We get many of questions regarding the first steps of setting up a company in Costa Rica by investors considering in their first forays in the country. Luckily, setting up an entity—whose owners enjoy the benefit of limited liability for ease of conducting business—is a simple and straightforward process.
Here are few of the most common questions that come up often in our practice:
- The sociedad anónima or S.A., which is comparable in other jurisdictions to a corporation or an AG (“Aktiengesellschaft”)
- The sociedad de responsabilidad limitada or S.R.L./Ltda., akin to a limited liability company or GmbH (“Gesellschaft mit beschränkter Haftung”)
Competent counsel will take some time to understand your needs and those of your partners and help determine which structure is the best fit. Of course, there are nuances to each once, but as a whole both entities serve the same purpose and work in similar ways. Most shareholders will never tell the differences between a sociedad anónima and a sociedad de responsabilidad limitada. By way of comparison:
- Both are highly flexible and customizable. For instance, you can determine how much leeway (or not) is allowed to the principals, where and how to hold general meetings, what kind of activities it will undertake, etc.
- Both can conduct the same kind and scope of business
- Both have no minimum capital requirement
- The SRL has a simpler structure, which makes it more attractive for ventures that are less complex and more tightly held as long as it is properly set-up!
That said, if the company principals do not have a permanent residence in Costa Rica, the law requires appointment of a Resident Agent (usually the same attorney that handled incorporation). Resident Agents are entrusted with receiving notifications from public offices, as well as usually provide miscellaneous services required during the year required on behalf of the company.
- Education and Culture Tax: Due at the end of March of every year. The rate varies from about $2 to $20, depending on the company’s registered capital
- Yearly Legal Persons Tax: Due on the last day January of every year.* The rate varies from about $125 to $400, depending on the company’s income. Read more about it here.
* The first year must be paid within 30 days of incorporation.
Depending on whether the company conducts lucrative business and has economic activity, it will be required to file tax declaration pertaining to income taxation, pay monthly sales taxes or other applicable taxes. Furthermore, distribution of dividends to shareholders in Costa Rica is subject to a flat 15% withholding tax.
Once duly registered, a company in Costa Rica is free to enter into contracts and acquire assets, such as vehicles and real estate. That said, most companies do not engage in actual business or have no further economic activities and, thus, do not require permits to operate or have no pecial tax obligations.
Normally, as a first step, the entity will have to register as a tax payer. This step can be done via proxy if the principals are not located in Costa Rica. Further information is available from the official Ministerio de Hacienda website.
Other requirements may include:
Are you ready to move forward or have any other questions?