We use cookies for statistical purposes.

Our Articles

Open a Branch in Costa Rica

Open a Branch in Costa Rica

Foreign companies seeking to establish their presence in Costa Rica can choose between branches and subsidiaries. There are several similarities between them, however, there are more differences that can determine the course of action for most overseas enterprises.

Below, our company formation agents explain how to open a branch in Costa Rica in order to help you establish if this is the right expansion option for you. Should you want to move here to run your business, we can also offer support in immigration to Costa Rica.

Procedure to set up a branch office in Costa Rica

The establishment of a Costa Rican branch is the same as for all other types of companies, and implies:

  1. drafting the registration paperwork;
  2. reserving a trading name;
  3. securing a legal address in Costa Rica;
  4. opening a local bank account;
  5. registering the branch with the Companies Register;
  6. obtaining a tax identification and a VAT number;
  7. obtaining the license to operate.

By comparison with other legal forms, such as the private limited liability company, the branch is significantly easier to register due to the simplified documentation.

If you want to open a business in Costa Rica, you can rely on our local agents for support.

Documents for opening a branch in Costa Rica

As mentioned above, the documents needed to create a branch in Costa Rica are far simpler compared to any other type of company. The papers need to be drafted and filed by the parent company and consist in:

  • a certificate of good standing of the parent company obtained in its country of registration;
  • information about the parent company’s activities and share capital;
  • a decision regarding the decision to set up the branch and the appointment of a company officer;
  • a power of attorney through which the officer will represent the foreign business through the branch in Costa Rica.

Please note that any document issued in a foreign language (other than Spanish) must be translated and apostilled before filed with the Companies House. You can let our company registration professionals in Costa Rica handle the incorporation of the branch.

What you need to know about Costa Rican branches

The branch office has a few unique characteristics that you will need to consider before choosing it. These are:

  • the branch does not have a legal personality, meaning it is not a company per se, as it is controlled entirely by the parent company;
  • this type of entity cannot engage in other activities than its parent company, unless there is special derogation in this sense;
  • the branch does not have liability for debts and obligations it incurs, but the controlling company does.

Even if controlled by the parent company, a Costa Rican branch office must adhere to the rules of this country. Also, this type of entity is usually employed in regulated sectors, such as banking, cases in which the license must be obtained from the National Bank or other similar organizations, depending on the industry.

Tax aspects when opening a branch in Costa Rica

From a taxation point of view, the branch will be subject to the corporate tax on the income it generates in Costa Rica. From this point of view, here are the main taxes to consider:

  • the income tax on corporate income of 30%;
  • the value added tax of 13%, 8% or 4%, depending on the services or products sold;
  • withholding taxes of 15% can also apply to various types of income.

It is also useful to note that branch offices can obtain tax reliefs, deductions, or reductions under Costa Rica’s double tax treaties.

If you want to launch a branch in Costa Rica, contact us. We can also help you immigrate to Costa Rica.