Openning a Bank Account in Costa Rica

Feb 18, 2023 | Commercial Law, General, Inmigration Law

Opening a Bank Account in Costa Rica: The Complete Guide

Foreigners allowed
to open a bank account

ID + Proof of Income
Required for individuals & companies

The Costa Rican banking system is robust and modern, offering services for both residents and foreigners. Opening a bank account is essential for receiving payments, paying bills, and securing your funds against theft or loss.

Requirements for Opening a Bank Account

Profile	Main Requirements
Individual (Resident)	– Costa Rican ID (cédula) – For foreign residents: valid DIMEX card – “Know Your Client” form – Proof of income
Individual (Non-Resident)	– Valid passport + entry visa/stamp – “Know Your Client” form – Proof of income – (Some banks may also request address or additional references)
Corporate	– Certificate of good standing – Company’s shareholder certificate – Documentation for corporate reps – Proof and explanation of origin of funds – Last fiscal financial statements (audited or certified) or projected cash flow if new

Note: Requirements and procedures may vary between banks; it’s best to check directly. For non-residents, banks increasingly accept passports and select bills/contracts for address verification.

Typical Step-by-Step Process

Choose a reputable bank (public or private, see summary table below).
Gather all documentation required by the institution.
Fill and sign the “Know Your Client” form (anti-money-laundering compliance).
Make the initial deposit (amounts vary by bank/account type).
Wait for compliance approval to activate your account.
Start using online and branch services once approved.

Tip:
If you’re denied an account at one institution, don’t be discouraged—requirements and flexibility differ from bank to bank. Try another bank or consult a legal specialist.

Main Banks in Costa Rica: Public v. Private

Bank	Type	Features
Banco Nacional	Public	Largest, high stability, best for secure holdings and broad reach
Banco de Costa Rica	Public	Solid reputation, strong government backing
BAC Credomatic	Private	Excellent online services, streamlined for foreigners
Scotiabank (Costa Rica)	Private	Flexible requirements, competitive digital platforms
Promerica	Private	Modern branches, strong online experience

AML (Anti-Money Laundering) & Ongoing Compliance

All banks must comply with Law 8204 (anti-money-laundering); account holders must periodically update their “Know Your Client” info (at least once a year).
Proof of income or source of funds is mandatory for all individual and corporate accounts.
If you fail to update your profile or answer compliance requests, the bank can close your account.

Important:
Be transparent with your income sources and respond quickly to bank compliance updates to keep your account active.

Frequently Asked Questions

Can I open a bank account as a non-resident foreigner?

Yes. Most banks will allow foreign nationals to open an account with a passport (often requiring a tourist visa stamp), proof of address, and proof of income, but the process is easier with a residency card.

Is there a minimum deposit?

This varies by bank, but usually starts as low as $20 USD. Check with each bank for specific requirements.

What if my application is rejected?

This is common—simply apply at a different bank. Requirements and policies vary, so persistence pays off.

Contact AG Legal — We’ll Help You Open Your Account in Costa Rica

Expert banking guidance: info@aglegal.com

Requisites to Apply as a Digital Nomad

Dec 30, 2022 | General, Inmigration Law, Labor Law

Welcome to our blog on becoming a digital nomad in Costa Rica! This small country, located in Central America, might be the perfect destination for you if you’re a young adult looking to escape the traditional career path and work remotely while exploring a new country. With its stunning natural beauty, friendly locals, and relatively low cost of living, Costa Rica has become a popular choice for digital nomads of all ages. In this blog, we’ll introduce you to what it’s like to be a digital nomad in Costa Rica as a young adult and provide tips and resources to help you get started. Whether you’re looking to live in Costa Rica long-term or take a short-term working vacation, this guide will help you navigate the challenges and opportunities of life as a digital nomad in this tropical paradise.

There is a New Law for Digital Nomads in Costa Rica

On Monday, July 4, 2022, the Regulation to Law 10008, named “Law to Attract Remote Workers and Providers of International Services,” was signed as the Law of Digital Nomads. With the regulation already in force, the requisites to apply as digital nomads are established. These regulations seek the economic reactivation of the country and encourage foreign workers to work in Costa Rica and to have remote work while enjoying the tourist attractions.

This new regulation allows foreign workers (digital nomads) not to face a tedious procedure before the General Direction of Migration and Immigration, the public institution in charge of processing the applications of digital nomads who want to work in our country.

Articles 2 and 4 of said Regulation are relevant because they establish a new migratory category for digital nomads, called “Worker or Remote Service Provider.” The digital nomad is the foreign person who “provides remunerated services remotely, in a subordinate manner or not, using a computer, telecommunications or similar means, in favor of a natural person or legal entity who is abroad, for which he receives a payment or remuneration from abroad for a minimum amount of three thousand US dollars per month ($3,000.00) and in case of requesting legal stay for their dependents of four thousand dollars per month ($4,000.00) (…).”

Digital nomads will have tax benefits such as exemption from payment of import taxes on personal computer equipment or total exemption from tax on utilities related to the income they receive from abroad.

Requisites for Digital Nomads Visa

Essential requirements to fulfill as a digital nomad are in articles 5, 7, and 8 of the Regulation, among them:

Proof of payment of one hundred dollars (USD$100) in favor of the Costa Rican government.
Images of the valid passport pages of the foreign person showing his/her photograph, personal data, and entry stamp to Costa Rica if the person has already entered the country.
Bank account statements accompanied by an affidavit stating that the financial statements were requested and obtained from the corresponding banking entity and indicating that the person has received an income from abroad for a minimum amount of three thousand dollars monthly during the last year ($3,000.00) or in case of requesting legal permanence for their dependents of four thousand dollars monthly in the previous year ($4,000.00).
Every foreign document that is provided must have an official translation into Spanish, made by a Notary Public or official Costa Rican translator.
Finally, when the migratory condition is granted, the foreign person will be able to enter Costa Rica and have three months to attend a face-to-face appointment where the photograph of the corresponding migratory document will be taken. For this appointment, the person shall provide the following:
Proof of payment of $90 for the issuance of the immigration document.
A valid passport and in good condition.
Medical Services Policy covers the applicant and his dependents for the entire stay in the country for at least fifty thousand dollars ($50,000.00).

