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Message 1DOINGBUSINESS2025
2LOCATION:Costa Rica is located in Central America, bordered to the north by the Republic of Nicaragua, to the east by the Caribbean Sea, to the southeast by Panama and to the west by the Pacic Ocean. CAPITAL: San José has 1,213,943 inhabitants (approx.).INHABITANTS THROUGHOUTTHE COUNTRY: 5,213,374 inhabitants (approx.).OFFICIAL LANGUAGE:SpanishAREA:51,100 km2 MAIN AIRPORT:Juan Santamaria International Airport, Alajuela. COSTA RICADoing Business Costa Rica l General AspectsExchange rate: 1 USD - 504.39 CRCSource: January 08, 2025 Central Bank of Costa Rica
3The Revolution of 1948 was a key point in the history of Costa Rica, as it led to the abolition of the army by constitutional decree in 1948. Education is a national priority, free, public and compulsory up to the secondary level, and English language learning courses are mandatory in the national school system. As a result, Costa Rica has one of the highest literacy rates in the world (almost 98%).Health is also a national priority, with world-class medical services available to foreigners and expatriates through the government-run universal health system (Caja Costarricense de Seguro Social) and the private health care. The democratic government of Costa Rica consists of three powers:1. Executive: President and Ministers.2. Legislative: Legislative Assembly, unicameral.3. Judicial: Supreme Court of Justice and courts of justiceDoing Business Costa Rica l Political and Economic Regime2022: The national and democratic elections were held on February 6th, 2022 and the second round of elections was held on April 3rd, 2022. In these elections, the new President, Vice President and deputies of the Legislative Assembly were elected. As a result of the national elections described above, the following were elected:Costa Rica is the oldest and most stable democracy in Latin America. In its 200 years of independence, there was a coup in 1917 and a revolution in 1948, both of which were the result of politicians’ efforts to remain in power beyond their legal term in ofce.Current President:Rodrigo Chavez (2022-2026 term).POLITICAL REGIME:Political party: Democratic Social Progress.ECONOMY:2022 20232025Growth ofapprox. 4.3%CEPAL estimates the GPD to rise on a 3,8%GDP Exceededexpectationsand rose to 5.1%The last trimester reported a rise of 4,0%2024The country has had sustainable growth over the past 25 years.
4Doing Business Costa Rica l Human Talent14% of total public expenditure is allocated to primary, secondary and tertiary education, almost double the average of 7.9% of OECD member countries (OECD, 2019). First place in TOEIC and TOEFL exams in Latin America (ETS, 2018).First place in innovation outputs in Latin America (WIPO, 2020).Number one in current and future workforce skills in Latin America (GLOBAL COMPETITIVENESS REPORT, WEF, 2019).Number one in digital skills among the population, as well as number one in human capital and quality of education in Latin America (GLOBAL COMPETITIVENESS REPORT, WEF, 2019). Costa Rica has a highly qualied human capital that is aligned with the needs of the market and its current and future trends of the workforce. Some highlights (CINDE1):HUMAN TALENT
5Doing Business Costa Rica l Incentives for Foreign InvestmentFREE ZONES N°7210: This regime is the set of incentives and benets that the State grants to companies that make new investments in the country, provided that they comply with the requirements and obligations established in the law, its reforms and its regulations.TO ATTRACT REMOTE WORKERS AND SERVICE PROVIDERS OF AN INTERNATIONAL NATURE (DIGITAL NOMADS) NO. 10008:Its aim is to promote incentives in order to attract workers and services providers with the aim to allow long-term visitation and stay in Costa Rica therefore increasing the spending of foreign resources in the country.Through this law, amenities are created to expedite and make thesettlement process attractive forthe digital nomads in Costa Rica. FOR THE PROMOTION OFCREATIVE AND CULTURAL ECONOMY NO. 10044: This law promotes creativeand cultural business ventures inorder to reactivate the economic, socialand cultural development of Costa Rica, through the promotion of actions, programs, public policies to exalt, promote, encourage, foster, incentivize and protect creative and cultural enterprises. In this way, the creation of smaller companies is encouraged and protected over those that can aspire to t in the Free Zone Regime.In general, the companies beneting from this regime will be dedicated to handling, production, manufacturing, processing, repair and maintenance of estate and the provision of services intended for export or re-export. The Foreign Trade Promoter (PROCOMER) is the state entity that grants and supervises the Free Trade Zone Regime.ATTRACTION OF INVESTORS,ANNUITIES AND PENSIONERS N°9996: This Law creates the regulatory framework to encourage the attraction of investors, annuitants and pensioners, as protected by Law 8764, the General Law on Migration and Foreigners, to contribute to reactivating the Costa Rican economy in a post-Covid-19 pandemic period. The law establishes a series of benets and incentives in favor of foreign persons who meet the prole described therein.Costa Rica is a country interested in promoting economic and social development, which can be seen reected in the following laws:
6COMPETITION LAWANTITRUST REGULATION Doing Business Costa Rica l Competition LawThe competition law applies to all companies operating in the Costa Rican market, regardless of their origin or type (domestic or foreign, public or private), except in cases of specic exceptions, such as those authorized by sectoral laws. This also includes actions carried out outside the country that affect the Costa Rican market.There are only ve sectors in which some activities are exempt from competition law: 1. Sugar production;2. Rice production; 3. Coffee production;4. Maritime transport and; 5. Regulated professional associations. For example, in sugar production, LAICA regulates production quotas and sales prices, while CONARROZ controls the import and distribution of rice. COPROCOM may investigate infringements of competition law on its own initiative or following a complaint. • If it determines that a company has violated the rules, they can impose nes, based on the company's gross receipts in the previous tax year. • • COPROCOM's decisions can only be reviewed by Costa Rican judicial courts.• • In addition, COPROCOM has the power to issue • opinions, recommendations and guidelines on the defense of competition, and to carry out market studies.MERGER CONTROLCOPROCOM supervises all transactions that exceed certain thresholds of invoicing and productive assets established in the law (Articles 88 and following, Law 9736). TELECOMMUNICATIONS SECTORSUTEL is the regulator in charge of reviewing mergers and COPROCOM issues a non-binding opinion when SUTEL requests it.FINANCIAL SECTORCOPROCOM also oversees mergers, although CONASSIF can handle those that involve systemic risks to Costa Rica's nancial system. COPROCOM is the main authority in charge of regulating competition in the Costa Rican market, with administrative, functional and budgetary independence. Although it depends on the Ministry of Economy, Industry and Commerce, COPROCOM operates autonomously, which allows it to carry out its functions without political interference.
