If you’re buying real estate in Costa Rica and preparing to move here, but need or want to continue to generate income, you may want to consider starting a new business. Costa Rica is a great place to start a new company. The laws are favorable for expatriates, and who wouldn’t want to live and work in a tropical paradise?
Whether you’re looking to start a spa, yoga studio, or maybe even an information technology agency of some sort, you’ll have every opportunity for success in Costa Rica. However, there are many things to know before you set up shop. Here is an overview of the most essential information.
To set up a business in Costa Rica, you first need to determine whether you will have a sole proprietorship or a corporate entity. What you choose will depend largely on the type of business you have, however, creating a corporate entity through an SA, or “Socio Anonima,” is usually the way to go, as a corporation is only liable to the capital contribution of the shareholders, and your personal income and assets are not at risk. Many business owners put their cars, real estate holdings, and other assets in the name of an SA to protect them.
Creating a corporation is a complex endeavor, and really does require the help of a knowledgeable attorney. Fortunately, there are many attorneys in Costa Rica who are highly qualified and well-versed in Costa Rica law, and can guide you through the process. The cost of the paperwork for creating a new corporation can range from $800 to $1000 or more, depending on your lawyer and type of business.
Keep in mind that Costa Rica imposes a yearly business tax on corporations. You must pay this tax annually in January for the year in advance, regardless of whether your company is actively generating income or not. The tax for active corporations is around $400 and the tax for inactive corporations is around $200, depending on the exchange rate.
To establish your business, you will need to obtain an operations license, called a “Patente Comercial,” which refers to the nature and details of your business, and a zoning request certification, called a “Certificado de Uso de Suelo,” which gives you local authority to run your business in a specific location.
Other patents, licenses and permits may be required depending on the type of business you own. Restaurants or services oriented businesses such as spas or salons, for example, would require a certificate from the Ministerio de salud (minister of health). Ask your lawyer to research and advise you on what you need for your particular industry.
You will need to open a Costa Rica bank account. This is a very different endeavor than it is in the United States – it is a very complex process that requires abundant paperwork. Be prepared to exercise some patience. There are numerous private and public banks in Costa Rica. International banks like HSBC and Citibank are well represented in Costa Rica. They have more amenities for expats and shorter lines, but local banks have more available ATM machines and offer state-insured deposits.
Expats can easily manage a business online, as the country has high-quality Internet service options. American Data Networks is among the best, both for its higher speed and better service.
Corporations can expect taxes on income and assets, as well as an annual capital tax, called the Education and Culture Tax. If you are a US citizen, and you file a timely US income tax return, you can receive a foreign earned exemption, which matches your income tax dollar for dollar for a set amount.
Costa Rican taxes and laws can be tricky, and taking care of all of the paperwork yourself can be a real challenge. Hire an accountant who is savvy about Costa Rican business and tax law; doing so will save you from making some potentially costly mistakes. Be sure to ask questions; Costa Ricans are not generally forthcoming with information unless asked for it directly.