Best Places to Live for a Digital Nomad in Costa Rica

Besides the practical considerations, many digital nomads choose Costa Rica because of its natural beauty and rich culture. The country is home to many national parks, reserves, beautiful beaches, and bustling cities.

Whether you are just starting as a digital nomad or are an experienced remote worker, Costa Rica is a great destination to consider. With its tax exemptions, strong internet connectivity, and natural beauty, it is no wonder that it has become such a popular choice among digital nomads. So, as a new member of the community of digital nomads in Costa Rica, the first question is where I will live and work.

Costa Rica offers beautiful places where to live; whether you want to stay in Costa Rica for the long term or for the short term,

As follow, you can find a suggestion of the best place in Costa Rica, where you can live and work

San Jose: As the capital and largest city in Costa Rica, San Jose offers a more urban environment and a wider range of amenities, including coworking spaces and reliable internet connectivity.
Manuel Antonio: Located on the Pacific coast, Manuel Antonio is a popular tourist destination known for its beautiful beaches and national park. It has a lively expat community and a variety of accommodation options.
Tamarindo: Another popular beach destination on the Pacific coast, Tamarindo is known for its surf culture and has a variety of cafes, restaurants, and coworking spaces.
Nosara: Located on the Nicoya Peninsula, Nosara is a small town known for its yoga retreats and eco-tourism. It has a laid-back vibe and a strong expat community.
Monteverde: Located in the mountains, Monteverde is known for its cloud forests and outdoor adventure activities. It has a small-town feel and a cooler climate.
Puerto Viejo. it is one of the best locations on the Caribbean coast, where you will be surrounded by exuberant nature and beautiful beaches. In this location, You will be part not only of a strong digital nomad community but also, but a strong foreign community

Do I need a Digital Nomad Visa to Enter Costa Rica?

You can enter the country with a Tourist Visa, where usually you will be allowed to stay 90 days in, and later, you then you can apply for digital nomad status for a period of 90 days in Costa Rica

Digital nomads have become a common sight in Costa Rica, with many choosing this Central American country as their destination of choice. The country’s stunning natural beauty, affordable cost of living, and strong internet connectivity make it an attractive place for those looking to work remotely.
One of the major draws for digital nomads in Costa Rica is that they are exempt from most taxes as long as they are not physically present in the country for 183 days or more per year. This means that digital nomads can take advantage of Costa Rica’s low living cost without worrying about paying taxes on their income.

Internet Providers

Those who are already in Costa Rica will find a good number of internet providers available to choose from. The Costa Rican Embassy can provide information on the different providers and help with any issues that may arise.
Internet providers in Costa Rica range from small, local companies to large international corporations, so digital nomads have a wide range of options. Some popular providers include Claro, Liberty, and ICE, all of which offer a variety of packages and speeds to suit different needs and budgets.

Do the Digital Nomads in Costa Rica Need to Pay Taxes?

After you get your digital nomad visa for Costa Rica, you can start to work. Based on the new law for digital nomads, as long as you stay in the Country, you don’t need to pay any income tax or any tax on your salary, which is a very good incentive, adding to the cost of living in Costa Rica, is lower than some other countries.

Can I Bring my Family with Me?

Yes, you can bring your family with you. In such a case, the rest of the family members must be filed as dependent from the person who shows an income of $4.000 per month. All the members who will apply must comply with the same requisites as the main applicant.

6 New Reasons to be a Resident in Costa Rica

Dec 25, 2022 | Financial Law, Inmigration Law, Taxes

Costa Rica is a small Central American country known for its beautiful beaches, biodiversity, and friendly locals. It is also a popular destination for tourists and expats alike, thanks to its low cost of living and high quality of life. With the approval of Law 9996, new incentives were created, which grant exceptional Costa Rica advantages never seen before. This article gives you an idea of how to get a Costa Rica residency and provides “6 new reasons to be a resident in Costa Rica“.

As general aspects first, the cost of living is much lower compared to many other countries, especially in terms of housing, food, and transportation. This means that you’ll be able to stretch your budget further and enjoy a more affordable lifestyle. Second, it has a strong healthcare system with private and public options. The country also has one of the highest living standards, clean water, reliable electricity, and a robust infrastructure. Third, it is known for its beautiful natural landscapes and eco-tourism opportunities. There is always something new to explore and appreciate, from the stunning beaches to the lush rainforests. Finally, becoming a resident allows you to immerse yourself in the culture and way of life fully. The locals are friendly and welcoming, and many ex-pat communities can help you transition.

Two new laws were recently approved to promote incentives to obtain your residency in Costa Rica, modify the pre-existing immigration law, and get a Costa Rica residency under particular conditions. Because of the interest of many people to come to live in Costa Rica, 6 new tax incentives and reduction of requirements were created for 3 categories of residents and thus promote foreign investment.

It is good to clarify that apart from this new Law and the advantages that we will comment on, a new law called the Law to Attract Remote Workers and Providers of International Services was also enacted, which promotes the entry of digital nomads into Costa Rica, that is, people who work remotely for companies that are located outside the country.

