Foreign companies seeking to enter the Costa Rican market do not have to go directly for the branch or subsidiary, as they can first test the market. The simplest way to do that is by setting up liaison or representative offices. The Costa Rican liaison office is a non-corporate form that can be used for specific activities and that has several limitations. Below, our company formation officers explain how to create and what the uses of a representative office are.
|Costa Rica Company Law
|The liaison office is not a self-established legal entity.
Uses of a liaison office
– provision of technical services, etc.
|Restrictions of a representative office (if any)
|Yes, a Costa Rican representative office cannot undertake any commercial activities.
|Minimum share capital (YES/NO)
|Local representative required (YES/NO)
Yes, a local agent, including a corporate one, must be appointed.
|Documents to be filed by parent company
– parent company’s information,
– proof of a local address,
– details of the appointed agent
|Local address requirement (YES/NO)
Yes, a registered address is required for opening a liaison office in Costa Rica.
|Authority to be enrolled with
|Liability of the parent company
|The parent business is liable for all liaison office’s obligations.
|Taxation of a liaison office in Costa Rica
A representative office is not subject to taxes in Costa Rica.
|Possibility of hiring local staff (YES/NO)
|Travel requirements for setting up a representative office (YES/NO)
No, there is no need to travel to Costa Rica to set up a liaison office.
|Advantages of a liaison office
– simple and quick registration,
– low maintenance costs,
– possibility to hire a small number of employees, etc.
|Support in opening a representative office
|Yes, our Costa Rican company formation agents can help with the creation of a representative office.
Table of Contents
How to register a liaison office in Costa Rica
The procedure for incorporating a representative office is similar to that of opening a new company in Costa Rica. It implies:
- drafting a registration application and a few other documents;
- securing a local address (a small office will suffice);
- appointing a local agent;
- filing the papers with the Trade Register.
There is no need to register for taxation or VAT in Costa Rica when opening a liaison office, as such an entity is not allowed to engage in commercial activities.
A representative office has its benefits, however, when discussing its operational aspects, there are important aspects to consider in relation to what it cannot do.
Our Costa Rican company incorporation consultants can assist in setting up such an office.
What are the main characteristics of a Costa Rican representative office?
Just like when choosing to open any other type of company in Costa Rica, its features are essential with respect to its use. However, here is what you need to know about the liaison office:
- as a non-corporate entity, it has no liabilities which means they rest on the parent company;
- the activities it can engage in are related to marketing, market testing, offering support, and providing information about the foreign company;
- it depends on the parent company from every point of view, meaning it cannot make decisions or enter into contracts;
- it cannot sell goods or products, however, it can present them to those interested in them;
- it does not require any license to operate.
If you need more details about what you can do through a representative office in Costa Rica, you can count on our local advisors. We also have a team of lawyers who can help foreign citizens who want to apply for residency in Costa Rica.
The advantages of a Costa Rican liaison office
While it may not seem very useful, creating a representative office in Costa Rica has certain benefits. One of the most important is that it can run small, it does not need large premises or a great number of employees. All it needs is a local agent to act as a representative of the foreign company in relation with the authorities and parties interested in the parent company’s goods or services. From this point of view, registration for social security is required.
If you want to relocate an employee from your home country, you can rely on us for support in the procedures related to immigration to Costa Rica.
Also, opening a liaison office does imply securing a minimum share capital for the Costa Rican entity. Here is also our video on this subject:
Why create a representative office in Costa Rica
For a company, it is hard to predict how its establishment in a foreign country will go, and this is the main role of a Costa Rican liaison office: to test the market and help the parent enterprise adjust its business model to the particularities of the Costa Rican market.
Considering the economic developments projected for the following years, here is what to expect:
- 2023 is projected to end with a 2.7% increase in the Costa Rican economy;
- 2024 is expected to deliver a higher economic growth of around 3.1%.
If you decide to set up a representative office in Costa Rica and need assistance, contact us! Our agents will help you.