Learn about how you can fund your dream life in the tropics and start a business in Costa Rica.
Many of us sit inside drab offices, dreaming of opening a small, beachside cafe in a tropical country. With a view of the endless sea and palm trees lining the beach, we imagine having an open-air cabin as our office, where we wear light, airy clothing as everyday business attire. And if you’re like us, it’s probably hard to think of more ideal sounding location for your beach-side business than Costa Rica!
Since the paperwork and planning that go into designing your paradise business are rarely found in our fantasies, we’re here to fill you in on some of the small details you’ll need to know to get on the road to business bliss! We’re not going to lecture you about the statistics because we all know that starting a new business anywhere in the world can be a little risky. People like us are not afraid to take small, calculated risks in the name of success and passion — both of which can be found here in abundance.
So, without further do, here is a list of details to know about starting a business in Costa Rica.
Decide on your immigration status
Let’s start this topic on a really high note: you do not need to be a resident to have full, equal rights for owning a business in Costa Rica. The Costa Rican government protects all corporations, even those owned by foreigners with a tourist visa.
If you do choose to stay more permanently, the easiest and most popular path to residency is to invest US$200,000 in local assets (like real estate). Some choose to remain in tourist status, meaning that they leave the country every 90 days to renew their visa. Note: The actual number of days granted on your visa depends on what country you are from (North Americans and Europeans typically get 90-day stamps).
Find an attorney
It’s always advisable to find a local attorney who is an expert in opening active corporations. They will file the paperwork for starting your new business in Costa Rica.
The costs of forming a corporation vary, but you can expect to spend between $800 and $1,000 for your notary to register your business with the Registro Publico (Public Registry).
The basic minimum requirements to legally establish your new company are:
- You must have a minimum of two owners, each owning at least one share in the new company. if it is intended to be the sole owner of the company the other party that was listed as co owner when establishing the new company can transfer the shares back to you when the company is duly formed and registered. Then you will become the sole owner of the company. One of these owners can be your lawyer, who will act as the business’s “resident agent.” Their address will become the company’s official place of business.
- The value of the shares must be paid for either up front or through a documented credit statement approved by the statutes of Costa Rican commercial law.
- The new company must be inscribed and duly certified by a notary public and its formation must be listed in the official government newspaper, La Gaceta, where all the basic tenets of the new company are described and made public knowledge.
Structure your business
There are a number of legal structures to choose from in Costa Rica corporate law. The best one for your purposes depends on the type of business you are creating. You will go to the Ministerio de Hacienda with your company’s legal documents to establish your business with this government ministry,
The most common business structure is called Sociedad Anonima, which offers many of the same benefits and protections that a North American or European corporation has. These companies are owned by various shareholders who can be anonymous. This is the most flexible and widely used business platform in which shareholders are liable only for their share of ownership.
Another popular business structure is called Sociedad de Resposibilidad Limitada (Limited Liability Company). In these companies, the owners’ liability is limited to their original investment, unless specifically defined otherwise by law. Their name must include the words “Sociedad de Responsabilidad Limitada,” or “Limitada,” or the initials “S.R.L.”
Open a bank account
There are approximately 20 private banks in Costa Rica, along with a number of state-owned banking institutions.
To open a bank account for your business in Costa Rica, you will need to provide several documents, including:
- A government issued photo ID (passport)
- Your legal documents for your corporation
- Proof of income and expenses
- A utility bill or rental agreement as proof of having a residence in Costa Rica
Get business permits
Once the business structure is formed and the bank account is opened, you will need to obtain an operator’s license, called a Patente Comercial. This license describes the nature and details of the business. It also includes a zoning request certification, called a Certificado de Uso de Suelo, or Uso de Suelo for short. This gives you the authority to run your business from the location you’ve chosen and ensures that the property is zoned for commercial use.
Depending on what kind of business you’ve chosen to run, you may need other licenses or patents. For instance, if you’re planning on opening a restaurant, spa, or salon, you’ll need a certificate from the Ministry of Health.
Find a good accountant
Paying taxes and keeping up with records can be complicated. For that reason, foreign business owners and locals alike will typically hire an accountant in Costa Rica to manage their files with the government. The accountant will request and file all your business paperwork and make visits to the tax administration on your behalf. A good accountant in Costa Rica, like anywhere else, will save you money in the long term, so it’s best to connect with someone up front.
Some of the taxes that you will have to pay in your Costa Rica business are:
- 13% value added tax on all income, paid monthly
- 10-30% corporate income tax (assuming that you are operating a corporate entity)
- 3.8% property transfer tax at the time of purchase of your property/place of business if you do so.
- 0.25% property tax on the value of your property, paid annually if you own the property/place of business.
Corporate income is taxed at a 30% rate. However, the law establishes special regulations for small companies whose gross income does not exceed $183,000 USD. For this category, the following rates apply:
- 10% for companies with gross income up to $91,000.
- 20% for companies with gross income of more than$91,000 but not more than $183,000.
- 30% for companies with gross income over $183,000.
Operate your business
It’s important to note that even if you own a business in Costa Rica you are not allowed to work in it. Working is the business is seen as taking away a job from a local but you can be in a role overseeing. Remove yourself from day-to-day operations and stick to the administrative and managerial tasks, which you are allowed to do as a business owner. If you need a workforce, it can consist of no more than 10% of foreign employees. Those who are foreign must have legal residency and a work permit that entitles them to work in the country.
Some common opportunities for expats looking to start their own business in Costa Rica are:
- Real estate development
- Investment/rental property ownership
- Property management
- Restaurant, bar, or cafe ownership
- Opening a store
- Creating and/or distributing hand-made products, i.e. soaps, tinctures, jewelry, crafts, art, woodwork, etc.
- Tour company ownership
- Hotel or hostel ownership
- Financing firms
- Remote working (people able to perform their jobs online)