Corporate Law at Costa Rica
Sure! Here’s an overview of Corporate Law in Costa Rica — covering how companies are formed, regulated, and key features relevant for doing business there:
Corporate Law in Costa Rica
1. Legal Framework
Corporate law in Costa Rica is mainly governed by the Commercial Code (Código de Comercio) and other specific laws.
The General Law of Companies regulates types of companies, incorporation, and governance.
Costa Rica also follows international treaties related to commerce, investment, and anti-money laundering.
2. Types of Business Entities
The most common types of corporate entities in Costa Rica are:
Sociedad Anónima (S.A.) — Corporation
Most common corporate vehicle.
Shareholders have limited liability.
Requires at least two shareholders.
Can issue shares freely.
Shareholders can be individuals or corporations, residents or foreigners.
Sociedad de Responsabilidad Limitada (S.R.L.) — Limited Liability Company (LLC)
Limited number of partners (usually between 2 and 25).
Partners’ liability limited to their capital contributions.
More flexible management than S.A.
Sucursal (Branch)
Foreign companies can open branches in Costa Rica.
Branches must register with the Public Registry.
3. Incorporation Process
Draft and notarize Articles of Incorporation (Escritura Pública).
Register company in the National Registry (Registro Nacional).
Obtain tax ID (Número de Identificación Tributaria, NIT) from the Tax Administration (Ministerio de Hacienda).
Register for social security and other local requirements.
4. Corporate Governance
Corporations (S.A.) have a Board of Directors and a General Shareholders’ Meeting.
LLCs (S.R.L.) are managed by one or more managers, often partners themselves.
Annual general meetings are required.
Companies must keep accounting books and financial records according to Costa Rican law.
5. Capital Requirements
No minimum capital required for S.A. or S.R.L.
Capital contributions can be in cash or in-kind assets.
6. Foreign Investment
Costa Rica allows 100% foreign ownership in most sectors.
Some restrictions may apply in strategic sectors (e.g., utilities, telecommunications).
7. Taxation
Corporate income tax generally applies at 30%.
Costa Rica has a territorial tax system: income generated outside Costa Rica may not be taxed.
Value Added Tax (VAT) at 13% applies to goods and services.
Companies must file annual tax returns and financial statements.
8. Compliance and Reporting
Companies must file annual reports and maintain proper accounting records.
Certain regulated sectors (financial, insurance, etc.) have additional compliance requirements.
Anti-money laundering regulations are enforced.
Why Choose Costa Rica for Incorporation?
Stable political and economic environment.
Strong legal system with protection for investors.
Strategic location in Central America with access to major markets.
Competitive corporate tax rates and incentives for free trade zones.
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