Costa Rica Company Incorporation
Constituting a new corporation in Costa Rica
If you plan to do business in Costa Rica, purchase a vehicle or real estate, you might as well form a company or companies as soon as possible. However, before doing so, please have the following basic considerations in mind:
- It is not that the lawyer wants to make an additional fee at your expense, if the Costa Rican legal system offers this advantage it is not intelligent not to use it.
- When you incorporate in Costa Rica, you establish a local company that can conduct all sorts of legal commercial activities in the country and offshore. You have the option of forming a new corporation or buying a ready-made shelf company or corporation.
- The main advantage of constituting a new corporation is that it has limited liability, which in very simple terms means that the inevitable risk involved in daily business transactions, will not affect your personal assets or assets owned by other companies that you control.
- Take into consideration that the incorporation process in Costa Rica is handled exclusively by an attorney at law who is also authorized as a Notary Public.
- The incorporation process lasts about 2–3 weeks after the formation of the company, deed is properly signed by the beneficiaries.
- The use of Costa Rican companies can seem complicated at first, but if handled by an experienced asset protection lawyer, it will be the first step towards your success in.
- If you buy a vehicle or real estate under your name and not using a Costa Rican corporation, anybody can conduct a title search with your passport number in the National Registry and find out what assets you have, how much they cost, how much you owe, how much you pay monthly, etc.
- If you run a business using your personal name as the employer, your personal name and assets will be exposed to labor lawsuits in a country that has a protectionist approach towards employees.
- It is ideal to own valuable assets under a separate corporation each, in the event that one of them is involved in a legal dispute; the other assets are safe from lawsuits.
- If you bought your car or house using for each an independent corporation, when you decide to sell them, the sale process will be facilitated as the buyer could just receive the control of the corporation and avoid expensive transfer taxes and legal fees.
- What is a Shelf Company? Also, known as shelf corporations or ready-made companies, they are limited liability corporations that are already incorporated in Costa Rica and that can be used immediately to purchase a property, sign contracts, purchase a vehicle, obtain a local telephone line, lease a property, etc.
- Why should someone purchase a shelf company versus going through the normal incorporation process? The answer is very simple, when we are contacted by our clients, we normally listen to their business needs, and based on that and their seriousness to start, we recommend them to start the incorporation process as soon as possible. The incorporation procedures will take from 2 to 3 weeks and many times business opportunities can’t wait, so if you listen to us and form a Costa Rican company with time, you will be proceeding the right way, saving money and properly protecting your assets. However, if you can’t wait, and you need to conduct immediate business transactions in Costa Rica, we offer the option of shelf companies that have not had any activity for our clients to acquire them.
Costa Rica Companies Incorporation Process
Because the mission of Lawyers of Costa Rica is to protect the interests of our clients, our efforts are centered on the clear explanation of the Costa Rican incorporation process, which is seen by our firm as the initial key aspect.
Our service: There are two main types of corporations, the S.A. (Sociedad Anónima) and the S.R.L. (Sociedad de Responsabilidad Limitada), both offer the benefit of being a limited liability corporation. The first one is operated by 4 directors, while the second one can be operated by one person, simplifying the operation for international beneficiaries.
We strongly suggest you contact our legal team so that you can explain to us your specific needs, and together we can form a personalized legal structure.
Get Professional Legal Advice on Company Incorporation!
Costa Rica Company Incorporation Frequently Asked Questions (FAQs)
Disclaimer: The following questions are a collection of real questions formulated to GLC over the years, which we believe represent some of the most common questions that individuals interested in creating a company or corporation in Costa Rica normally have. Our answers ARE NOT in any way legal advice, they are just general information provided as a reference so that the general public might obtain a better understanding of the process of forming a company in Costa Rica. Any unauthorized copying, alteration, distribution, transmission, performance, display or other use of this material is prohibited. As Costa Rican lawyers, we are not allowed by the Costa Rican Bar Association from providing legal advice without the prior existence of a client/attorney relationship, in order to obtain legal advice for your specific case we encourage you to seek specialized legal advice.
1. I would like to talk to someone about create a new corporation and transferring my assets to that corporation. Can you help me?
Once both Partners define important details such as business activity, share distribution, legal representation, registered address, and dividend distribution, the Notary transmits the authorized and executed public electronically to the National Registry.
At the National Registry, the company formation request is assigned to a specialized Registrar for revision in order to determine that the legal formalities were ALL met and if everything checks, then the company will be registered officially in a period that ranges between 24–72 hours after being properly submitted.
Once registered the company will obtain a corporate identification number which is 3–101 plus 6 more unique digits for S.A.s (Sociedades Anónimas) or 3–102 plus 6 more unique digits for S.R.s (Sociedades de Responsabilidad Limitada). The corporate identification number, known in Spanish and in Costa Rica as the cédula jurídica represents the existence of the new company to legal life. Once registered, the company will be able to conduct any type of legal activity allowed in Costa Rica and internationally.
