Do you know if your Costa Rican corporation is up to date? With the changes to the laws made in 2019 and before, is your corporation in good standing with the relevant authorities?
Status with Tax Authority (Tributación Directa)
You want to make sure your corporation is keeping up with the required declarations and payments with the Costa Rican tax authority, Tributación Directa.
This includes the following items:
- Corporate Income Tax;
- Value Added Tax (VAT) – known as IVA in Spanish;
- Yearly Corporation Tax (Ley 9024);
- Timbre de Educación y Cultura.
This is by no means an exhaustive list. There are other taxes that apply to specific types of companies, and some items don’t apply to inactive companies.
Status with CAJA (CCSS)
You definitely want to make sure that your corporation is up to date with Caja de Costarricense Social (CCSS), Costa Rica’s social security fund for pensions as well as health care. Failure to pay the employee deducted portion of the CCSS contributions as an employer (usually 10.34%) is a felony. This is because you’d be taking funds from the employee’s own salary and not paying the required contribution. So make this the utmost priority.
As of September 2019, the Costa Rican government is gradually creating a database of shareholders and beneficial owners of Costa Rican companies.
This process is done online using the Firma Digital, which is a smart card that you’ll need to get along with a card reader and software. Notably, only residents can get a Firma Digital, so if you are a non-resident with a corporation, you’ll need to provide a Special Power of Attorney to a notary to register the shareholders on your behalf. This affects a lot of foreigners in Costa Rica so if you need any help with this process, please contact us and we can help.
At Grupo Gap, we have plenty of experience through our business consultants and legal professionals to make sure your corporation is up to date, giving you the peace of mind that a serious issue won’t pop up in the future. Contact us now for a consultation on your corporation status.
Should I Have My Assets in a Corporation?
It has been common practice in Costa Rica to form a corporation simply to hold assets, as a non-trading holding company. It’s very clear that recent changes (such as the introduction of the Yearly Corporation Tax and Shareholder Registry) are working to discourage this practice for smaller estates (such as a single house) due to the cost and complexity involved.
Costa Rica is working on the assumption that all corporations have a commercial intent — that is, the company is formed to do business, earn an income, pay corporate income and VAT taxes, and have regular accounting statements.
You may also think that it is ideal to transfer the shares of a corporation when you buy or sell a house. However, it can be hard to tell if there are pending lawsuits or other legal problems surrounding a corporation — which means most buyers will not take your “used” corporation for fear of those risks.
Dissolve Your Corporation
If you’re no longer using your Costa Rican corporation you should seriously consider dissolving it to avoid racking up fines and debts for failure to declare and pay. Any active corporation is automatically assumed to be up and running unless you tell the government otherwise. There are a few processes for this, including a simple procedure for smaller companies or holding companies who have divested their assets.
Our legal team also specializes in forming and managing, and dissolving Costa Rican corporations.
–Jeffrey Alami, Loan Analyst, Grupo Gap LLC SRL
Contact us now for a consultation on your corporation status