for Investing in Real Estate in Costa Rica
Many buyers or business owners in Costa Rica will have the property they buy or the business they own registered in a corporation instead of their own name. It is a smart decision. There are many advantages to using a Costa Rican Corporation for investing including looking after your heirs, tax advantages, and being able to grant simple powers of attorney in your absence. We will happily supply more details on request and at personal meetings.
Many business clients must decide whether to use a Costa Rica Company set up here or to use an existing Corporation outside Costa Rica. It is almost always better to set up an entity in Costa Rica under local laws that can engage in business easily. Even though a foreign company can legally do business, sign contracts and more, there are occasions where a foriegn registered corporation could cause unnecessary delays. If you have to use your non Costa Rican company then at least register it here at the commercial register. This can take several weeks to complete.
There are two main types of company registrations in Costa Rica:
1) The Sociedad Anonima (S. A.)
This is the most used and it has multiple uses and is flexible. It can have any amount of initial capital split any way you want. The S.A. must have a Treasurer, Secretary, and President, who must be separate people. It must have three directors and a comptroller, usually the attorney who cannot have power of attorney. Shares can be freely transferred without other shareholders knowledge. Transfer of shares is with entry in the shareholders book, endorsement of share certificate, or a transfer contract. You can alter the by laws at any time and freely give POA with a simple shareholder meeting or proxy. The legal representatives are responsible for the company actions.
An S.A. has 3 corporate books and 3 account books and are registered with the tax authority. If no activity exists in the company, i.e. the company is just for holding an asset or assets formal tax reporting is not needed, although you should register yearly saying no activity is taking place.
The company and tax year runs October 1st to September 30th each year. You have until December each year to file.
2) The Sociedad de Responsibilidad Limitada (SRL)
This structure is similar to the S.A except that shares cannot be transferred to third parties after set up without consent of other shareholders who can have first right to buy those shares. An SRL can only have one manager administrator which is very appealing if you don’t want your name to appear anywhere as it will on an SA board of directors. Consult our attorney for more details.
We recommend that all property investments in Costa Rica use a Costa Rican corporation for ownership purposes. We are happy to help you in this and all matters related to Real Estate in Costa Rica.