The tax advantages of Law 9996, which was created to ease the requirements to become Costa Rica, was recently approved by the Legislative Assembly and signed by the President of the Republic on July 14, 2021, giving a series of tax advantages for 10 years for those who want to be residents. In this beautiful country. This new Law, called the Law for the Attraction of Investors, Rentiers, and Pensioners, implements changes in 3 immigration categories: 1) Investor Resident, 2) Resident Rentier or Rentista 3) Resident Retired or Pensionado.

The advantages of new law 9996 are:

For the Resident Investor category, the investment in the country is reduced to US $150,000 US dollars
Exoneration of all import taxes one time on household items.
Exemption of all import taxes for a single time of two vehicles, land, sea, or air. The residents in these categories can import vehicles of any brand, yachts, boats, helicopters, airplanes, or any other means of transport, totally exempt from taxes.
Exemption from income tax on revenues in any of these migratory categories.
Exoneration of 20% of the property transfer tax you acquire while the Law is in force and under any of the above immigration categories.
Exemption from import taxes for instruments or materials for professional or scientific practice carried out by the person with the migratory category of investor, retired resident, or rentier resident.

On the other hand, it is good to clarify that these new benefits also extend to people who are dependents of the person applying for residency. Another important aspect is that the person who is residents a and wants to upgrade to an investor, rentier, or pensioner can do so without any problem and apply for the benefits of this Law.

To apply for the benefits of this new Law or get this special status for foreigners, you must apply within the first 5 years of the Law. The benefits of this unique opportunity will be up to 10 years from the moment the tax benefits are granted.

If you want to know the Law in detail, click on this link so that you can read it comprehensively.

Residency Requirements.

For any category, the Costa Rica residency requirements are:

Passport-size photograph.
Birth Certificate.
Criminal History or Lack thereof.
Fingerprints obtained at the police department in Costa Rica.
Register with the Embassy or Consular department of your country in Costa Rica.
Photocopy of your passport that shows the last entry.
Payment of government fees.
If you and your couple are applying for residency, you must provide the marriage certificate and proof of income.
If you are applying for the Costa Rica residency by investment, you must provide proof of your investment of USD$150,000.
If you are applying as a Rentista or Rentier on a fixed income, you will need to prove your monthly revenue of USD$2,500 per month or make a deposit of USD$60,000 in a Costa Rican Bank that will cover two years of revenue. This new category of rentista has recently been improved by the new Law 9996.
If you are applying as a retired or pensionado resident, you must prove an income of USD$1,000 per month.
To apply for any Costa Rican residency, all the documents shall be apostilled or duly authenticated by your country’s consulate.

All applications should take place once the foreigner becomes legal in the country; in other words, that visa has not expired.

Temporary Residency and Permanent Residency

Several types of residency status for foreigners are available in Costa Rica, including temporary and permanent residency. Temporary residency allows individuals to live in the country for a specific period, while permanent residence will enable individuals to live in Costa Rica indefinitely.

Visa Requisites

Nationals from the United States, UK, or Canada citizens, among many others countries, do not require an entry visa to Costa Rica. However, you must have a valid passport and a return ticket to exit Costa Rica within 90 days. The passport must be valid for one day before you enter Costa Rica.
To verify all entry requirements according to your nationality, please click on this link.
If your nationality is not enlisted and you cannot enter without a visa, you will need to hire immigration lawyers to help you.
In some cases, the visa must be applied before the Costa Rican consulate of the country where you live.

The Pura Vida Life

Are you considering a move to a tropical paradise? Look no further than Costa Rica, a small country in Central America known for its lush forests, stunning beaches, and laid-back way of life. Here, you’ll find a culture centered around the phrase “Pura Vida,” which means “pure life” in Spanish and expresses appreciation for the simple things in life.

But the Pura Vida lifestyle isn’t just about the great outdoors. Locals or Ticos are known for their laid-back attitude and appreciation for the simple things in life. Here, you’ll find a strong sense of community and a focus on family and friends. This country is also safe and stable, with a strong democracy and a low crime rate.

Becoming a resident is an excellent opportunity to enjoy a high quality of life at an affordable price; you’ll find a range of options for housing, from apartments in the city to sprawling mansions on the beach. As was said before, the cost of living is relatively low compared to other countries in the region, and the country’s healthcare system is top-notch. Living in paradise means embracing the Pura Vida way of life. It’s about enjoying the simple things in life, spending time with loved ones, and immersing yourself in the beauty of nature. Costa Rica is the perfect place to call home with its stunning natural beauty, warm climate, and laid-back culture.

If you’re considering moving, don’t hesitate to contact AG LEGAL, as reputable immigration lawyers compound many other specialties.

At AG LEGAL, we are more than eager for you to ask us for any details you want.

Hiring a Lawyer in Costa Rica

Dec 25, 2022 | Commercial Law, Criminal Law, General, Inmigration Law, Intelectual Property

The importance of hiring a lawyer in Costa Rica cannot be overstated. The legal system in Costa Rica can be complex, and having a knowledgeable and experienced lawyer on your side can make a big difference in the outcome of your legal matter.

Whether you are involved in a court case, negotiating a contract, immigrating to this beautiful country, or need advice on a legal issue, having a lawyer who is familiar with the laws and legal processes in Costa Rica can be invaluable. A good lawyer can help you navigate the legal system, protect your rights, and achieve the best possible outcome for your case.