7Doing Business Costa Rica l Competition LawMerger control is activated when three criteria are met: 1. at least two of the companies involved must have operated in Costa Rica during the previous two scal years; 2. they must exceed the established thresholds in relation to the gross sales or productive assets of the companies and;3. and at least two companies must meet the thresholds individually.In exceptional cases of successive transactions exceeding the thresholds, the regulations also apply.Finally, any merger transaction that does not signicantly impede competition in the relevant market, or in other related markets, will be approved by the competent authority.This legal framework aims to ensure a competitive market and protect the interests of consumers, ensuring that business practices do not distort competition in Costa Rica.
8CORPORATE ASPECTSHOW TO INCORPORATE A COMPANY?JOINT STOCK COMPANYThe corporate form most commonly used in Costa Rica is the joint stock company, given its structural exibility. Its basic structure is made up of the following aspects:COMPANY NAME:The company name may be a name in any language, or a fantasy name composed of one or more words that do not have a generic meaning. It must contain the addition “sociedad anónima” (joint stock company) which can be abbreviated as “SA” and its company name must not be the same or substantially similar to the company name of a company or brand already existing in the country. DOMICILE:The company must have its registered ofce within the national territory. Companies may, however, carry out their activities anywhere in the world and may establish branches or agencies. SOCIAL TERM: The term of the company must be determined and xed, since indenite terms are prohibited by law. The custom is to set the term at 99 years, which can be varied (increased or reduced) by means of an amendment to the company’s articles of incorporation adopted by shareholders’ agreement and which comes into force upon its registration in the national registry of legal entities. CORPORATE PURPOSE:Companies are not required to indicate a specic or carefully detailed corporate purpose or object; however, it is important to note that, if the corporate purpose were to be specied, the company may only carry out those activities that are within its scope. SHARE CAPITAL:The share capital must necessarily be a xed amount, denominated in any currency and divided into common and nominative shares. The law prohibits the use of bearer shares. The law does not set a minimum share capital. There is no limit on partners; it can be a single partner or multiple partners, national or foreign.LEGAL RESERVATION: Companies must annually allocate 5% of their net prots to establish a legal reserve fund. This obligation will cease once the fund reaches 20% of the share capital. Doing Business Costa Rica l Corporate Aspects1.2.3.4.5.6.
9BOARD OF DIRECTORS:The affairs of the company shall be managed by a board of directors composed of at least a president, a secretary, and a treasurer. It is not necessary that the members of the board of directors be shareholders of the company. LEGAL REPRESENTATION:The chairman of the board of directors is the legal representative of the company by legal provision and has sufcient powers to act on behalf of the company within the framework of its corporate purpose. In addition to the chairman, the articles of incorporation may designate other directors as legal representatives exercising their powers jointly or separately.Other persons (who may or may not be shareholders or directors) may hold powers of representation based on powers or mandates granted. FISCAL: Companies must appoint one or more auditors whose main duties are to monitor corporate activities and ensure compliance with corporate agreements and the law in order to protect the interests of shareholders and other interested parties. Auditors cannot be employees or agents of the company or be related by blood or marriage to members of the board of directors. RESIDENT AGENT:Any company whose legal representatives do not have a xed address in Costa Rica must have a resident agent, whose (passive) obligation is to receive administrative and judicial notications on behalf of the company. The resident agent must be a lawyer with an open ofce in Costa Rica. LEGAL BOOKS:Companies must keep legal books (minutes book of shareholders’ meetings, minutes book of board of directors, shareholders’ register) and accounting books (journal, ledger, and inventory and balance sheets).Doing Business Costa Rica l Corporate Aspects7.8.9.10.11.
10It is not necessary for them to have a prosecutor or oversight body.For limited liability companies, the legal reserve fund must be 10% of the share capital.Although there is no difference in the local tax treatment of joint stock companies and limited liability companies, the nancial expense of the debts of a limited liability company with its partners is not considered as a deductible expense for tax purposes.In cases where the partners are of American origin, limited liability companies can provide an advantage, since, under certain conditions, it is possible to take taxes paid in Costa Rica as a tax credit in the United States.Limited liability companies have a structure and operation similar to joint stock companies with the following differences: LIMITED LIABILITY COMPANIES The company name must have the addition “limited” or “limited liability company”, which may be abbreviated as “Ltda” or “SRL”.Shares are transferred by assignment and the transfer must have the approval of all the other shareholders, unless the articles of incorporation establish the approval of only 75% of the share capital.There is no limit on partners; it can be a single partner or multiple partners, national or foreign.Limited liability companies do not have a board of directors or a management committee. Instead, the company’s business is managed by one or more managers who are also the legal representatives of the company, acting jointly or separately as provided for in the articles of incorporation. Doing Business Costa Rica l Corporate Aspects
11STEPS TO INCORPORATE A COMPANYIn all cases, at least 2 natural or legal persons are required for their incorporation, but once incorporated, all of their capitalcan be owned by a single individual or entity. In the rst scenario, the registration process takes approximately 2-3 business days. In the second scenario, it takes approximately 8 business days. Choosing between one option or another depends on the particularities of each company (For example, depending on the currency in which the share capital is established.). In the vast majority of cases, the digital system can be processed, which is much faster.The procedure involves the granting before a Costa Rican notary public of a public deed, an extract of which must be published in the ofcial newspaper “La Gaceta”. 1. It can be done through a digital platform called “Create Company” or 2. Through the physical presentation of the testimony of the public deed of incorporation of the company to the Public Registry. 1234In cases where the constitution of the company involves foreign shareholders, they must constitute it before a Costa Rican notary public. Otherwise, a power of attorney must be granted before the consul of the foreign shareholder’s country. Please note that this option is complex and therefore we recommend you make the appropriate enquiries.Doing Business Costa Rica l Corporate Aspects
