Although Costa Rica is far from being an offshore financial center, certain aspects of its commercial code and business regulations make Costa Rica a corporate-friendly jurisdiction. Until recently, foreigners and expats formed business entities in Costa Rica for specific purposes typically related to acquiring real estate and motor vehicles, and also as part of certain immigration strategies. In recent years, however, Costa Rica has become a new and attractive destination for foreign investors and business people, which merits a cursory review of the corporate system.
Author’s Note: None of the statements published herein shall be construed as financial or legal advice. If you have questions about forming a business entity in Costa Rica, please consult an attorney. The Costa Rica Star does not give legal opinions. Any information herein is of a general nature and cannot substitute the advice of a legal practitioner.
A business entity in Costa Rica can be formed or assumed by means of a commercial transaction. This is very popular among foreigners and can be initiated from their own countries of residence. These entities allow members and shareholders to perform various business dealings in Costa Rica and abroad.
One of the most popular business entities in Costa Rica is the Sociedad Anonima (S.A.), which shares some similarities with stock corporations in the United States. Another business structure offers Responsabilidad Limitada, which is a concept similar to that of a limited liability company (LLC) in the U.S. To certain extent, an S.A. also provides stock holders a certain limited liability insofar as their personal property is concerned.
The process of forming a business entity in Costa Rica is done mostly online and requires an electronic signature, which can be obtained from many banks at different fees. Although this online system is self-serve in theory, it is highly recommended to retain a Costa Rican public notary in this regard. It takes a couple of weeks to complete the process.
A common misconception about business entities in Costa Rica is that they offer high levels of privacy or anonymity. While the law allows corporations to keep their shareholder records private, that is pretty much the extent of privacy. Once an entity is formed, foreign shareholders and officers must refrain from making significant purchases in their own names instead of through the business. Armed with just a passport number, anyone can pierce the corporate veil and get a hold of detailed shareholder records.
Corporate-friendliness has its limits in Costa Rica. Employers who operate business under their own name risk exposing their companies and assets to the litigious and worker-friendly legal system.
There is an annual corporate tax, which is more like a fee, that must be paid without regard to the status of the business entity. Miss three of these payments and the entity will be dissolved. The fee is around $400, and it is a small price to pay considering the many advantages that Costa Rica business entities offer with regard to taxation and liability.
It is a good idea to keep close track of all the instances in which an individual appears as officer or stock holder of a business entity in Costa Rica. Personal limited liability does not preclude legal claims against actions performed by the company, its officers and shareholders. Emergency corporate resignations can be handled by public notaries in Costa Rica for about $100.