But how do you go about hiring a lawyer in Costa Rica? The process can initially seem intimidating, but it’s pretty straightforward once you know what to do. Here are some critical steps to follow:

Determine your legal needs: Before looking for a lawyer, you must understand what kind of legal assistance you need. Do you need a lawyer to help you with a specific legal issue, such as drafting a will, negotiating a contract, or ongoing legal representation in a court case? Understanding your legal needs will help you find the right lawyer.
Research and compare lawyers: Once you know what kind of legal assistance you need, it’s time to start researching and comparing lawyers. You can do this through online directories, recommendations from friends or family, or by contacting the Costa Rican Bar Association.
Understand the different types of agreements on legal fees: When hiring a lawyer in Costa Rica, you will likely be asked to enter into three different types of agreements: a contingency fee agreement, a flat fee agreement, or an hourly fee agreement.
Sign the agreement: Once you have agreed to the terms of the agreement, it’s time to sign the contract and formally retain the lawyer’s services or at least to have some written support.

By following these steps, you can ensure that you have a qualified and experienced lawyer to help you navigate the legal system in Costa Rica and achieve the best possible outcome for your case. Don’t underestimate the importance of hiring a good lawyer – it can make all the difference in the world.

Is it necessary for the lawyer to be in a Law Firm?

In Costa Rica, a lawyer is not necessarily required to be part of a law firm to practice law. Lawyers in Costa Rica can choose to work independently or as part of both options. Have pros and cons to both options.

Working independently can give a lawyer more flexibility and control over their practice. Still, it can also be more challenging to build a client base and handle complex legal matters without the support of a team.

On the other hand, working as part of a law firm can provide access to resources and expertise that may not be available to an independent lawyer.

What is essential is to hire a good law firm in Costa Rica and verify that the lawyer is duly accepted in the bar of attorneys; sometimes, in our law firm, we have seen cases where because of the lack of verification, the client ended up involved in a big legal mess since that person who you think is a lawyer is not a person licensed to practice law.

We will analyze the most usual areas of law where the attorneys are consulted.

When do I need a Real Estate Attorney?

There are several situations where you may need to hire a real estate attorney in Costa Rica. Some common reasons to seek the services of a real estate attorney include the following:

Buying real estate: If you are buying or selling real estate in Costa Rica, the real estate attorney shall check the property before the Public Registry to check the historical movements on the title of the property, review the documents, and represent you in the transaction.
Reviewing and negotiating contracts: If you are entering a real estate agreement, such as a lease or purchase agreement, a real estate attorney can review the terms and negotiate any changes on your behalf.
Resolving disputes: If you are involved in a real estate dispute, such as a boundary dispute or a dispute over the terms of a contract, a real estate attorney can represent you in court and help you resolve the dispute.
Obtaining financing: If you need financing to purchase real estate in Costa Rica, a real estate attorney can help you negotiate the terms of the loan and review any related documents.
In Costa Rica, most Real Estate attorneys are notary publics, which means that usually, in any real estate transaction where the property title is transferred, you will need a notary public.

Overall, if you are involved in any real estate transaction or dispute in Costa Rica, it’s a good idea to seek the advice of a real estate attorney to protect your interests and ensure that the transaction is handled correctly.

When do I need an Immigration Attorney?

If you are planning to move to Costa Rica or are already living in, you will need help with immigration issues; you may consider hiring an immigration attorney. Here are some everyday situations in which you might need an good legal service:

Applying for a visa: If you are planning to visit, work, or study in Costa Rica, you may need to apply for a visa. An immigration attorney can help you determine which type of visa is best for your situation, help you gather the required documentation, and guide you through the application process.
Plan permanent residence: Ipermanentlyo live in Costa Rica permanently, you will need permanent residence. Permanently can help you understand the requirements for obtaining permanent residency and assist you with applying.
Renewing your visa or residence permit: If your visa or residence permit expires, you will need to renew it to continue living in Costa Rica. An immigration attorney can help you understand the renewal process and ensure you have all the necessary documentation.
Applying for citizenship: If you are eligible and wish to become a citizen of Costa Rica, an immigration attorney can help you understand the requirements and assist you with the application process.
Resolving immigration problems: If you have problems with your immigration status in Costa Rica, such as being denied a visa or facing deportation, an immigration attorney can help you understand your rights and options and represent you in the legal proceedings.
Retirement plan: if you plan to retire in Costa Rica, hiring a good attorney must be your first step.

The Importance of hiring a good Corporate Lawyer.

Hiring a good corporate lawyer in Costa Rica is essential for businesses of all sizes and types. A corporate lawyer can provide valuable legal guidance, explaining to you the business law and representation for a wide range of business-related issues, including:

Formation of the business: If you are starting a new business in Costa Rica, a corporate lawyer can help you choose the proper legal structure for your business, such as the type of corporation, partnership, and assist you with the formation process.
Compliance with laws and regulations: A lawyer who knows corporate law can help ensure that your business complies with all relevant laws and regulations in Costa Rica, including tax laws, labor laws, and environmental regulations.
Contract review and negotiation: You can review and negotiate contracts for your business, including agreements with vendors and customers.
Risk management: A corporate lawyer can help identify and manage legal risks that may affect your business, such as liability risks or intellectual property issues.
Investment: Also, if you are investing, you need to double-check who you are dealing with; a corporate attorney can help you to decide if it is a good or bad investment.
Trademark: It is essential to register your brand or logo before starting to operate.

Overall, getting the correct legal service, and getting the right legal guide to Costa Rica, can be the difference between having a successful start in a foreign country like Costa Rica.

Embassies Attorneys list

Even though Spanish is the official language, you can find lawyers who speak English, so at least two embassies enlisted a list of law firms and attorneys who speak English that can provide legal consultation for your local or international legal issues.

For the UNITED ESTATES OF AMERICA EMBASSY, you can check here: CLICK HERE USA EMBASSY.
For the UNITED KINGDON EMBASSY, you can check here: CLICK HERE UK EMBASSY.

