Creation of a corporation in Costa Rica

Corporations are juridical persons that are a separate entity of the physical persons who form it and have their own unique ID number. This means that corporations can own business and assets, become an employer, participate in contracts, among many other aspects. 

In Costa Rica, corporations can be either a “Limited Responsability Corporation or Sociedad Responsabilidad Limitada” or “Anonymous Corporation/ Sociedad Anónima”. These are both corporations that are capital corporations as their ownership are represented by titles called “Shares” or “Cuotas” depending the type of corporation. In both cases, the main benefits are they serve as a shield against the personal assets of their partners and representatives.

The difference between a limited liability company and a corporation is in the ease of administration, for example a limited liability company only requires a manager, while the SA requires a board of directors composed of at least the president, secretary, treasurer, fiscal.

In order for a corporation to act it does requiere a human to do actions under their name. These legal representatives in Costa Rica are called “Apoderados” and you can have 2 type of apoderados: generalisimo or especial. The especial apoderado is for something in concrete , once you finish that special request it expires.

While the generalisimo is a general authorisation to represent the corporation for general acts, and its authorisation must detail the quantum of the matters he can get involved.For instance an apoderado generalisimo can receive a general authorisation to participate in any type of interaction with private and public institutions that have an economical limit of USD10,000 or it can be fixed as the amount to be unlimited but only for acts before the public administration. The legal authorisation to represent the corporation can also specifically exclude the apoderado capacity to enter into debts, sell property or get a mortgage. In any case as a legal representative will act in the market, it must be register before the public registry, so third parties can review if the person saying it has a legal authorisation to act under the name of a corporation actually does

A legal representative (apoderado) with generalisimo faculties does not mean it has unlimited power to do whatever it wants, it remains being an agent of the corporation and it has the obligations to represent its best interest and will be legally responsable, civil and criminal responsibility for its actions .

From a practical scenario, I have seen that investors that are not based in Costa Rica sometimes have limitations to conduct the different interactions that they need to make in order to properly handle their corporations, that is why that I offer the additional service to serve as their legal representative. And as such, I appear as one of the representatives (in addition to any others) at the public registry.

One of the advantage of having Simple Legal Consulting as legal representative is that we can make sure that annual obligations of the corporations are fulfilled: payment of annual corporate tax, declaration of final shareholders before the central bank and declaration of inactive corporations.

An Agente Residente is required whenever any of the legal representatives does not have a domicile in Costa Rica.

The Agente Resident, which it is required to be a practicing lawyer, will serve as the “go-to” person for any notification.

The Agente Resident only has the power to receive notifications, nothing else.

1. Annual declaration of final beneficiaries. This obligation implies revealing who the final beneficiaries of the company are, the obligation must be fulfilled every year and must be carried out by someone with the powers of a general or special attorney. In any case, it must have a digital signature. Failure to comply implies a penalty between 4 and 100 minimum wages or a percentage of gross income.

2. Annual net worth statement for inactive corporations. This is required regardless to inactive corportations who are not enrolled as provider of services before the tax authority. It is also independent of whether or not the corporation has assets. It is a tax obligation that must be met or the penalty can be up to USD$10,000.

3. Annual corporate tax. In Costa Rica, by the mere fact of existing, companies pay a tax on their existence. This amount will vary depending on whether the company is active before the tax authority or not. The annual tax is around USD$200-400.

4. Monthly VAT statement. This obligation is only for companies duly active before Taxation and implies declaring the amount of sales and the VAT collected on a monthly basis. This is usually done with a counter, but you can do it without.

5. Annual income tax return (profits). This obligation is only for companies duly active before Taxation and implies declaring the income and costs incurred to determine the value of the income tax to be paid.

The income tax brackets for companies start at 5% and go up to 30% for companies that have a gross income that exceeds ¢122,145,000. The complete list can be seen at this link on the page of the Ministry of Finance.