12Foreign companies can carry out their operations under the guise of a Costa Rican branch.It is necessary to comply with a series of requirements and the creation of different minutes in the parent company in which the registration of the branch in Costa Rica and the appointment of a representative or agent of the branch are approved. These documents must be apostilled or legalized by a consulate to be used in Costa Rica, as well as ofcially translated if applicable. The representative of the branch must appear before a notary to sign the branch registration document and expressly accept its mandate in Costa Rica.The requirements are as follows: A representative, with sufcient powers of the foreign company (which will be recorded and must be demonstrated to the Notary), must appear before a Costa Rican notary public to grant the deed of incorporation of the branch, which must include:• Appointment of a general attorney who handle the business of the branch. The power may be limited in the amount or substance of the matters that may be handled. It may be foreign.It must be expressly accepted that the branch and the agent are subject to the laws and courts of Costa Rica, with respect to all acts or contracts that they enter into or must execute in the country and expressly renounce the laws of their domicile. The general attorney must expressly accept the power. If they aren’t present in the moment of granting, they may do so at a later time by additional deed granted before a Costa Rican public notary. To create a branch of the parent company, it will be necessary to register a legal representative with the Public Registry of Costa Rica. The branch must have a specic purpose and assigned capital; it does not need to be identical to that of the parent company. The purpose, capital, full name of the representatives or administrators and duration of the parent company must be indicated.To do this, we require that you provide us with certications regarding the current composition and appointments of the company’s administrative body, as well as a certication of the company’s validity and a certied and apostilled copy of the parent company’s by laws. You must also appoint a resident agent, who must be a Costa Rican lawyer with an open ofce in Costa Rica with the ability to receive communications and notications in the absence of the attorney. • ESTABLISHMENT OF A BRANCH OF A FOREIGN ENTITY Doing Business Costa Rica l Corporate Aspects1.A.B.3.2.4.5.C.
13Resolution of the shareholders’ meeting of the parent branch in which the creation of the branch with the aforementioned data is approved. • The period for establishing a branch is approximately 15 business days due to the nature of the documents used and is done in person.The general attorney who would act on behalf of the company: If the attorney did not reside in Costa Rica, power of attorney would have to be granted before a Consul for the different acts, since the branches do not have legal books, so powers of attorney could not be granted through Assembly Minutes. • Doing Business Costa Rica l Corporate Aspects6.
14Doing Business Costa Rica l Operating PermitsOPERATINGPERMITSCENTRAL GOVERNMENT REGULATORY COMPLIANCERegistration of economic activity Registration in the Costa Rican social security system All natural persons and legal entities are required to register in the Single Tax Registry with the Tax Administration of the Ministry of Finance when starting any lucrative activity or business that is subject to taxation. This registration is made through forms D-140 Registration and Modication, and constitutes an essential legal obligation. Legal Entities that do not carry out economic activity: Any entity domiciled in Costa Rica that does not carry out any activity or business of a lucrative nature, has the obligation to register in the Single Tax Registry and make the annual informative declaration before the Tax Administration. For the process of formalizing any business or activity with a lucrative nature in Costa Rica, registration with the Costa Rican Social Security Fund ("CCSS") is mandatory. The employer must register all its workers from the beginning of the employment relationship and deduct the worker's contribution from the salary of its employees corresponding to a xed percentage of 10.67%, likewise, the employer must make a contribution of 26.67% to the social security system on a monthly basis. To make this registration, the documentation can be submitted both in person, as well as through the dig-ital platform "Virtual Ofce" of the CCSS with the corresponding digital signature. In the event that the procedure is carried out in person, the corresponding documentation must be submitted to the headquarters of the CCSS that corresponds to the jurisdiction where the commercial premises are located.
15Doing Business Costa Rica l Operating PermitsThe employer must report in detail the information of its workers, such as salary, working hours, rest times and their specic functions. The CCSS appoints an inspector for each registration procedure, who visits the commercial establishment for the purpose of interviewing the workers and carrying out an on-site inspection in order to verify compliance with current labor regulations. Compulsory occupational risk Insurance Any company domiciled in Costa Rica that carries out economic activity has the obligation to subscribe and maintain in force the Compulsory Occupational Risk Insurance, to provide protection to its workers against accidents and occupational diseases, in accordance with the regulations established in Title IV of the Labor Code, its regulations and the Technical Standard of theMandatory Occupational Risk Insurance.This insurance is processed before the National Insurance Institute both in person and virtually. Likewise, the policy covers work risks that occur within Costa Rican territory, which includes:• Natural or geographical;• Territorial sea;• Airspace that covers them and;• Continental shelf.The National Insurance Institute shall extend the coverage of the policy outside Costa Rican territory, in the case of companies or activities which, by their nature, must be carried out occasionally or permanently, outside the geographical scope of the Republic of Costa Rica.
16Doing Business Costa Rica l Operating PermitsMANDATORY COMPLIANCE MUNICIPAL GOVERNMENTLand Use Application Building Permit It is a necessary requirement for:• Construction procedures;• Development of infrastructure projects or;• To know the use that can be given to the • property following the regulations in force at the time of its issuance, with which the • Municipality certies the area in which the land is located in accordance with the Cantonal • Regulatory Plan. This permit is of a territorial nature, so the Regulatory Plan will be adjusted according to the Municipality of its jurisdiction. The Cantonal Municipality issues a certication according to the activity that is to be carried out on the property, this being a prerequisite for obtaining Construction Permits and/or Commercial Patents. The land use certicate can be processed both in person and virtually at the Cantonal Municipal corresponding to the location of the commercial premises in which it is presented to carry out a lucrative activity and business. The Construction Permit constitutes a guarantee that the project to be carried out complies with local safety, zoning and environmental regulations. Building without the proper permits not only exposes theproject to nes and penalties, but can also result in the demolition of the work. The Construction Permit must be managed both for the execution of new works and for the remodeling that is projected in commercial establishments. However, in the case of existing infrastructures that do not require remodeling, such a permit will not be required.To process these Permits, it is initially required to hire a certied professional to prepare the architectural design, the construction plans and carry out the corresponding procedures before the Federated College of Engineers and Architects (CFIA). Subsequently, the Construction Permit must be requested from the local Municipality, in charge of reviewing the plans and verifying compliance with urban regulations.In larger projects or located in sensitive areas, it may be mandatory to obtain additional permits, such as the environmental impact study.
