COSTA RICA COMPANY FORMATION

Costa Rica Company Formation is a perfect solution for foreigners to establish their business in the Central American market and internationally.

Costa Rica is a well known and respected jurisdiction with high confidentiality, limited liability to shareholders and great banking possibilities.

Costa Rican companies are most commonly used as holding companies or for businesses that seek to establish themselves in the Central American market.

The procedure of company registration in Costa Rica is straightforward and may be completed in a matter of days, depending on how quickly the incorporation documents are prepared. Below, lawyers from EU LAW FIRM respond to a series of general questions on the jurisdiction and company registration in Costa Rica.

Costa Rica Background:

Republic of Costa Rica is a country situated in the middle of Central America bordered by Nicaragua and Panama.

The country is famous for its flexibility on company formation, high confidentiality and low tax rates.

Company in Costa Rica is a perfect solution for foreign individuals and businesses seeking to do international business, with low tax rates and flexibility.

Capital city: San Jose

Population: 5,094,118

Local currency: Costa Rican colón (CRC)

National language: Spanish

 

Description of Costa Rica Company Formation (Sociedad Anónima (S.A.):

  • The most common type of company in Costa Rica.
  • Liability is limited to the assets of the company and to all contributions made by shareholders.
  • It is overseen by a board of directors that must have at least three members: president (who will be the legal representative), secretary, and treasurer, who may be non-residents.
  • It is also necessary to assign a “Fiscal” who has the responsibility of ensuring compliance with the obligations of the law, the articles of incorporation, and the statutes.
  • If the company is totally constituted by non-residents, a resident agent is required, who must be duly registered.
  • The minimum capital is CRC 10,000 (approximately USD $17), it is not required to pay up the capital. The capital stock is not related to the assets of the company.

Description of Costa Rica Limited Liability Company Formation (Sociedad De Responsabilidad Limitada (S.R.L.):

  • The second most common type of companies in Costa Rica.
  • The liability of the shareholders is limited to their contributions.
  • It is overseen by one or more administrators (managers).
  • You are not obliged to go to Costa Rica to establish your company, and you are not obligated to have annual meetings if your firm does not function in Costa Rica.
  • Corporations based outside of Costa Rica are not required to file a Financial Statement with any national authority.
  • The beneficial owners of the entity are not disclosed to the government, and there are only minimal ongoing compliance obligations.
  • No minimum capital is required to incorporate.
  • The capital stock is not related to the assets of the company.

Why start a business in Costa Rica?

  • Tax rules

The Costa Rican tax system is built on the territoriality concept, which states that any economic activity conducted in Costa Rica is liable to income taxation on local income in the same manner as a registered firm is, regardless of where it was founded. Permanent establishment (PE) requirements apply to such companies conducting business in Costa Rica. Income from transactions conducted outside of Costa Rica may be classified as non-Costa Rican-source income and hence exempt from income taxes under Costa Rican law. 

  • Economy

Over the years Costa Rica has seen consistent economic development. This expansion was the outcome of an outward-focused policy centred on foreign investment attraction and progressive trade liberalization. Today, Costa Rica has one of the lowest poverty rates in Latin America and the Caribbean thanks to a mix of political stability, social contract, and consistent prosperity.

  • Business opportunities

Costa Rica is a major ally of the United States in Central America, expanding its presence in the market to Asian and European countries as well. Costa Ricans are accustomed to conducting business with other countries and many brands from Costa Rica are recognized worldwide. The country widespread usage of the English language are seen as important benefits for companies conducting business in Costa Rica. Therefore, a company in Costa Rica gives a major access to various businesses and trade possibilities in the United States, Europe and other countries.

  • Flexible company formation & operating

Costa Rica offers fast and easy company formation procedure, therefore the registration of the entity may take a couple of days. A Costa Rican limited liability company has also low cost company maintenance and government fees. Get your company registered in Costa Rica company registry today!

Tax system in Costa Rica

  • Corporate income tax: Corporate profits are taxed at a rate of 30%. Small businesses with a gross income of less than 109,032,000 Costa Rican colones (CRC) are exempt from the law’s provisions.

The following rates apply to this category:

Companies having a gross income of more than CRC 109,337,000 are eligible for a 30% tax break.

A new tariff scale was introduced in the new Law for legal persons whose gross income does not exceed CRC 109,337,000 throughout the fiscal period:

  • 5% on the first CRC 5,157,000 in net yearly revenue.
  • 10% of yearly net income in excess of CRC 5,157,000 and up to CRC 7,737,000.
  • 15% of yearly net income in excess of CRC 7,737,000 and up to CRC 10,315,000.
  • The excess of CRC 10,315,000 in yearly net income is taxed at 20%.

There are also special regimes available for micro and small businesses.

  • VAT: professional services in Costa Rica are now subject to a 13 % value-added tax (VAT). The tax, known in Spanish as the Impuesto de Valor Agregado (IVA), superseded the country’s previous 13 %sales tax (known in English as the IVI; Impuesto de Ventas Incluido, or “Sales Tax Included”).
  • Other taxes: interest paid from a supervised financial entity in Costa Rica to a supervised financial entity outside of Costa Rica is subject to a 5.5 % withholding tax. Dividends paid to local (when the company does not have economic activity) and foreign companies and individuals are subject to a 15% withholding tax. 

HOW THE ORDER SYSTEM WORKS?

1. Choose the most suitable company type and make online order

 

Choose the most suitable company formation package from STORE EU LAW FIRM, and place an online order with the available payment methods. After successful order you will receive an email confirmation with your order details.

2. Collection of documents and KYC verification

 

After successful order and receipt of payment, our customer support will get in touch with you to acquire the required documentation for company formation in Costa Rica.

3. Company formation in Costa Rica

 

The company formation in Costa Rica takes between 2-7 business days after all required documents have been received. After company has been incorporated, physical company formation documents with apostilles will be sent to your mailing address.

DOCUMENTS REQUIRED FOR COMPANY FORMATION IN COSTA RICA

For individuals:

  • Passport copy.
  • Utility bill not older than 3 months.

If shareholder is a company:

  • Copy of company extract (visible directors, shareholders and ultimate beneficial owners).

DOCUMENTS REQUIRED FOR OPENING THE BANK ACCOUNT FOR COMPANY IN COSTA RICA 

  • Passport copy of all directors and shareholders.
  • Utility bill not older than 3 months.
  • CV of the company management.
  • Business plan.

Banks may request additional documentation from case to case.

Note: All documents in a foreign language must be translated into English and certified by a qualified translator.

Need more help to set up a business in Costa Rica?

Just get in touch with us to get more information about company formation in Costa Rica. We typically respond in 2 hours.