Re-registration of dissolved companies

Aug 1, 2022 | Commercial Law, Taxes

On Tuesday, May 31^st, 2022, through the Official newspaper, The Gazette Number 100, the Re-registration of Dissolved Companies Law was published. This recently approved bill aims to promote national economic reactivation because dissolved companies will be able to resume the lucrative activities for which they were created.

The present Law establishes that dissolved companies can re-register before the Legal Entities Registry of the National Registry to recover their legal status. Three circumstances can occur for the re-registration: 1) if the company was dissolved for not paying the Corporate Tax, 2) for the expiration of the company’s legal term (according to the Law of Corporate Tax), or 3) for the expiration of the company’s legal term as stipulated in the public deed of incorporation of the company, according to article 201 of the Costa Rican Commerce Code.

For the re-registration to proceed, Law Number 10255 indicates that a request must be made to the National Registry within a term not exceeding three years after the declaration of the company’s dissolution. The legal representatives must make this request of the dissolved company if payment of all the pending amounts is paid, the principal sum of the tax obligation, fines, sanctions, and related interest.

Another important aspect of this Law is the provisions of article 6, which adds article 7 bis to the Law of Corporate Tax. This reform establishes that if re-registration proceeds due to the payment of debts previously paid by the legal representative of the company, and it is dully re-registered in the Legal Entities Registry, the company must also comply with the Law to Improve the Fight against Tax Fraud (Law Number 9416), about submitting the Declaration of Shareholders Registry and Ultimate Beneficiaries within a legal period not exceeding two months.

Finally, according to the Transitional Provisions of this Law, it is established that the Executive Power must issue a regulation that includes the re-registration request within the next three months of the start of the full force of this Law. Also, if the companies were declared dissolved five years before the full power of this law, the legal representatives can request the re-registration if they comply with this law’s requirements. This regulation has not yet been published; therefore, this Law does not have the possibility of being applied until the respective code is issued.

This Law must not be confused with another law published in 2017, where the re-registration of dissolved companies by debts was allowed but having paid the Corporate Tax no later than December 15^th, 2017, once this date ended, the possibility of re-registration given by that law was no longer available. This new law, Law Number 10255, does not count with a specific term to comply with the payment, which means that almost all dissolved companies can be re-registered before the Legal Entities Registry.

Inactive Companies Income Statement

Jan 16, 2022 | Commercial Law, Taxes

On the 20th of December 2021, the Ministry of Finance issued a statement indicating that as of the 1st of January 2022, a simplified form will be available for the declaration of the Income Tax of Inactive companies.

This procedure will be carried out virtually through the Virtual Tax Administration (ATV) platform, which can be found on the official Ministry of Finance website. The document available to make this declaration is Form D-101 (Simplified Income Tax Declaration), in which information for the fiscal periods of years 2020 and 2021 will be declared.

The legal ground for this operation is indicated by the Law for the Strengthening of Public Finances (Law No. 9635) in article 2 subsection a). This regulation obliges all legal entities to comply with the Income Tax declaration, regardless of whether they carry out lucrative activities or not.

As stated above, inactive companies will be considered as taxpayers and will be assigned the code 960113, which is intended to identify companies that do not carry out income-generating activities in Costa Rica. These non-profit companies, which will now be considered as taxpayers, must comply by presenting the Form D-101.

Inactive companies are understood as those legal entities that do not carry out generating economic activities at a national level, in other words, companies that do not produce profits or generate income. Companies that only have the purpose of owning some asset, being a vehicle, a house, shares, or other types of assets.

Before making this declaration, interested legal entities may consult the tax situation of their companies to make sure they remain in order. This consultation can be done on the Ministry of Finance official website, in the Tax Situation Consultation section.

It is worth noting the term provided by tax authorities to present this declaration. According to the statement provided by the Revenue Office, inactive companies have a two-month and fifteen-day period to comply with this obligation, which will begin to be computed from 1st of January, 2022 and expires on the 15th of March of this year (2022).

At last, it is important to take into account that to carry out this operation, the information regarding the legal representatives and the registered offices of the inactive companies must be up to date. This means that the information can be verified by the Tax Administration and must be real, thus proceeding with the filing of the Simplified Income Tax Return for the aforementioned fiscal periods of the years 2021 and 2021.

An important aspect to consider is whether the company has active assets or non-registered assets or if these are only found in its accounting books. At this time, it is highly important to be updating the value of the company’s assets. While it is true that a person can make a statement with basic accounting knowledge, it is preferable always to be assisted by a professional.

This type of declaration should not be confused with other tax obligations such as the payment of the tax on legal entities, the declaration of real estate or the solidarity tax for the strengthening of housing programs (ISO) and the municipal taxes; For example, a person who has a house registered in an inactive company would be responsible for paying the following taxes: a) land taxes. b) municipal taxes. c) taxes of legal entities and d) in case its value is included within established law terms, it would also have to pay the solidarity tax for the strengthening of housing programs (ISO).

In case of having an inactive company whether having registered assets or not, do not hesitate to contact us. Our commercial partner AG BPO SERVICES can help you make the declaration.

Law for the Attraction of Investors, Rentiers, and Retirees

Aug 8, 2021 | Inmigration Law, Taxes

ARTICLE 1- Object of the law

The purpose of this law is to create the regulatory framework to encourage the attraction of investors, rentiers, and retirees, thus protected by Law 8764, General Law of Migration and Foreigners, of August 19, 2009, to contribute to the Costa Rican economic reactivation in a post-Covid-19 pandemic period.

ARTICLE 2- Scope

This law will apply to all those people who are authorized to enter our country under the immigration categories of investors, retired residents, or rentier residents.

ARTICLE 3- Declaration of public interest

This law is of public interest for the development of the attraction of investors, rentiers, and retierres to the national territory. For its fulfillment, the institutions of the Public Administration may include economic contributions to support the fulfillment of its purposes through the ordinary and extraordinary budgets of the Republic.