17Doing Business Costa Rica l Operating PermitsSanitary Operating PermitCommercial PatentLiquor PatentAny establishment that wants to operate in Costa Rica must apply for the Sanitary Operating Permit before the Cantonal Health Governing Area of the Ministry of Health. This procedure has a cost of $30 to $100 depending on the risk group in which the economic activity you intend to carry out is located. The procedure can be submitted both virtually and/or in person at the Cantonal Health Governing Area according to the territorial location of the establishment. The Sanitary Operating Permit has a period of validity determined according to the economic activity carried out. It is the obligation of the establishment to renew this permit before its expiry, which entails the corresponding payment according to the risk group assigned to the activity. Once granted, the Sanitary Operating Permit must be placed in a visible place within the commercial establishment. Natural or legal persons who, as part of their commercial activity, are engaged in the sale, distribution or any other form of commercialization of alcoholic beverages, are obliged to obtain the corresponding Liquor Patent license from the Municipality of the canton where the establishment is located. This procedure is essential to ensure compliance with the applicable legislation on the regulation and control of alcoholic beverages. Any natural or legal person who:• Dedicated to the exercise of lucrative activities • shall be obliged to pay a patent tax that entitles them to carry out these activities.• • Carrie out a lucrative activity or business must • apply for a municipal license. This license is the act by which the municipality authorizes natural or • legal persons to operate and operate for the exercise of any type of economic activity. These procedures are carried out in the Municipality of their respective canton according to location and they grants, depending on the activity, permanent and/or temporary licenses. In the case of temporary licenses, they are renewed before their expiration.The municipal license tax must be paid quarterly and is calculated based on the annual sales or gross income declared during the process of obtaining the municipal license.
18TAXESDIRECT TAXES 1. ABOUT INCOME TAX:Income tax is levied on the prots of individuals, legal entities or collective entities without legal personality, domiciled in the country, that develop lucrative activities of Costa Rican source, with the exception of activities that have a specic tax treatment through other exemptions established by law.2. ABOUT PROPERTY TAX: It is the tax established in favor of the municipalities whose object is the land,installations or xed and permanent constructions existing there. It is calculated on an annual basis and the periods in which it must be paid depend on the municipality in charge.TAX RATE ON TAXABLE INCOME INDICATED BY THE CORRESPONDING LAWTAX INCOME REGIME FOR COMPANIES WITH GROSS INCOME NOT EXCEEDING ₵119.629.000,00 Doing Business Costa Rica l TaxesDEFINITION Exchange rate: 1 USD - 504.39 CRCSource: January 08, 2025 Central Bank of Costa Rica
193. ON INCOME, CAPITAL PROFITS AND LOSSES:It applies to capital gains obtained from the transfer, by any title, of real estate or personal property, obtained by a natural person or legal entity domiciled in Costa Rica without such acts constituting their habitual profession.4. ABOUT REMITTANCES ABROAD:This is the withholding tax on income or prots that are produced in Costa Rica, but sent abroad. Taxpayers are people who reside outside of Costa Rica, but receive the benet of productive activity. It must be paid during the rst 15 calendar days of the month immediately after it is transferred to the taxpayer.5. ABOUT DIVIDENDS:It is the tax that arises from the payment or accreditation by the capital company to its partners (natural persons), persons domiciled abroad or inactive companies in cash or kind.6. LEGAL ENTITIES:The applicable tax is paid annually, and its cost will depend on the specic characteristics to the legal entity. It remains in the range of ₵69,330 - ₵231,100.TAX RATE ON TAXABLE INCOME INDICATED BY THE CORRESPONDING LAW on the nature of the productive activities carried out and the concept of payment and is in the Doing Business Costa Rica l TaxesDEFINITION
20INDIRECT TAXES1. TO ADDED VALUE:This is the tax imposed on all sales of goods or services; it is paid by every person who buys a good or acquires a service. It must be declared during the rst 15 calendar days of each month. 2. ABOUT MUNICIPAL SERVICES:When setting up a company, the corresponding licenses must be requested from the corresponding municipality in accordance with its operating activity. Fees, procedures and special contributions depend on the corresponding municipality.3. STAMP OF EDUCATION AND CULTURE:It must be paid annually by every Costa Rican company or subsidiary of a foreign company registered in the Registry Public. TAX RATE ON TAXABLE INCOME INDICATED BY THE CORRESPONDING LAW for more specialized tasks may vary depending on company’s net capital and ranges from Doing Business Costa Rica l TaxesDEFINITION EXEMPTIONS:The Legislative Assembly determines exemptions for the payment of taxes and duties
21WORK PERMITSHIRING STAFFLABOROnce the company is established, and if it will hire staff, it must register with the social security authorities, the Costa Rican Social Security Fund (“CCSS”) and the National Insurance Institute (“INS”). Each worker must be registered individually. Likewise, a work risk policy must be obtained from the INS that includes all employees. Obtaining temporary work permits is usually a slow process for companies that are not registered with immigration authorities and can take between six months and a year, depending on the specic case, due to the delay in processing applications of this nature. However, the company may choose to register as a Recognized Company (Category F – Multinational), if it meets the requirement of having operations in 3 countries other than Costa Rica.The review process is carried out in three months, and if approved, the company could obtain permits for its foreign employees in approximately three months, using the preferential window. Despite this, it must be taken into account that, for the process of applying to be a recognized company, apostilled documents must be submitted from each foreign country where there are operations.Hiring of staff is based on the requirements that each company requires, but as a constitutional right there should be no differentiation based on race, marital status or gender.The individual employment contract, whatever its name, is any contract in which a person is obliged to provide services to another or to carry out work for him or her, under the permanent dependence and immediate or delegated direction of the latter, and for remuneration of any kind or form.The employer must:Deliver copy of the contract to the worker.Comply with the minimum requirements stipulated in Article 24 of the Labor Code. (Identication of the parties, work schedule, duration of the contract, salary, assignment of the position, place of performance, other specications). Enter into individual time-based employment indenite contracts with all thepermanent staff at the beginning of the employment relationship in 3 copies: one for each party and another that the employer will send to the Employment Ofce of the Ministry of Labor and Social Security, directly or through the respective labor or political authority, within fteen days after its celebration, modication or renewal.Doing Business Costa Rica l LaborDoing Business Costa Rica l Laboral
