The government's positive attitude towards foreign investment, as well as the country's developed infrastructure, its easy access to North America, and its large tourist market, all make it an appealing location to establish a business. Read this article to find out more.
There is a business-friendly culture in Costa Rica without any restrictions for foreign business ownership. Although the Costa Rican Code of Commerce stipulates that "foreigners will be allowed to conduct business once they have obtained a residency status for more than ten years," it is commonplace for foreigners to start a business in the country without being a resident, simply by incorporating a Costa Rican company. You can even set up a business on a 90-day tourist visa.
However. although you can be a business owner, you won't be permitted to actually work in that business, as Costa Rica encourages the employment of its local workforce. So it's important to be slightly removed from daily operations in order to avoid any issues.
As rules can change, it's always worth connecting with your respective embassy before you take any steps, as well as contacting the Costa Rican America Chamber of Commerce, Costa Rican Investment Promotion Agency, or Procomer (Promotora del Comercio Exterior de Costa Rica) for advice and further information as to requirements.
Before you start a business in Costa Rica, be aware that the paperwork and planning involved can be extensive, and there is always an element of risk, irrelevant of the type of business you wish to start. It is, therefore, important to ensure that you have sufficient start-up capital, as well as a sound business model and a thorough understanding of the working environment.
Be prepared that setting up a business can take a lot longer and cost more than what you may initially expect, as you may need to import certain foods, construction material, furniture, and technology. Costa Rican construction workers have a reputation for not always being reliable, and a workday can pass without them ever even showing up. Pura vida is the laidback philosophy in Costa Rica, and this chilled out approach to life comes with its pros and cons when it comes to setting up a business.
Business structures
Depending on the type of business that you wish to set up, you'll need to decide on how to structure it. There are a number of legal structures available, such as a general partnership, a limited partnership, a sole proprietorship, and a corporate entity.
However, the most common type of limited liability corporation is the Sociedad An贸nima (SA), which is only liable to the capital contribution of the shareholders, and offers a lot of the same benefits and protections that a North American or European corporation has. It is normally formed by a board of directors consisting of a president, secretary and auditor. Establishing this type of corporation means that your personal income and assets won't be at risk, and many business owners also put their assets in the name of the SA to protect them too.
The other main choice of corporation is the Sociedad de Responsabilidad Limitada (SRL), which is designed for smaller businesses. It has the advantages that come with a limited liability corporation but also allows for a one-man board of directors, which facilitates formalities.
The costs of forming a corporation can vary greatly, but generally speaking, you should prepare to spend between US$300 and US$1,000 to set up and register your business with the registro publico (public registry).
Requirements
Acquiring residency in Costa Rica isn't an easy feat unless you intend to invest more than US$200,000 in capital, so you'll need to look into other ways to become a resident, such as marriage. As a result, many business owners stay as constant tourists and do visa runs, which means they have to leave the country every 30 to 90 days (depending on their nationality).
In order to run a business, you'll need to open a Costa Rican bank account, which can involve a fair amount of paperwork and certain prerequisites. If you don't speak Spanish, it can be worth dealing with an international or private bank instead of a local bank. Citibank and HSBC are two such banks that operate in Costa Rica and usually have staff who speak English. However, be aware that they don't have as many ATMs as the public, local banks.
After establishing your business structure, setting up a bank account and signing a lease agreement, you will also need to register your corporation before the tax authority, acquire insurance for employees, register the corporation with the CCSS (Costa Rican Social Security Fund), and apply for any other necessary permits, including a zoning permit, called a Certificado de Uso de Suelo, which allows you to run your business in your chosen location. You'll then need to get a business license, called a Patente Comercial, which details the nature of the business. Once you have finished this process and have formed your corporation, you will need a Patente Municipal for each branch or office location.
Depending on the type of business you wish to set up, you may also need other licenses or patents. For example, if you plan to run a cafe or spa, you will need to get a health permit from the Minister of Health.
When you have adhered to all the necessary requirements, a public notary will draft and notarise the deeds of your charter for registration. Only then will your business be registered and can start operating in Costa Rica.
Hire an accountant and attorney
Your corporation needs to be registered before the Direcci贸n General de Tributaci贸n Directa (tax authority). You will need to pay an annual business tax of about US$400 every January for the upcoming year, whether your company makes a profit or not. You should also be prepared to pay corporate tax, ranging from 10% to 30% depending on your annual total revenue, as well as taxes on income and assets.
Paying taxes and keeping up with records can be complicated so it's advisable to hire a qualified and experienced accountant to file the appropriate paperwork, visit the tax authorities on your behalf, and make sure that all your finances are in order. An accountant can actually save you money in the long run if you find a good one, so be sure to meet prospective candidates in person and interview them thoroughly.
It's also a good idea to consult a local lawyer, as they should be able to guide you through the legal processes and ensure you obtain all the necessary licenses and patents for your business. Creating a corporation can be complex, but they can ease the process by helping you file all the paperwork required.
Useful links:
Registro de Personas Jur铆dicas
Registro 煤nico de Contribuyentes, Direcci贸n General de Tributaci贸n Directa
Instituto Nacional de Seguros
Ministerio de Salud
Costa Rican Investment Promotion Agency
Costa Rican-American Chamber of Commerce
International Chamber of Commerce in Costa Rica
Doing Business in Costa Rica
Procomer
We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.