ARTICLE 4- Rectory

The governing body of what is protected in this law in the matter of migration will be the General Directorate of Migration and Foreigners, a body attached to the Ministry of the Interior and Police. Concerning tax matters will be the Ministry of Finance.

ARTICLE 5- Incentives

The people covered by this law will enjoy the following incentives:

a) Duty-free and all import taxes present only once, for the importation of household items. In the applications, they will be able to protect their dependents for immigration purposes. Household goods shall be understood as all new or used items of a reasonable nature and quantity and proportionally sufficient for the needs of the beneficiary of this law and the members of their immediate family nucleus, including, among others, home furnishings and electrical appliances. , home decor items, kitchen and bathroom utensils, bedding.

Suppose the beneficiary person transfers these assets within the validity period of the benefits granted by the provisions of the second paragraph of Article 12 of this law. In that case, they must pay the taxes from which they were exempted.

In highly qualified situations, where there is destruction or loss due to theft of household items, the beneficiary may acquire other assets for their replacement, also exempt from taxes. The regulation will develop the accreditation mechanisms of the circumstances in which these qualified exceptions proceed.

b) Beneficiaries may import up to two land, air, and/or sea transportation vehicles for personal or family use, free of all import, tariff, and value-added taxes. In case of loss of the vehicle due to theft, destruction by fire, flood, collision, or accident occurring during the term of validity of the benefits granted following the provisions of the second paragraph of article 12 of this law, the owner may import another vehicle free of the indicated taxes.

The beneficiary of this law, who has imported a vehicle under the conditions indicated in the previous paragraph, may sell or transfer it to third parties, in which case the provisions of article 10 of Law 7088, Tax Adjustment and Resolution, will be applied. 18th CA Tariff and Customs Council, of November 30, 1987.

c) The amounts declared as income to qualify for the benefits of this law will be exempt from income tax.

However, the income obtained in the national territory, resulting from the investments made in the country, will be taxed by income tax, according to what is provided in Law 7092, Income Tax Law, of April 21 1988.

d) Twenty percent (20%) of the total transfer tax will be exonerated on real estate that they acquire within the term of this law, provided that the beneficiary is the registered owner of the asset.

If the beneficiary person transfers these assets within the term of this law, they must pay the taxes from which they were exempted.

e) Exemption from import taxes for instruments or materials for professional or scientific practice, carried out by the person with the migratory category of investor, retired resident, or rentier resident. The person must demonstrate to the Ministry of Finance that what is imported corresponds to his economic activity and has criteria of proportionality and reasonableness.

ARTICLE 6- Tax residence

Foreign persons classified as investors, retired residents, or rentier residents, according to this law and who invest in Costa Rica, will not be automatically considered tax residents under Law 7092, Income Tax Law, of April 21, 1988, and its regulations, being subject to due diligence processes for the exchange of information with other jurisdictions under an international agreement, following article 106 quarter of the Code of Tax Standards and Procedures. The status of tax resident will be obtained only when the requirements of the final paragraph of Article 2 of Article 7092, Income Tax Law, of April 21, 1988, and Article 5 of the Income Tax Regulations are met.

ARTICLE 7- On the resignation or cancellation of the condition of investor, rentier resident, or retired resident

If the beneficiary person renounces his condition of “investor,” “pensioner resident,” or “rentier resident,” or if the General Directorate of Migration and Foreigners cancels his immigration status for having incurred In any of the cases contemplated in article 129 of Law 8764, General Law of Migration and Foreigners, of August 19, 2009, within the term of this law, you must pay the taxes from which it was exempted.

ARTICLE 8 Investors

For the category of investors, for the term established by this law, a new investment range is established, with a capital of not less than one hundred and fifty thousand US dollars (US $ 150,000.00), according to the official sale exchange rate. determined by the Central Bank of Costa Rica, whether in real estate, registrable assets, shares, securities, and productive projects or projects of national interest. In those cases where special laws regulate the investment, it will be analyzed individually.

In addition, beneficiary investors for this law may be considered those who invest in venture capital funds or sustainable tourism infrastructure projects.

ARTICLE 9- Processing

The Ministry of the Interior and Police, through the General Directorate of Migration and Immigration, in attention to the criteria for simplifying procedures, will have a specialized service window for the categories provided in the second article of this law, regulated in Law 8220, Protection of Citizens from Excess Requirements and Administrative Procedures, of March 4, 2002.

In addition to the requests dealt with directly at the window in question, the Ministry of Appointment may open a window under the same conditions of service at its different locations or dependencies.

ARTICLE 10- Falsification of documents

Whoever alters or falsifies documents to obtain any of the benefits provided in this law will be sanctioned with a fine equivalent to ten percent (10%) of the taxes that were exonerated. Additionally, you must proceed with the immediate payment of the full amount of the taxes that were exonerated. The foregoing is without prejudice to other administrative and criminal penalties that may apply.

The respective sanctioning procedure will be carried out by the General Directorate of Migration and Immigration, by the provisions of article 189 of Law 8764, General Law of Immigration and Immigration, of August 19, 2009. For its part, according to the provisions of this law, the Ministry of Finance will supervise and sanction following the corresponding legal framework.

ARTICLE 11- Regulations

The Executive Power will regulate this law within the sixty days following the date of its entry into force.

ARTICLE 12- Validity of the law

Investors, rentiers, or pensioners who opt for the benefits granted in Article 5 of this law may do so only during the first five years from its entry into force.

Investors, rentiers, or beneficiary pensioners who opted for said benefits during the first five years of the law’s validity will keep them for ten years from the date they were granted.