22The amount of the salary must be determined by the employer and the employee; however, it cannot be less than the minimum wage established by law. Every worker has the right to earn the current minimum wage established by law. The ordinary salary is the monthly amount that the worker receives in cash. This amount will incur deductions from the law, if applicable (CCSS, ROP).The minimum wage in force according to Executive Decree No. 44756-MTSS is:MINIMUM WAGEDIURNAL: The daytime workday is the one that runs between 5:00 a.m. and 7:00 p.m. on the same day and cannot be more than 8 hours per day or more than 48 hours per week.NOCTURNAL: The night shift is the one that runs from 7:00 p.m. on one day to 5:00 a.m. on the next day, and cannot be more than 6 hours per day or more than 36 hours per week. MIXED: Mixed working hours include day and night hours and cannot exceed 7 hours per day or 42 hours per week. Every worker must enjoy at least one paid day off per week (seventh day). Overtime must be paid at an additional 50% of the regular hourly rate.Ordinary and extraordinary daily working hours may not exceed 12 hours per day.WORKING DAYSDoing Business Costa Rica l LaborExchange rate: 1 USD - 504.39 CRCSource: January 08, 2025 Central Bank of Costa RicaMINIMUM LABOR OBLIGATIONS
23MINIMUM LABOR OBLIGATIONSBONUS:Every worker has the right to payment equivalent to an “additional salary” that is granted during the rst 20 days of December of each year.The Christmas bonus is the sum of all ordinary and extraordinary salaries earned by the worker during the twelve months from December 1 of the previous year to November 30 of the year in question, divided by twelve.It is the right of all persons who have worked continuously for the same employer for at least one month. Those who work on xed-term contracts or for specic tasks are also entitled to it.VACATIONS: Every worker has the right to enjoy twelve days plus two days of rest as a minimum, for every fty weeks of continuous work, in the service of the same employer, regardless of the hours worked.The employer will specify the period in which the em-ployee will enjoy his/her vacation; within fteen weeks after the day on which fty weeks of continuous ser-vice are completed.Vacations are only compensable when the employ-ment relationship ends, when the work is occasional or piecework and when for some justied circumstance the worker has not enjoyed his or her vacation.It is prohibited to accumulate vacations, except for one time when the worker performs technical work that makes his or her replacement particularly difcult.WORK RISK POLICY:The employer must have an occupational risk policy, the cost and obligation of which is the employer’s and not the employee’s.The policy provides protection against possible accidents and illnesses that may occur to the worker as a result of or as a consequence of the work he or she performs. Doing Business Costa Rica l Labor
24COSTA RICAN SOCIAL SECURITY FUNDIt is the employer’s obligation to register as an employer with the CCSS. He/she must then register all his/her employees from the beginning of the employment relationship. The employer must deduct the employee contribution from the salary of his/her employees by means of a xed percentage (10.67%) and on his/her own account he/she must provide the employer contribution (26.67%). Working mothers are protected by the Labor Code, which establishes that pregnant or breastfeeding workers cannot be dismissed without justied cause. The reasons for which they can be dismissed are included in a strict list located in article 81 of the Labor Code. Even if there are reasons, this type of dismissal must be authorized by the Labor Inspection Division of the Ministry of Labor and Social Security. For this protection to take effect, the employer must be informed of their status, and it must be supported by a certication or certicate issued by the Costa Rican Social Security Fund.There is also the benet of maternity leave. This includes a period of four months to which the worker is entitled. These are distributed as one month before delivery and three months postpartum to facilitate the rapprochement and adaptation between mother and child. During this period the mother receives 100% of her usual salary. The breastfeeding period is considered to be the period preceding the birth of the baby. The minimum is three months with the option of an extension by submitting a medical opinion to the employer. Breastfeeding leave means the benet of 15 minutes every three hours or half an hour twice a day, this depends on the mother’s choice.Biological or adoptive parents are entitled to two days’ leave per week, for four weeks from the date of birth.The salary during these licenses will be paid 50% by the employer and 50% by the Costa Rican Social Security Fund.MATERNITYPATERNITYHOLIDAYS01January25July31August25December11April02 August15September01May15August01DecemberHoly Thursday, Friday and Saturday. Doing Business Costa Rica l Labor
25TERMINATION OF CONTRACTSAny employee hired for an open-ended period who is dismissed without just cause has the right to receive advance notice of the end of his or her employment relationship. If advance notice is not given, the equivalent amount in money must be paid.Also the worker has to provide notice to their employer. If the employee fails to give notice, their employer may claim the time during the 30 days following the end of the business relationship through legal means.Notice is calculated based on the last six months of salary.It is a right of workers to be compensated in the event of termination of the employment relationship with employer liability. It emulates unemployment insurance in other countries.The work performed by the worker must be continuous and have been carried out for a period of more than three months.Even if the worker is hired by another employer, he or she must be paid the amount corresponding to the severance pay immediately. No deductions for social security contributions are applied.In Costa Rica, foreigners enjoy all labor rights and duties once they meet the requirements of a residence card, immigration category for economic purposes, or legal refugee or asylum