Starting a business in Costa Rica offers tremendous opportunities for local entrepreneurs and international investors alike. However, the process requires careful planning, strict adherence to legal requirements, and a deep understanding of the local market.
Navigating Costa Rica’s legal and administrative framework is essential to ensure your business operates smoothly and remains compliant.
How to Start a Business in Costa Rica
Establishing a business in Costa Rica involves several key steps, each governed by specific legal obligations. These steps help secure your business’s foundation and protect your interests.
- Choose Your Business Structure: The first step is selecting a legal structure. Costa Rica offers several options, each with its advantages and regulatory requirements:
- Corporation (Sociedad Anónima, S.A.): Ideal for larger companies or international investors. It requires at least two shareholders and provides limited liability protection.
- Limited Liability Company (Sociedad de Responsabilidad Limitada, S.R.L.): Common for small and medium-sized businesses, offering limited liability protection to partners.
- Branch of a Foreign Company: Allows a foreign entity to operate locally while remaining tied to its home-country structure.
- Reserve Your Company Name: Before registration, you must verify that your chosen company name is available and reserve it with Costa Rica’s National Registry. This step ensures that your brand identity is legally protected.
- Draft the Bylaws or Operating Agreement: Depending on your business structure, you must prepare key legal documents, such as corporate bylaws for an S.A. or an operating agreement for an S.R.L. These documents outline the internal governance, ownership, and operational rules of your company.
- Appoint a Board of Directors: If forming a corporation, Costa Rican law requires the designation of a board of directors responsible for managing the company’s strategic decisions.
- Register Your Company: Submit all necessary documentation to the National Registry, ensuring your business complies with all local regulations. Registration grants your company legal recognition and the ability to conduct operations.
- Obtain Permits and Licenses: Depending on your industry, your business may need specific permits related to health, safety, or environmental compliance. Contact us to help you with the municipal authorities.
- Register for Taxes: Register your business with the General Directorate of Taxation to meet all tax obligations, including corporate income tax, value-added tax (VAT), and other relevant duties.
- Comply with Labor Laws: If you hire employees, you must comply with Costa Rican labor laws, which mandate health insurance, pension contributions, vacation leave, and severance pay.
- Seek Legal and Accounting Support: Given the complexity of Costa Rican business law, engaging local legal and accounting experts is essential. At American Law Partners, we have over 30 years of experience, so we can guide you through registration, regulatory compliance, and daily operations.
Common Business Structures for Foreign Investors
Foreign investors in Costa Rica frequently select from several legal entities tailored to different business needs:
- Sole Proprietorship: Simple to establish, with personal liability for business debts.
- Partnership: General or limited partnerships, where liability and management responsibilities vary.
- Limited Liability Company (S.R.L.): Provides liability protection for partners and is taxed at the corporate level.
- Corporation (S.A.): Ideal for larger ventures and international investments, offering flexible governance and ease of share transfer.
Additionally, businesses must register the Ultimate Beneficial Owner (UBO) for transparency and comply with municipal operating permits.
Legal Framework for Doing Business in Costa Rica
Costa Rica’s legal system is grounded in civil law traditions and the Constitution. It guarantees property rights, due process, and the rule of law, providing a stable and transparent environment for business activities.
Regulatory Environment for Businesses
Businesses operate under a structured regulatory framework, supervised by multiple authorities:
- Ministry of Economy, Industry, and Commerce (MEIC): Oversees competition, consumer protection, and trademarks.
- National Registry: Maintains records for companies, real estate, and intellectual property.
- Costa Rican Social Security Fund (CCSS): Administers social security and health insurance.
- General Directorate of Taxation: Ensures tax compliance.
- Central Bank of Costa Rica: Regulates the financial sector.
Legal Assistance for Business Operations in Costa Rica
Our law firm, American Law Partners, provides comprehensive legal services for businesses in Costa Rica. We assist with employer registration, Social Security enrollment, insurance, permits, municipal coordination, real estate closings, certifications, and company formation.
As licensed attorneys and Notary Publics, we ensure all procedures comply with Costa Rican law and international standards.
Contact us today to schedule a consultation. Our team will provide personalized legal guidance to protect your interests and support your business development in Costa Rica.
Frequently Asked Questions (FAQ)
- What is the easiest business structure to start in Costa Rica?
For small businesses or individual entrepreneurs, a Sole Proprietorship is the simplest option, although it does not offer liability protection.
- Do I need a local partner to start a business in Costa Rica?
No, foreign investors can fully own an S.R.L. or S.A., although certain permits and licenses may require a Costa Rican resident as a legal representative.
- How long does it take to register a company?
Typically, company registration and document preparation can take 2-4 weeks, depending on the complexity and efficiency of municipal approvals.
- Are there taxes on corporate profits in Costa Rica?
Yes, corporations and S.R.L.s are subject to corporate income tax, VAT, and other applicable taxes based on business activity.
About the Author
This article was written by Terry Steele, Attorney in Costa Rica (cédula de identidad 08-0111-0536, bar license 36269).
With over 35 years of residency in Costa Rica and extensive experience advising international clients in real estate, corporate law, and cross-border investments, Terry specializes in helping foreigners navigate property purchases and residency applications with confidence.
