rican residents in the structure of companies established within its jurisdiction.

• Costa Rica’s reputation. The country complies with the requirements of the Organisation for Economic Co-operation and Development (OECD) and has been a member of the organisation since May 25, 2021, which has an extremely positive impact on its reputation.

Legal forms of companies in Costa Rica

The most common legal forms of companies in Costa Rica are:

• Limited Liability Company (Sociedad de Responsabilidad Limitada; Sociedad Limitada, SRL)
  The shareholders of such a company are liable for its obligations only up to the amount of their contribution to the share capital. There are limitations on the number of shareholders. This is the most popular form for company registration in Costa Rica.
• Private Joint Stock Company (Sociedad Anónima, SA)
  The shareholders contribute capital and are liable only up to the amount of their respective contributions. There are limitations on the number of shareholders as well as on the free circulation of shares on the market.
• Public Joint Stock Company (Sociedad Anónima Abierta, SAA)
  There are no restrictions on the number of shareholders, and the company’s shares may be freely traded on the stock exchange.
• General Partnership (Sociedad en Nombre Colectivo)
  A minimum of two partners participate jointly in profit-oriented activities. The rights and obligations of the partners are defined in a Partnership Agreement. Partners are personally liable for the debts and obligations of the partnership.
• Limited Partnership (Collectivo Sociedad en Comandita Simple; Sociedad Comandita)
  This type of partnership includes two categories of partners: general partners, who bear personal liability for the obligations of the partnership, and limited partners, whose liability is restricted to the amount of their capital contribution specified in the Partnership Agreement.

Comparison table: SRL vs SA

Company Registration in Costa Rica: the Procedure

The company registration process in Costa Rica consists of the following steps:

1. Preparation of documents for each participant, namely:

• a scan of a valid passport;
• a scan of a second identification document (driver’s license, ID card, national passport, etc.);
• a proof of residential address for each participant, issued within the last three months.

Additionally, the following information must be provided:

• the proposed company name;
• a description of business activities;
• a description of the company structure.

2. Preparation of preregistration forms by our experts and their signing by the company’s participants: a power of attorney for our representative and an Instructions Form. Both documents must be signed by the founder in the presence of a notary or lawyer in their country of residence.

Our experts will send you detailed instructions.

3. Sending the original forms to Costa Rica.
4. Once the forms are received in Costa Rica, our specialists initiate the registration process.
5. Within approximately 1.5 weeks, the company will be registered, and the owner will receive the Certificate of Registration and Books (the equivalent of Articles of Association).

6. The final, though optional, stage is the apostille of corporate documents for their use abroad (in countries that are parties to the Hague Apostille Convention).

Notable Features of Costa Rica

• In 2015, Costa Rica initiated discussions with members of the Organisation for Economic Co-operation and Development (OECD) regarding accession and is now a full member of the OECD.
• The President of Costa Rica signed a decree establishing the “Regulations to create a registry of final beneficiaries for transparency.” These regulations authorize the Central Bank of Costa Rica (Banco Central de Costa Rica) to create and manage a registry containing information on the ultimate beneficial owners of all companies, trusts, foundations, and non-profit organizations in Costa Rica. The Central Bank is also required to cooperate with the Revenue Department of Costa Rica to establish and maintain this registry. Although the regulations are already in force, the registry has not yet been created, so the submission of beneficial ownership information is not currently required. Once established, companies will be required to submit beneficial ownership information annually. In addition, companies registered in Costa Rica must file the CenBank Shareholders Resolution every year.

Corporate Taxation in Costa Rica

Taxation in Costa Rica is governed by two main legislative acts:

• The Tax Justice Law (Ley de justicia tributaria)
• The Tax Adjustment Law (Ley de ajuste tributario)

For taxation purposes in Costa Rica, the determining factor is not the taxpayer’s residency but the source of income. Income earned within Costa Rica is subject to taxation under the territorial principle, meaning that income generated outside the country is exempt from tax.

• Corporate Income Tax

Only income generated within Costa Rica is subject to taxation.
The standard corporate income tax rate in Costa Rica is 30%.
There are also reduced tax rates of 20% and 10%, depending on the amount of profit.

Costa Rica actively offers so-called “tax holidays,” which allow companies to be exempt from taxes for a certain period after business registration. Industrial, manufacturing, and service companies registered in Costa Rica’s free zones may benefit from various tax incentives. “Tax holidays” for companies in free zones include 100% exemption from corporate income tax for the first 8 years after registration and 50% exemption for the following 4 years. In addition to tax holidays, companies in free zones are granted:

• exemption from import duties on raw materials, production equipment, parts, and components;
• exemption from export duties and taxes;
• exemption from Sales Tax on local purchases of goods and services;
• exemption from property taxes;

and other benefits.