status.The economic and general aspects of the work permit are the responsibility of the employer, as issued by the General Directorate of Immigration and Foreign Affairs.The irregular immigration status of the worker does not exempt the employer from all his or her labour obligations. Therefore, any breach may be reported to the Ministry of Labour and Social Security. NOTICE: SEVERANCE: FOREIGN EMPLOYEES: Termination occurs when one of the two parties that form part of the employment relationship puts an end to it. For this, there are just causes indicated in articles 81, 369 and 685 of the Labor Code that allow the employer (justied dismissal) or the employee (article 28 of the Labor Code – indirect dismissal) to terminate the employment contract. All dismissals are made by means of a written letter that indicates the cause. Every worker who terminates his or her employment relationship, regardless of the cause or form of termination, has the right to receive payment of Christmas bonus benets and monetary compensation for vacation days pending at the date of termination. Doing Business Costa Rica l Labor
26INTELLECTUAL PROPERTYDoing Business Costa Rica l Intellectual PropertyWhat does it protect?How long is it protected?Estimated Registration TimeWhat is Costa Rica differentiating?National and international regulations signed by Costa Rica Trademarks can be protected for their form (names, letters, numbers, punctuation marks, fancy words, drawings, presentation, or sounds), function (goods or services), or use and dissemination of the sign (signs known in international trade). Trade names and advertising signs have the function of geographically locating a brand, or promoting it, and their existence depends on the validity of the trademark, and enjoys the same rights.10 years from the date of registration and renewable for equal periods.6 months in the event that there are no oppositions to registration.In Costa Rica, the registration of trademarks, trade names and advertising signs grants exclusivity for their use. The system is similar to that of other countries and follows the “rst-to-le” principle, which means that protection is granted to the rst person to register the trademark. National:• Law on Trademarks and Other Distinctive Signs.• Regulations of the Law on Trademarks and Other Distinctive Signs.International:• Paris Convention for the Protection of Industrial Property.• Agreement on Trade-Related Aspects of Intellectual Property Rights.• Trademark Law Treaty.WHAT DOES INTELLECTUAL PROPERTY PROTECT?Intellectual property protects trademarks, trade names, advertising signs, patents and utility models.
27Doing Business Costa Rica l Intellectual PropertyWhat does it protect?How long is it protected?EstimatedRegistration TimeWhat is Costa Rica differentiating?National and international regulations signed by Costa Rica Patents: They protect any creation of the human intellect capable of being applied in industry, which meets the conditions of patentability provided for in the law.Industrial Designs and Utility Models:They protect creations of the human intellect that have a useful form, but do not necessarily need to be applied in industry. These are two-dimensional appearances of an object (industrial designs) or work instruments or utensils that allow a better function or have a special use (utility models).Patentes: 20 years a from the ling of the application with the Industrial Property Registry of Costa Rica. After this period, the protection is non-renew-able and is made available to the public.Industrial Designs and Utility Models: 10 años non-extend-able from the date of registration.2 years. In Costa Rica, the patent registration system grants exclusivity to exploit an invention. This system is comparable to that of many countries and patent registrations are often based on international applications, taking effect from the rst international application. With a registered patent, third parties can be prevented from copying or exploiting the invention and can be licensed on it. Utility models, which protect minor enhancements, have a faster and easier registration process.National:• Law on Patents for Inventions, Industrial Designs and Utility Models.• Regulations of the Law on Patents for Inventions, Industrial Designs and Utility Models International:• C Paris Convention for the Protection of Industrial Property.Patent Cooperation Treaty (PCT).
28AGENCY, DISTRIBUTION AND REPRESENTATION AGREEMENTSRELEVANT LEGISLATION:Agency, distribution and representation contracts are regulat-ed in the Costa Rican Code of Commerce and in the Law for the Protection of the Representative of Foreign Houses. COMPENSATION IN CASE OF TERMINATION:When the cancellation of a representation, distribution or manufacture agreement occurs before the expiration of the agreed term or the prior notice established in the contract is not granted, it generates liability for the foreign company and therefore the payment of compensation to the distributor, which is applied according to the classic regime of compensation for damages which must be proven in the corresponding legal channel. In addition, the foreign company represented must purchase the stock of its products from its representative, distributor or manufacturer, at a price that includes costs plus a reasonable percentage of the investment that will be determined by the Ministry of Economy, Industry and Commerce. Likewise, for those contracts entered into prior to 2007 (the date on which the Law on the Protection of the Representative of Foreign Houses was amended) in the event of the unjustied cancellation of the representation, distribution or manufacturer agreement, the foreign company must compensate the distributor or representative with a sum that will be calculated on the basis of the equivalent of four months of gross prot for each year or fraction of the term of the contract, with a maximum of 9 years of service. This compensation must be paid in a single and total payment, immediately after the termination of the contract or when the condemnatory court decision is nal, if any.The early termination of a contract entails liability for the foreign supplier. However, it is possible to include an early termination clause in the contract that regulates the period of prior notice. If this period is not specied in the contract, the law establishes that the notice must be given 10 months in advance. The termination of the contract at the expiration of the term, without renewal, or if it is terminated by giving the prior notice established in the contract, does not entail the payment of compensation by the foreign company.With respect to dispute resolution, the absence of an express provision in the contract presumes that the parties intended to settle any dispute through binding arbitration that may take place in Costa Rica. Notwithstanding this presumption, the parties may object to arbitration.TERMINATION OF CONTRACTSCONFLICT RESOLUTION:Doing Business Guatemala l Agency, distribution and representation agreements
