Inactive Companies in Costa Rica

January 14, 2020
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Starting in January 2020, inactive companies in Costa Rica (such as holding companies with no business activity) will need to begin registering with the tax department and submit yearly returns.

This requirement has been adopted to confront possible tax evasion and tax fraud by shell companies. It aligns with most other countries, including the OECD nations where Costa Rica is pushing hard to join the ranks.

For example, a US-based LLC with no commercial activity but who owns a property in its name must return yearly to the IRS and the state and detail its assets and liabilities. This is now the same for Costa Rica.

This is independent of the Shareholder Registry, which must be completed and updated by all companies, active or otherwise.

Costa Rican companies with company numbers (cédula jurídica) ending in the number 1 and 2 must register with Hacienda by the end of January 2020. The rest of the companies have a staggered deadline as follows:

Ending in 3 and 4: February
Ending on 5 and 6: March
Ending in 7 and 8: April
Ending in 9 and 0: May

Registering Properties in Company Names

In Costa Rica, it has been common practice among locals and expats to register properties (homes, cars, etc.) in the name of inactive holding companies. This has been done primarily to limit liability and obfuscate the real owners of the properties from the public. With the ongoing changes, doing things this way is becoming less viable. Consider registering properties in your name as an option. Remember, insurance is there to cover liabilities.

Speaking of insurance, can we help you with your Costa Rica insurance requirements? We can refer you to a licensed insurance broker for local insurance products approved by SUGESE, Costa Rica’s insurance regulator.

In Conclusion

The new regulations for inactive companies in Costa Rica aim to improve tax compliance and reduce the potential for tax evasion and fraud. Regardless of activity level, all companies must register with the tax department and submit yearly returns. Additionally, companies with cédula jurídica ending in specific numbers have specific registration deadlines. Registering properties in the name of inactive holding companies is also becoming less viable, and it is recommended to consider registering properties in your name. Finally, if you need help with your Costa Rica insurance requirements, you can be referred to a licensed insurance broker for local insurance products approved by SUGESE. It is essential to comply with these regulations to avoid potential penalties or legal action.

-Written by Glenn Tellier (Founder of Grupo Gap)

[email protected]

Frequently Asked Questions

What is the purpose of the new regulations for inactive companies in Costa Rica?

The new regulations aim to combat potential tax evasion and fraud by shell companies.

Is registering with the tax department and submitting yearly returns required for all companies in Costa Rica?

Yes, all companies must complete the process, whether active or inactive.

What is the Shareholder Registry?

The Shareholder Registry is a separate requirement that must be completed and updated by all companies, regardless of whether they are active or inactive.

Do you know if inactive companies can still register properties in their name?

Yes, but it is becoming less practical to do so. It is recommended to consider registering properties in your name instead.

What should companies do if they need help with Costa Rica insurance requirements?

Companies can be referred to a licensed insurance broker for local insurance products approved by SUGESE, Costa Rica’s insurance regulator.

What is the consequence of not complying with the new regulations?

Companies that fail to comply with the new regulations may face penalties or legal action.

Have you got questions? – Contact us today!