Forming Your Corporation

Costa Rica Corporation Forming Your Corporation

Forming a corporation in Costa Rica is a strategic decision for many foreign businesses and investors. With a robust legal framework, favorable tax conditions, and a pro-business environment, Costa Rica has become a prime location for individuals and businesses seeking to establish a corporate presence in Latin America. Of course, setting up a company in Costa Rica involves several legal and administrative steps that you must carefully follow.

The Law Firm of Melendez & Bonilla will help you to form your corporation in Costa Rica, performing all of the essential requirements and procedures, and insure so that you have a clear understanding of how to proceed for a corporate registration in Costa Rica.

Select a Unique Company Name

Your company’s name must be unique and not conflict with existing businesses in Costa Rica. Our lawyer will check the availability of your desired company name by consulting the National Registry. It must differ from an existing name by at least three letters and cannot be the same as a famous company name, a trademark, or a country name.

Your name should reflect your business’s purpose or mission. Also, consider how it is pronounced in both Spanish and English.

Choose Your Corporate Structure

You must decide which type of corporate structure is best for your business needs, considering your business's nature and size. This decision will determine the administrative and legal framework you will work within and the structure of your corporation. Most corporations an S.R.L. or as an S.A.

Draft the Articles of Incorporation

We will work with you to draft the Articles of Incorporation, as they must be signed and validated by a licensed notary in Costa Rica. The articles of incorporation, the constitution, lay out the key details about your company.

The constitution includes the corporate name, which is the registered name of the company. The purpose of the company, which is a description of the nature and objectives of your business. The share capital which is the information about the company’s capital structure, including the value and distribution of shares. The legal address, the physical address of your company in Costa Rica. The identification of all of the company’s shareholders, including their names, addresses, email, identification numbers or passport numbers, professions, and marital status.

For an S.R.L. it includes the manager and his name, address, email, identification number or passport number, profession, and marital status. For an S.A. in names the board of directors, which must include at least a president, a secretary, a treasurer, and a auditor. These individuals do not need to be Costa Rican residents or citizens but must provide their identification information Both types of companies must have a registered agent with an office in Costa Rica.

Register Your Company with the National Registry

Once your Articles of Incorporation are ready and signed, we will submit them to the National Registry for official registration.

The lawyer must pay a registration fee that is based on your company’s initial share capital. Then he will submit your articles of incorporation and other required documentation to the Nacional Registry of legal companies. The time for the registration process to be completed usually takes two to three weeks.

After approval by the National Registry, your company will receive a corporate identification number, cédula jurídica, making it legally recognized in Costa Rica.
This is also the identification used for tax purposes.

Register with the Costa Rican Tax Authorities

After your corporation is registered with the National Registry, it must be registered with the Ministry of Finance. This step is necessary to ensure compliance with Costa Rica’s tax regulations and reporting. This is done by filing the form D-140.

Your company will be assigned a Tax Identification Number, Número de Identificación Tributaria, or NIT. This number is essential for filing taxes, issuing invoices, and conducting any financial transactions.

Keep Up with Annual Requirements

Once your corporation is formed, it’s essential to maintain its legal standing by meeting annual requirements. Every company in Costa Rica must submit an annual tax return, even if no income is generated. Failure to do so can result in fines and penalties. Annual shareholder’s meetings must be held and documented in the company’s legal books. Costa Rica imposes an annual corporation tax, which varies depending on your company’s gross income and must be paid every year.

Annual Education and Culture tax must be paid and the amount varies depending on your company’s capital.

The Register of Transparency and Ultimate Beneficiary Owners must be filed every year showing the final shareholders of your corporation.

Open a Corporate Bank Account

Next, you may want to open a corporate bank account in Costa Rica. This can be done at any of the country’s major banks, such as Banco Nacional, Banco de Costa Rica, Scotiabank, or BAC de San José. Most banks will require a copy of the articles of incorporation, corporate identification number, Cédula Jurídica, identification of the legal representative, and proof of address. If it is an S.A., you will need a board of directors’ resolution authorizing the opening of the account. Some banks may require further stricter documentation requirements, so it’s important to consult with the bank beforehand to understand their policies.

Obtain Municipal Business Permits

If you have a physical office, you will also need to apply for a business license, a patente, from the municipality where your company will operate. This step ensures your business complies with local zoning and commercial regulations.

The documents that are required include the articles of incorporation, the corporate identification, the lease agreement or proof of property ownership for your business premises, and a health permit issued by the Ministry of Health, especially if your business involves food, health care, or public services.

Register with the Social Security System, Caja Costarricense de Seguro Social – CCSS, and workman’s insurance with the Instituto Nacional de Seguros, INS.

Register with the Health Department and INS

If your company will have employees, it must be registered with the Caja Costarricense de Seguro Social (CCSS). This ensures your compliance with Costa Rican labor laws and social security regulations. The CCSS registration requires that your company makes mandatory contributions for employees’ health insurance and pensions. They require the corporate identification number, a list of your employees and their salaries, and information about the company’s legal representative. Once registered, your company will have to make monthly contributions to cover social security and health insurance for its employees.

Also, you must register with the Instituto Nacional de Seguros for workman’s’ insurance. The required documents are the same as for the CAJA.

Business in Free Trade Zones

If your company is involved in export activities, technology, or manufacturing, you may want to consider setting up in one of Costa Rica’s Free Trade Zones. Companies operating in these zones enjoy significant tax breaks and exemptions.

Please see Types of Corporations to decide which form suits your needs.