29The Political Constitution of the Republic guarantees private property as a constitutional right that is inherent to individuals, stating that every person may freely dispose of his or her property in accordance with the provisions of the law.In Costa Rica, the National Property Registry is the public institution that provides legal certainty and registry security to property owners in the country, with the purpose of registering, annotating and canceling acts and contracts related to ownership and other property rights over identiable real estate and movable property. 1. Capital Gains Tax:Capital gains tax is levied on gains on the sale of assets and any variation in the value of the taxpayer's equity.The rate applicable to capital gains is 15%, however, on the rst sale of goods acquired before July 1, 2019, the taxpayer may choose to pay capital gains tax by applying a rate of 2.25% to the sale price. 2. Transfer tax:The transfer tax applies to any legal transaction by which a real estate property is transferred, whether or not it is registered in the National Property Registry.The tax is generated on the date and time of the execution of the public deed or the date on which the legal transaction is documented.The tax must be paid within fteen days following the date of issuance of the document and is calculated on the real value of the transaction and the rate is 1.5%.The taxable income from capital gains will be: • The difference between the acquisition and transfer values of the assets or rights; or • In other cases, the market value of the assets or rights that are incorporated into the taxpayer's assets.Capital gains obtained from the transfer of the taxpayer's main residence are exempt from capital gains tax (it also applies when the home is in the name of a legal entity but has undoubtedly been used for the main residence of the owners of the legal entity).In the case of transfers of real estate located in the national territory owned by a non-domiciled person, the purchaser is obliged to withhold and pay 2.5% of the total price agreed as withholding on account of the capital gains tax.Doing Business Costa Rica l Real EstateREAL ESTATETAXES APPLICABLE TO THE PURCHASE
303. Withholding at source:It refers to the amounts that must be withheld when certain transactions are carried out and that must be refunded to the Direct Taxation ofce before the 15th of the month following the issuance. In the case of transfers of real estate located in the national territory by non-domiciled persons, the purchaser must withhold and pay the amount corresponding to two point ve percent (2.5%) of the total value agreed for the sale of the real estate.If the withholding is not made, the Tax Administration assumes that it was made and charges the obligated agent nes and interest.In the case of real estate transactions, it is important to consider the gure of the broker or commission agent, since, if the payment will be made as a remittance abroad, 15% of the commission paid must be withheld.5. Luxury homes taxLuxury homes in Costa Rica have a solidarity tax based on the value of the property. In 2025, owners of homes or apartments whose construction value exceeding ₡145 million must pay the solidarity tax or also known as the "luxury houses" tax.According to Executive Agreement Number 44834-H.The current fees are as follows:TAXES TO BE CONSIDERED IN THE PURCHASE AND SALE OF REAL ESTATEAMOUNT FAREUp to ₡364,000,000.00 0,25%On the excess of ₡364,000,000.00 and up to ₡730,000,000.000,30%On the excess of ₡730,000,000.00 and up to ₡1,095,000,000.000,35%On the excess of ₡1,095,000,000.00 and up to ₡1,462,000,000.000,40%On the excess of ₡1,462,000,000.00 and up to ₡1,824,000,000.000,45%On the excess of ₡1,824,000,000.00 and up to ₡2,191,000,000.000,50%On the excess of ₡2,191,000,000.00 0,55%The payment of the solidarity tax is annual and must be presented and paid on January 15th of each year.4. Property tax:It is a tax in favor of municipalities on land, installations or xed and permanent constructions. Nationwide, the tax rate will be one-quarter of a percentage point; that is, 0.25% of the value of the property registered by the Tax Administration.It is carried out through a declaration formula and the taxpayers are:• Owners with title registered in the NPR• Owners of property not registered in the NPR• Concessionaires of the Maritime-Terrestrial Zone with respect to xed installations and constructions (for the land the fee applies). Doing Business Costa Rica l Real Estate
31FINANCIAL MARKET In Costa Rica, the Financial Market is divided and regulated into 4 large areas: nancial intermediation, securities, insurance and pensions. The National Council for the Supervision of the Financial System (CONASSIF) is the highest ranking collegiate management body in the Costa Rican nancial system, it is made up of 7 members and its purpose is to provide uniformity and integration to the regulation and supervision activities of the National Financial System, as well as to the superintendencies that govern these specic sectors.FINANCIAL INTERMEDIATION: The usual collection of nancial resources from the public for investment in credits or securities, on behalf of and at the risk of an intermediary, can only be carried out in the country by public or private entities expressly authorized by law and by the General Superintendence of Financial Institutions (SUGEF), which is the entity in charge of supervising banks, non-bank nancial companies, savings and credit cooperatives and other nancial institutions. Doing Business Costa Rica l Financial MarketSECURITIES MARKET:The issuance, placement and distribution of securities in Costa Rica, as well as the participants and products of this market, are regulated and supervised by the General Superintendence of Securities (SUGEVAL), the body responsible for ensuring the transparency of the securities markets, the correct setting of prices and the protection of investors. Therefore, stock exchanges, brokerage rms, investment fund management companies and their funds, issuers of securities, risk rating agencies and any other participant in the stock market in Costa Rica are under the supervision of SUGEVAL and must have the relevant permits to operate. INSURANCE MARKET: With the approval of the Free Trade Agreement between the Dominican Republic, Central America and the United States (known by its acronym in English as "CAFTA") the Insurance Market in Costa Rica opened in 2008.There are currently many and diverse participants in this market, which are regulated by the General Superintendency of Insurance (SUGESE), the body responsible for the authorization, regulation and supervision of natural and legal persons involved in acts or contracts related to the insurance, reinsurance, insurance intermediation and auxiliary services in the insurance market.
