Establishing a company in Costa Rica

Costa Rica is a democratic republic in Central America; to its north it shares a border with Nicaragua and to the south it borders on Panama, situated on land that links South America and North America. To the east is the Caribbean Sea and to its west the Pacific Ocean. The country’s name means “rich coast” in Spanish, and it is indeed a true tropical paradise, originally home to tribal natives of various indigenous Indian cultures (Amerindians) until its discovery by Columbus (who gave it its name). In 1563 a settlement was established there as part of the Spanish Empire, and in 1821 it finally declared its independence from Spain.

The official language is Spanish. The majority of the 4.3 million citizens are ethnically white descendants from Spain, although there are many Indian natives that have intermarried and joined the mix. It has a tropical climate, hot and humid throughout the year. It offers an extremely developed tourism industry, several fascinating nature reserves, active volcanoes and various beach attractions.

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Three things you did not know about Costa Rica:

  • Costa Rica permanently abolished its army in 1949 and is the only Latin American country among the 22 oldest democracies in the world. It is very stable in terms of politics and society.
  • While it has 0.25% of the world's land, it has 5% of its biodiversity, with 25% of its land dedicated to national parks. It serves as a haven for many animals, includes species of frogs, birds, tapirs, various felines, monkeys and particularly gorgeous butterflies (presented in a unique butterfly reserve).
  • Costa Rican coffee is known the world over for its quality and aroma; the tarrazu coffee beans of Arabica variety are sold as a premium brand of luxury espresso.

Costa Rica’s economy

Despite its political and social stability and its standing as a particularly successful Central American country, Costa Rica is still a developing economy. GDP is 55 billion USD and per capita income is only 12,000 USD. The local currency - CRC colón -is named for Christopher Columbus. The economy is very diverse, including the main sectors of agriculture (bananas, coffee, sugar and beef), tourism (2.2 million tourists annually, most from the U.S.), and recently also a rapidly-developing advanced industry and foreign investments. The government encourages foreign investments and extending industrial scope by providing unparalleled tax incentives, resulting in such giants as Intel, GSK (pharmaceuticals) and P&G choosing to settle there. Additionally, the country has an economic-geographic advantage in its proximity to U.S. markets, the same time zone and direct sea routes to Europe.

Companies active in Costa Rica’s free trade area receive unprecedented incentives and benefits from its government, and also the advantages of the area itself. The registration process is relatively quick and simple, but there are several restrictions: companies specializing in private banking, finance/investment or pensions must receive government authorization. Furthermore, insurance or anything elating to fuel distribution are banned as they undermine the local government’s monopoly on this market. There are also some limitations in the area of telecommunications.

Additional information about establishing offshore companies in Costa Rica:

General
Type of company
Stock Corporation
Relevant Companies Law
Commercial Code, Law No. 3284, 1964 and amendments
Offices
Law requires companies to provide a local office address
Language of original incorporation documents
Spanish
Finance and Taxation
Currency
CRC colón
Corporate tax rate
0%
Standard share capital
10,000 CRC of 100 issued par value shares of 100 CRC
Office Holders
Secretary
Obligation to appoint company secretary
Required
Obligation to appoint local secretary
Not required
Type of entity that may function as company secretary
Individual and/or company
Director
Obligation to appoint company director
Required
Obligation to appoint local company director
Not required
Minimum number of directors
3
Type of entity that may serve as company director
Individual and/or company
Shareholders
Obligation to register shareholders
Required
Obligation to register local shareholders
Not required
Minimum number of shareholders
2
Type of entity that may register as shareholder
Individual and/or company
Type of shares
Registered shares
Accessibility of Information
Company registrar
Information regarding office holders is not accessible to the public
Annual Assembly and Reporting
Obligation to hold annual assembly
Required – in any location in the world
Obligation to prepare financial reports
Required
Obligation to submit financial reports
Not required