Governs from its publication.

Legal and Tax Implications for Inactive Companies In Costa Rica

Jan 19, 2021 | Commercial Law, Taxes

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In past years it was very common to use inactive companies as a legal structure to protect assets. The foregoing, because it was a corporate figure that was exempt from certain tax requirements, unlike those that develop a commercial activity.

Because of the entry into force of the Law on Strengthening Public Finances (Ley de Fortalecimiento de las Finanzas Públicas) in 2018, the benefits of using an inactive company as a corporate vehicle for the protection of assets, undergoes a significant shift. The above, because it converts this type of companies into taxpayers and it forces them to comply with 5 tax requirements, which are the detailed as follows:

FILING OF D-140 FORM: Once an inactive company is dully incorporated before the Costa Rican National Registry, it must file before the Tax Authority an update of the information regarding its legal representative or representatives and its tax address. Additionally, the company must be registered under the economic activity of “Legal persons incorporated in the country that does not carry out economic activity of a Costa Rican source”, which is governed by code 960113. It is important to consider that in the event of non-compliance with this first post-incorporation requirement, the company is exposed to a sanction. Lastly, this requirement must be complied within the period of 10 business days from the incorporation of the company.

CORPORATE TAX: This is a tax must be paid annually, during the month of January of each year. The amount to be paid varies from year to year and can be paid from any digital platform of the banks registered in the national financial system. The amount to be paid varies depending on whether it is an inactive company or an active company.

EDUCATION AND CULTURE STAMP: This tax It is included with the legal expenses at the incorporation of the company. Subsequently, this tax must be paid annually between the months of February and March of each year. The net capital reported in the Income Tax return of the immediate prior fiscal year, is used as the basis for calculating such tax.

ULTIMATE BENEFICIARY OWNERSHIP DECLARATION (UBO): This declaration is filed annually during the month of April before the Central Bank of Costa Rica. The purpose of this declaration is to indicate who is the final beneficiary (physical person) who is owns company. The omission this requirement carries out several sanctions to the company, such as a pecuniary fine, the non-issuance of good standing certifications and the non-registration at the Costa Rican National Registry of documents in relation to the company.

INCOME TAX RETURN (FORM D-101): One of the most important modifications that are introduced with the aforementioned law, is the filing of the Income Tax Return, in which the capital stock, assets and liabilities of the inactive company must be stated. This declaration will be taken as the basis for the calculation of the Corporate Tax, Education and Culture Stamp and other future tax liabilities. The failure to submit this declaration form entails financial penalties and in the face of an audit by the Tax Authority, the company would be exposed to an additional penalty for the increase of the corporate assets without justification. This requirement must be submitted annually and expires on March 15.

In conclusion, with the introduction of these new tax requirements that all inactive companies must fulfill, this promotes to maintain the corporate information updated. The above, because these companies stopped being simple holders of assets and from now on, they are subjected to a meticulous tax inspection. Therefore, the only way to avoid this type of sanctions is to keep everything in order and in compliance as if the said company, would be developing a commercial activity like any company called “active”.

TAX OBLIGATIONS INACTIVE COMPANIES	DUE DATE
FILING OF D-140 FORM	10 business days from the incorporation of the company before the CR National Registry,
CORPORATE TAX	January 31st
EDUCATION AND CULTURE STAMP	From February to March
UBO	April 30th
INCOME TAX RETURN (FORM D-101)	March 15th

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The Faculty of Municipalities in Costa Rica to Issue Securities

May 10, 2020 | General

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Prior to the enactment of the Municipal Code, by Law No. 7794 of April 30th, 1998, its predecessor Code silent on this possibility. Before this it was decided to consider that according to the “Principle of Legality” if there was no express authorization for such an act, you could not do it. This raises the possibility of a comprehensive reform of the Municipal Code (CM), seeking to strengthen the autonomy, so that the former Article 4 is removed and the door opens to each Municipal Government to establish its financial possibilities to seek solutions to the considered priority areas.

With this intention there are incorporated into the CM, a number of provisions that ensure the availability of using financial instruments that provide the deftness to give financial support to their development projects, of infrastructure formedium and long term.

The Article 87 of the valid CM establishes:

“The municipalities may issue certificates to finance themselves. These securities are subject to the rules of the National Securities Commission and shall be exempt from all Taxation”
The estate of the semiautonomous and autonomous agencies, the estatal Enterprise estructures as corporations and municipalities are empowered to intervene in municipal certificates.

Meanwhile, the articles 88 to 90 established in their order the following:

“Article 88. – Through institutional agreements, state support and some other ways to collaborate, it could be created a fund endorsement guarantee of the municipal emissions, with the rules and conditions estatuidas in the regulations that every municipality creates for effect.

“Article 89. – The obtained funds with bonds only could be use to the purposes stated in the emission.”

“Article 90.- The municipalities must design payment plans and attention ones appropriate to their duties. For this, they must include, in their budget, in their regular estimate, enough parties to fulfill the commitments.