32NATIONAL PENSION SYSTEM: The basic contributory pension, the mandatory supplementary pension, the voluntary complementary pension and the non-contributory pension are the 4 main pillars in Costa Rica on which the National Pension System is built on. The authorization, regulation, and supervision of the plans, funds, managers and schemes contemplated in the National Pension System in Costa Rica is the responsibility of the Superintendence of Pensions (SUPEN) as the body with instrumental legal personality and capacity and attached to the Central Bank of Costa Rica.Doing Business Costa Rica l Financial Market
33FAQCan the incorporation of a corporation be signed with an electronic signature?In Costa Rica, it is not possible to sign the constitution of a corporation or any other type of corporation with an electronic signature, since the constitution must be signed before an active notary public in a public deed.Can the shareholders of a company be foreigners?Yes, shareholders can be either Costa Rican or foreign as well as national or foreign legal entities.Can the legal representative of the company be a foreigner?Yes, there is no prohibition for the person who occupies the position of legal representative to be a foreigner, however, it is important that their presence in the country would be required in case the company's procedures so require, unless power is granted to another representative in the ways detailed above. If all the members of the company are foreigners, they must appoint a resident agent. Is it possible to form a company in Costa Rica with only one shareholder?No, in Costa Rica it is necessary to have at least two shareholders, who can be natural or legal persons, national or foreign. Should the company keep accounting records?Yes, in Costa Rica every company that carries out economic activities must keep accounting records and must be assisted by a duly registered professional. What is the minimum capital required to form a corporation in Costa Rica?The capital minimum of capital social is ₡10,000, approximately US$20.00.Can a bank account be opened when a corporation is incorporated?Yes, once the company has been established, it is possible to open a bank account. To do this, the nancial institution usually requests a projected cash ow for the rst 12 months of the year. In this case, it is stated that economic activities will be carried out, so an accountant must be appointed.What is required to form a company whose shareholders will be foreigners who will not travel to Costa Rica to sign the articles of incorporation?This is not possible as presented in this case. The options would be:a) The person makes the trip and signs in Costa Rica.b) Allow our ofce to set up the company and then transfer all of the share capital to the client.How long is a company established for?The term of a company must be determined. It is usual to dene a fairly broad term, such as 100 or 200 years. Is it mandatory for board members to be shareholders?It is not strictly necessary. A board member may be a shareholder, but it is not mandatory. Is it possible to issue bearer shares? In Costa Rica it is not possible to issue bearer shares, the most similar option would be the endorsement of shares, which requires registration in the Company's shareholder registry book, simultaneously. Doing Business Costa Rica l FAQ
34FAQDoes the supplier have to compensate the distributor at the end of the agreement? No, if the termination is made for a valid reason or at the expiration of the term. Otherwise, the supplier must compensate in accordance with the classic regime of compensation for damages.Can a non-resident person purchase property? Should he/she do it in personal title or through acompany?Yes, a non-resident foreigner can acquire property in Costa Rica without restrictions, regardless of their country of origin. In addition, they have the option of applying for residency in the country as an investor, based on the purchase of the property.The purchase can be made either individually or through a company, depending on the purpose of the acquisition.Must the origin of the funds to purchase property be justied?According to Law 8204, it is mandatory to justify the origin of funds in nancial transactions. Therefore, the buyer must submit documents that prove the legitimacy of the funds used for the purchase of the property. Purchase option contracts or the nal contract can serve as support for the transaction..Are there any special regulations for beachfront properties?Yes, when considering buying a beachfront property in Costa Rica, it is crucial to keep in mind the Maritime Zone Law, which applies to the rst 200 meters from the high tide line. These 200 meters are divided into two different zones.The rst zone includes the initial 50 meters from the high tide line, designated as a public beach, where no construction is allowed. The next 150 meters, although they cannot be owned as private property, are subject to restrictions and can be leased through a concession granted by the local municipality.Why should I register my intellectual property?The registration of intellectual property is voluntary, but it is advisable to protect a person or company’s interests and prevent third parties from misusing the distinctive signs or inventions of the person or business. In addition, registration is necessary to protect rights against the registration of similar signs by third parties. Registration also allows the intellectual property registration symbol to be used in the trademark, which can be an indicator of trustworthiness and authenticity for customers and consumers.Doing Business Costa Rica l FAQShould the distribution agreement provide exclusivity? No, a supplier can have multiple distributors. However, if the parties so wish, they may grant exclusivity to the distributor, which must be expressly indicated in the contract.Can a supplier terminate a distribution agreement early? Yes, the supplier may terminate the contract early provided that it gives prior notice in accordance with the time limit set out in the contract. If the contract does not specify a notice period, the law establishes a period of 10 months.
35FAQWhat is the difference between my company's corporate name, brand, trade name and advertising sign?The company name refers to the ofcial name of a company or partnership, which identies the entity in legal and administrative documents.A trademark is a distinctive sign that identies a company or product, such as logos, names, or expressions. Trademarks can be registered to protect intellectual property rights and prevent third parties from using similar signs.A trade name is a name that is used to identify a company or product, but it is not necessarily a distinctive sign. A advertising sign is a sign that is used to promote a product or service. Advertising signs and trade names are complementary signs, i.e. they exist together with a trademark, they are registered to promote the brand (advertising sign) or identify the location of the commercial establishment where the products or services protected by the trademark are sold or provided (trade name).Do I have to incorporate a Costa Rican company to register my intellectual property?No, it is not necessary to incorporate a Costa Rican company to register intellectual property. It can be registered by a natural person or an entity, national or foreign. Likewise, foreign or national applicants have the possibility of granting a special power of attorney for a third party to process the registration on their behalf.Only companies and individuals who carry out nancial intermediation have to register with SUGEF?No, in accordance with Law No. 7786 (Law on Narcotic Drugs, Psychotropic Substances, Drugs of Unauthorized Use, Related Activities, Money Laundering and Financing of Terrorism), ca-sinos, the habitual purchase and sale of real estate, the trade in precious metals and stones, trust services, the granting of credit facilities as regulated by CONASSIF, pawnshops and other activities established in articles 15 and 15 bis of Law No. 7786, are considered Designated Non-Financial Activities and Professions (DNFBPs), and depending on the type of nancial activity they carry out, companies and individuals engaged in these activities must register with SUGEF and may be subject to its regulation and supervision on the issues of prevention of money laundering and nancing to terrorism. What are the main products offered in the Costa Rican Stock Market?Stocks, bonds of public and private issuers, commercial papers, nancial investment funds, real estate investment trusts and others. Is it possible for a foreign person to contribute to a pension fund in Costa Rica?Yes, but you must have a legal residency immigration status.Doing Business Costa Rica l FAQ
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