Some of the most popular uses of Costa Rican companies are:
- To launch a local and/or global business
- To purchase local assets
- To open local corporate bank accounts
- For asset protection purposes
2. On behalf of one of our law firm clients, please could you send an introductory info sheet on a corporate formation in Costa Rica?
Answer: GLC has offered some of the most professional company formation services available in Costa Rica since 1999. Our firm was one of the pioneers in “adapting” Costa Rican corporations to the offshore company formation world.
The basic package that we normally offer is:
Type of entities available: S.R.L.s and S.A.s
Main characteristics: limited liability, offshore tax exempt, agile KYC, low yearly maintenance, global capability.
- Articles of Incorporation
- Share Certificates
- Legal Books
- Registered Address
- Resident Agent
- English Translation
- Apostille (available)
- Good Standing Certificate
Description of our three-Step Incorporation Process:
- Step 1: The Client decides to proceed by completing our Incorporation Form and sending payment to GLC via PayPal, Credit Card or Bank Wire.
- Step 2: GLC´s attorneys review the Incorporation Form and confirm name availability and if everything is ok to send a Letter of Acceptance to the client in which he or she is appointed as Manager.
- Step 3: GLC uploads the public deed prepared by our Notaries to obtain the official registration of the National Registry.
Estimated Duration: 24–72 hours (The process is handled entirely online and/or email, no physical presence of the beneficiaries is required).
3. I am a US individual who is now involved in a business operation in Costa Rica. I am seeking consultant and advice for restructuring of an existing business corporation and other matter related banking between US and Costa Rica. I need an attorney who is experienced in corporate law and fluent in English to deal with contacting shareholders who are living in the US. Can you assist me?
In that sense, our clients are mostly foreign and come from many different backgrounds, but they all have one thing in common, they see Costa Rica as an attractive jurisdiction for their business and/or personal matters.
Having said that, North Americans especially US citizens have always been some of our preferred clients and in our more than 20 years of experience with them, we can say that we understand the differences between the North American business environment and that of Latin America.
Besides forming companies for our clients, GLC specializes in local and offshore bank account introduction, corporate amendments, corporate and civil law.
4. Following the correspondence below, kindly advise if you provide services for redomiciliation of the companies from Costa Rica.
As experts in Company Formation and Corporate Law we offer the following yearly renewal services:
- Registered Address (Also known as Social Domicile available for companies that don’t operate in Costa Rica)
- Resident Agent (Needed when the representative of the company is foreign)
- Custody of Legal Books (Necessary to prepare certain Corporate Certifications)
- Payment of the Yearly Corporations Tax (paid with the incorporation and then every January)
5. I would like to inquire about the formation of a Costa Rica offshore company with a bank account and merchant account.
Answer: As the first movers in “adapting” Costa Rican companies to the offshore companies’ industry, GLC also assists clients with local and offshore bank account introduction services. We are also able to facilitate merchant account and payment processing for our clients through trusted providers.
6. I would like to know if there are ready-made shelf companies available that could help shorten the incorporation time.
We also maintain a limited number of ready-made corporations, but to take control of an existing corporation is significantly slower than forming a company from “scratch”. Another reason why it’s not attractive to maintain a stock of shelf companies because now Costa Rican companies are obligated to pay what we call the Yearly Corporations Tax every January, so the older the company the more expensive it would be for the client.
7. I am looking to either get a shelf corporation or file and start my own corporation. I do need it to be an S.R.L.
Answer: Most of our clients incorporate S.R.L.s versus S.A.s below you will find a comparative table:
|Type of Entity||S.R.L.||S.A.|
|Acronym stands for in Spanish:||Sociedad de Responsabilidad Limitada||Sociedad Anónima|
|Equivalent in Common Law:||LLC||Corporation|
|Offshore Tax Exempt||YES||YES|
|Needs a Board of Directors||NO||YES|
|Right of First Refusal to other shareholders||YES||NO|
As you can see both types of entities share the benefit or characteristic of their limited liability, so the main reason why now and for the last at least 10 years more than 90% of the companies that we form are SRL is because of how easy they are to manage. The SRL doesn’t need a Board of Directors were the S.A. does require a Board of Directors of President, Secretary, and Treasurer plus an Auditor which sometimes results more complex especially for international clients as they need more signatures to form the company.
To form an S.R.L. you just need one Director/Manager to operate, which results extremely practical for international business.
Their tax regime is exactly the same so there are no advantages or disadvantages between them in that sense. As you can see there is one other difference to take into consideration before selecting the type of entity that best suits your business needs, that is the existence of the Right of First Refusal in the S.R.L.
What we call the Right of First Refusal in S.R.L.s is the obligation that minority shareholders have when they want to sell their stock (called Quota in S.R.L.s) to offer them first to the existing majority shareholders of their company. This originated in Costa Rican Law for S.R.L.s as they were initially conceived as “family companies” so this obligation was an effort to try to maintain the company between its founders. S.A.s offer a more open shareholder reality in which there is no Right of First Refusal from the majority shareholders allowing third parties to become shareholders freely.