Is Your Costa Rica Corporation Up to Date?

Would you happen to 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 ensure your corporation keeps 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. Other taxes apply to specific types of companies, and some items don’t apply to inactive companies.

Status with CAJA (CCSS)

You want to ensure that your corporation is up to date with Caja de Costarricense Social (CCSS), Costa Rica’s social security fund for pensions and 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 take funds from the employee’s salary rather than pay the required contribution. So make this the utmost priority.

Shareholder Registry

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 Firma Digital, a smart card you’ll need to get along with a card reader and software. Notably, only residents can get Firma Digital. 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 will stay the same in the future. You can contact us now for a consultation on your corporation status.

Should I Have My Assets in a Corporation?

In Costa Rica, it has been common practice to form a corporation to hold assets as a non-trading holding company. 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.

It is also ideal for transferring 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, meaning 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, including a simple procedure for smaller companies or holding companies that have divested their assets.

In Conclusion

It is crucial to ensure that your Costa Rican corporation is up to date with the relevant authorities to avoid penalties and legal issues. This includes keeping track of required tax declarations and payments with the Tributación Directa and being up to date with CCSS contributions. It’s also important to be aware of recent changes in regulations such as the shareholder registry and yearly corporation tax.

If you’re unsure about the status of your corporation, seeking the help of experienced business consultants and legal professionals like Grupo Gap can give you the peace of mind that your corporation is up to date and compliant with regulations.

Lastly, if you’re no longer using your corporation, it’s essential to dissolve it properly to avoid any future legal issues. Whether you need help with forming, managing, or dissolving a Costa Rican corporation, Grupo Gap’s legal team has the expertise and experience to assist you. Contact us now for a consultation on your corporation status.

NOTE Our legal team also specializes in forming, managing, and dissolving Costa Rican corporations.

Frequently Asked Questions

What is Tributación Directa?

Tributación Directa is Costa Rica’s tax authority that oversees corporate income tax, value-added tax, yearly corporation tax, and Timbre de Educación y Cultura.

What is CCSS?

CCSS is the Caja de Costarricense Social, which is Costa Rica’s social security fund for pensions and healthcare.

What happens if I don’t pay the employee deducted portion of the CCSS contributions as an employer?

Not paying the employee deducted portion of the CCSS contributions as an employer is considered a felony in Costa Rica, which can result in legal penalties.

What is the shareholder registry?

The shareholder registry is a database created by the Costa Rican government to keep track of shareholders and beneficial owners of Costa Rican companies.

Can non-residents get a Firma Digital?

No, only residents can get a Firma Digital in Costa Rica. Non-residents must provide a Special Power of Attorney to a notary to register shareholders on their behalf.

Should I form a corporation to hold assets in Costa Rica?

Recent changes in regulations have made it more complex and costly to form a corporation to hold assets, especially for smaller estates. It’s essential to understand the implications and consult with a legal professional before forming a corporation for this purpose.

Can I transfer the shares of a corporation when buying or selling a house?

While it may seem like a good idea, it can be challenging to determine if there are any pending legal issues or lawsuits surrounding a corporation, which can make it difficult for buyers to take on the corporation.

What should I do if I’m no longer using my Costa Rican corporation?

If you’re no longer using your Costa Rican corporation, it’s essential to dissolve it properly to avoid any future legal issues or fines. Grupo Gap’s legal team can help with this process, including a simple procedure for smaller companies or holding companies who have divested their assets.

Contact us now for a consultation on your corporation status.

-Written by Glenn Tellier (Founder of Grupo Gap)

info@gap.cr

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