Then, from the transcribed provisions we can clearly draw the following:

o MUNICIPALITIES CAN ISSUE “CERTIFICATES”, to finance themselves.

o The provisions were concerned not only to regulate the offer, but also the demand, when in Article 87, authorizes “THE STATE, THE AUTONOMOUS BODIES, (…)” to invest in municipal bonds.

o The legislation marked the possibility to create, either through institutional agreements (between Municipalities and other entities, between the Municipalities and the State) a GUARANTEE WARRANTY FUND OF MUNICIPAL SECURITIES, for the purpose of placing on the organized securities market, fund that as we understand, has not yet been created, but it would not hurt to try to propel the chance to give more presence and appeal to their emissions.

o The legislator, foreseeing rules to avoid mismanagement (detour to other projects) in funds raised, forces in his Article 89 that “the proceeds from bonds may only be used for the purposes indicated in the issue” that to maintain the spirit of “bond issue to finance specific infrastructure projects.”

o It also grants an interesting tax incentive, where Article 87 states that the bonds “SHALL BE EXEMPT FROM PAYMENT OF ALL TYPES OF TAXES“, whereby the payment of income tax is abolished, on interest and discounts referred in Article 23 of the Law on Income Tax and gross income. This notwithstanding subsequent analysis of the effect it may have on the creation -for instance – of a Municipal Investment Fund (MIF) in relation to the arrangements that exist in Article 100 of the current LRMV.

o It also requires municipalities to “program” payments of obligations and budget them in due form, otherwise the Comptroller General of the Republic not to approve their budgets.

We observe then the provisions, an obvious intention of the legislature to promote and facilitate the issuance and placement of “municipal bonds”.

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How to File a Property Appraisal in your Municipality

May 9, 2020 | General

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The appraisal of a property for tax purposes should be performed according to the Base Values per Constructive Typology Manual criteria, set by the Technical Standardization Department of the National Treasury.

All property value assessments must meet as a requirement, a detailed description of each type of construction, and any installations or additions within the plot.

The knowledge of the above requirements, allows the taxpayer to determine if a given appraisal was performed in accordance to the established technical and legal norms and eventually to appeal when the appraisal is considered not to comply with them.

If the appraisal ignores or violates any of the established procedures, the taxpayer can request for its annulment.

The appellate procedure for an appraisal is:

To present a motion for revocation before the Property Department of the pertaining Municipality.
If this motion is rejected, the user must file an appeal before the Municipality Council.
If the appeal is rejected, the law grants 15 working days to file another appeal with the Administrative Tax Court.

The Administrative Tax Court is in charge of ultimately deciding whether or not the Municipality will proceed with a new appraisal.

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Double Taxation

May 9, 2020 | Taxes

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Nowadays, commercial activity has become globalized and many companies have extended their operations across borders. When a company operates in several countries the dilemma suddenly arises: where should income be reported? where should taxes paid?

Every country has its own tax regulations, and per their sovereignty, a company could be required to pay taxes in the countries where it conducts its enterprises.

It was looking for tax justice, that the principle of double taxation was conceived and developed. This principle prohibits governments from taxing the same individual for the identical concept or activity.

This predicament has led nations to establish various measures in order to avoid double taxation. Internal legislation has been enacted to regulate this issue, but faced with the impossibility to completely solve the problem; countries have resorted to international treaties in order to reach a more integral solution.

Costa Rica has joined this initiative and currently has signed treaties with Spain, United States and with some Central American countries.

The existence of these agreements in order to avoid double taxation is essential to promote foreign investment, as they provide legal security to investors and reduce taxation to such investments, and ultimately avoid for investors, disadvantageous scenarios for competitiveness.

Currently, the potential admission of Costa Rica to the Organization for Economic Cooperation and Development (OECD), will further impulse this initiative, since one of the objectives of the entry of Costa Rica to this organization is to improve the business climate within the country and ensure the security of the investments made in national territory.

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Important Aspects of the Corporate Taxes Law N°9428 (Costa Rica)

May 2, 2020 | Commercial Law, Taxes

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Field of application

To all corporations, to the representatives or branches of foreign corporations and to LTDA/SRL companies; it applies to both the corporations that are already registered as well for the ones that are going to be registered in the Mercantile National Registry.

Payment

Each tax period will be counted from January 1° to December 31° of the same year.

For the entities that are already registered, the tax will generate on January 1° of each year and the payment has to be done during the next 30 days counted from January 1° of each year.

As for the entities that are set up during the year, the taxes have to be paid in the next 30 days counted from the day of submission of the public deed of Constitution of the Corporation before the National Registry. The rate has to be proportional to the time left between the date of submission of the deed and the end of the tax period. The discount stated in the Law of Taxation of the National Registry will not apply.

The tax is paid through the means, forms and conditions stablished for this purpose by the National Tax Office.

Rates

The law lists four scenarios under which the rate that must be paid is established:

The corporations that are registered in the Registry of Corporations, but not in the Unique Tax Registry of the General Directorate of Taxation, must pay an amount equivalent to 15% of a monthly base salary (office worker 1) according to the second article of the Law N°7337.

Taxpayers of the utility tax who have declared a gross income lower than one hundred and twenty base salaries regarding the utility tax of the last period, must pay an amount equivalent to 25% of a monthly base salary.

Taxpayers of the utility tax who have declared a gross income between a hundred and twenty and two hundred and eighty base salaries regarding the utility tax of the las period, must pay an amount equivalent to 30% of a monthly base salary.

Taxpayers of the utility tax who have declared a gross income equal or superior than two hundred and eighty base salaries regarding the utility tax of the last period, must pay an amount equivalent to 50% of a monthly base salary.

The legal representatives of the corporations are jointly responsible for the neglect of payment of the taxes stablished in the Law.

Sanctions

In case of non-compliance, the Code of Rules and Procedures of Taxes.

The National Registry will not be able to issue certifications, nor register any document in favor of taxpayers who are not up to date with the payments of this tax. Notary Public that issue certifications to the overdue taxpayers must record this condition in the respective document.

The overdue taxpayers cannot contract with the Government or any public institution.

The debts derived from this tax will constitute preferential legal mortgage or preferential liens on the corporation assets.

The neglect of payment for 3 consecutive periods is cause of dissolution. The National Tax Office will send to the National Registry a report of the taxpayers that did not payed the taxes, so that the National Registry can proceed with the cancelation of registry and asset annotation.

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