Costa Rica

Key benefits

Costa Rica is located in Central America between Panama and Nicaragua. Dubbed “the Switzerland of the Americas” Costa Rica offers many advantages and favorable tax conditions. The high degree of privacy is one of the biggest advantages Costa Rica holds however in March 2012 Costa Rica signed the Convention on Mutual Assistance in Tax Matters with the Organisation for Economic Co-operation and Development (OECD). This could in effect change the privacy provisions Costa Rica is famous for however the required legislation has not been passed into Law at the current time.

Although the official language of Costa Rica is Spanish English is also widely spoken. Company names can be recorded in either Spanish or English.

Costa Rica’s economy was originally agriculturally based however recent diversification has taken place and Costa Rica has become a member of the World Trade Organisation in addition to developing numerous incentives to promote business and trade.

The most common form of company used in Costa Rica is the “Sociedad Anonima” as shareholders are not liable for the actions of the company. The main advantages of the S.A. are listed below:

Key benefits of a Costa Rica S.A:

  • A S.A. offers a high degree of privacy and anonymity.
  • 4 Members are required for a S.A – President, Secretary, Treasurer & Controller. Board Directors appear on public record.
  • Shareholders do not appear on public record.
  • Costa Rica is not a member of the Hague Convention therefore if a bank account is planned to be opened outside of Costa Rica then the corporate documents have to be legalized. Legalisation costs depend on the specific countries Consulates rates.
  • Timescale of Incorporation – between 20-40 working days.
  • An S.A operates a territorial taxation principle; the company only pays taxes according to the income generated in Costa Rica.
  • There are no reporting or accounting requirements.
  • Costa Rica is not considered an offshore entity and has a number of Free Trade Agreements in place (US, Canada, Mexico, Chile, Dominican Republic and the Caribbean). There are also negotiations underway with China and the EU.

Tax and accounting regulations

Summary of Requirements for a Costa Rica S.A.

General Information
Type of CompanyPrivate Corporation S.A.
Timescale to incorporateApprox. 10 working days
Corporate TaxationNil
Double Tax Treaty Access:No.
Directors
Minimum No. Required3 required, President, Secretary & Treasurer. May be individual or Corporate
Local Director RequiredNo
Publicly accessible informationNo
Location of MeetingsAnywhere
Shareholders
Minimum No. Required2, 100% foreign shareholders allowed. May be the same as directors. Can be individual or corporate.
Publicly accessible informationNo
Location of MeetingsAnywhere
Company Secretary
RequiredYes
Local Secretary RequiredNo
Registered Office / Agent RequiredYes
Share Capital
Standard CurrencyCR Colones / USD
Standard Authorised10,000 CR Colones / Approx. USD 30.00
Minimum Paid Up CapitalAt least 25% of the issued share capital must be paid up upon incorporation.
Accounting & Compliance
Requirements to prepare AccountsYes
Requirement for AuditNo
Local Auditor RequiredN/A
Requirement to File AccountsNo
Requirement to file Annual ReturnNo
Accounting Year EndThe fiscal year runs from 1st October until the 30thSeptember however an application may be made to the authorities to adopt a different year end
Additional Information
Bank Account Opening

Service Pro can open a bank account in Cyprus for a Costa Rica S.A. without presence. We can also offer bank accounts in a number of other jurisdictions, please contact us for information.

Taxation:

Individual Tax Rate:
  • Territorial principle of taxation. Individuals are taxed only on income earned in Costa Rica.
Corporate Income Tax Rate:
  • Territorial principle of taxation. Corporations are taxed only on income earned in Costa Rica.
Taxation of Dividends:
  • None
Capital Gains Tax:
  • None
Withholding Tax:
  • None

 

Procedure of company registration

There is no requirement to travel to Costa Rica in order to follow registration procedures for a company. The following process is followed in order to register:

  • A Deed of Registration is drafted and executed before a Notary Public
  • A Notice of Registration is published in the Official Gazette
  • Once registered the corporation must request the approval of the legal accounting books before the Tax Authorities
  • Once the books are authorized the shareholders registry book is updated accordingly and share certificates are issued

The above registration process takes around 2 weeks.