Costa Rica

  • Posted By : Admin
  • April 04, 2018
  • Tax havens
  • 0 Comments

Costa Rica is located in Central America and its area is 51,100 km2. From many points of view it is one of the greatest destinations for both tourism and business. It is limited to the east and northeast by the Caribbean Sea, to the west and south by the Pacific Ocean, to the southeast it shares a boarder Panama and to the north with Nicaragua.

In recent years Costa Rica has evolved a lot in the technology sector becoming a jurisdiction with one of the best platforms for registering companies for online business and data processing.

General information

Capital
San Jose
Official language
Spanish
Area
51,100 km2
Form of government
Presidential Republic
Currency
Costa Rican Colon (CRC) and US$
UTC time zone
UTC - 6
Legal system
French Civil Code


Taxes for non-residents in Costa Rica

Costa Rica maintains favorable tax laws for foreign investment in the country. It is considered a tax haven and natural and legal persons that do not reside in the country and whose incomes don´t not come from its territory are not obliged to pay tax. Investors who decide to open a bank account or register a company in Costa Rica will not pay taxes such as rent, corporation taxes, VAT, inheritance, donations and will not suffer the dreaded tax deductions for subsequent years. Investors who decide to invest in Costa Rica and repatriate the money to their country of residence can save on taxes through double taxation agreements.

Characteristics of Costa Rican Companies

Types of companies
In Costa Rica there are Limited Liability Company, Private Limited Company, Limited Simple Partnership
Share capital
No minimum capital requirements for LLC
Constitution time
7-10 days for LLC
Taxes
LLC are exempt from all types of taxes if their income does not come from the territory of Costa Rica.
Directors
1 director minimum (LLC). The director can be an individual resident of any country.
Shareholders
1 shareholder minimum (LLC). The shareholders can be individuals or companies with residence in any country.
Shares
Registered. Bearer shares are not allowed.
Legal address
LLC must have its legal address on the territory of the country. When the director of the company is a foreigner, a registered resident agent must be appointed, whose function will be to receive communications from governmental authorities.
Privacy
Costa Rica has private commercial registry. The law recognizes as the offense the disclosure of any type of official information related to the company and its beneficiary except for the information requested by judicial order on the criminal activities of the company.
Board meetings
Meetings of directors or shareholders are not mandatory and can be held anywhere in the world.
Accounting / annual audit
It is required to keep accounting records for LLC, however, the submission of annual accounts or auditing of accounts is not mandatory.

Financial system in Costa Rica

Financial services
Banks in Costa Rica are specialized in electronic commerce, payment processing, games and real estate investments. The client may request any type of financial services: current accounts, savings accounts, virtual pos, credit cards, foreign currency accounts, investment accounts in the stock market, credits etc.
Limitations of cash payment
There are no limitations on cash payments nor there is exchange control. Banks in Costa Rica can open accounts in numerous currencies Euros, US $, GBP, AUD, CAD, CNY, JPY.
Deposit guarantee
Costa Rican banks cover up to $ 10,000 of customer deposits.

Automatic information exchange in Costa Rica 

Costa Rica has signed the automatic exchange of information treaty that has entered into force on January 1 of 2018 but has not signed a bilateral agreement with any country.

The signatory countries of the agreement

Year 2017
Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Groelandia, Guernsey, Hungary , Iceland, India, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Holland, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovakia, Slovenia, South Africa, Spain, Sweden, Turks and Caicos Islands, United Kingdom.
Year 2018
Andorra, Antigua and Barbuda, Aruba, Australia, Austria, Bahamas, Barein, Belize, Brazil, Brunei, Canada, Chile, China, Cook Islands, Costa Rica, Curaçao, Dominica, Ghana, Grenada, Hong Kong (China), Indonesia, Israel, Japan, Kuwait, Lebanon, Marshal Islands, Macao (China), Malaysia, Mauritius, Monaco, Nauru, New Zealand, Panama, Qatar, Russia, Saint Kitts and Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, San Maarten, Switzerland, Trinidad and Tobago, Turkey, United Arab Emirates, Uruguay and Vanuatu.


The treaty of automatic exchange of information does not affect the fiscal status of the country, that is, if the tax laws in Costa Rica establish that people and non-resident companies pay 0% of taxes, the signing of the treaty will not make it pay taxes in Costa Rica. The treaty of automatic exchange of information is presenting many problems between countries since it is NOT a treaty in which automatic information will be reported to each other or all to all, that is, each country will have to sign a bilateral information agreement automatically with another country. If, for example, Japan is interested in exchanging information with Costa Rica but Costa Rica is not interested in reporting information to Japan, there will be NO information exchange and clients privacy will be protected. Currently, 04-04-2018 Costa Rica has not signed any bilateral agreement to automatically exchange information. You can see the updated list of countries that have signed bilateral agreements to exchange information automatically with each other.

The bilateral agreements with Costa Rica

Year 2017
No bilateral agreement has been signed for this year.
Year 2018
No bilateral agreement has been signed for this year.


The countries most affected by the signature of the automatic exchange of information treaties are going to be the countries of high taxation and not the offshore jurisdictions. It is expected that high tax countries sign bilateral agreements with each other with the corresponding problem that these have: competition in investments, tax competition and abandonment of investments in other jurisdictions by countries with lower or no taxation allowing legal repatriation of them to the country of fiscal residence.

Using offshore jurisdictions what can be achieved is a reduction and postponement of tax payments. As a general rule high-tax countries force natural and legal persons to declare all the world's income. But what happens when you have an offshore company and you do not divide dividends or have gone bankrupt? For example, a person has a company and account in Costa Rica, the company has generated annual benefits and the final beneficiary doesn’t want to repatriate them to his country of residence. So what happens? The answer is very simple: there will not be any kind of tax payment until the benefits obtained from Costa Rica reach the territory of a tax residence of the final beneficiary. Therefore, if you are required to report benefits obtained from abroad, it is advisable to inform your tax agency so when you will be offered a tax advantage in your country of residence to repatriate them.

Advantages of Costa Rica

Costa Rica is one of the best offshore jurisdictions to invest for the following reasons: 

  • There is no need to pay any kind of tax. 
  • Legal security guaranteed by law. 
  • Privacy. 
  • Jurisdiction specialized in E-commerce, gambling, payment gateways, real estate services and Forex
  • Good telecommunications infrastructure. 
  • Little bureaucracy when it comes to obtaining financial licenses, companies formation and bank accounts opening. 
  • There is no restriction by nationality. 
  • Excellent geographical location. 
  • Economically stable financial center. 
  • Jurisdiction specialized in tax planning.
  • Easy repatriation of benefits.