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Open a Limited Liability Company in Costa Rica

Open a Limited Liability Company in Costa Rica

The limited liability company (Sociedad de Responsabilidad Limitada) is a widespread form of business among small entrepreneurs. It must be incorporated by at least two founders, liable for the company’s debts only to the extent of their contribution to the capital. Company formation in Costa Rica is quite simple. The incorporation of the limited liability company in Costa Rica is based on the registration of the Articles of Association in the Mercantile Public Registry. You can rely on us if you want to open a company in Costa Rica.

 Quick Facts  
 Types of local companies

– private limited liability company,

– joint stock company,

– sole proprietorship

 Legal forms available for foreign companies

– branch office,

– liaison office,

– subsidiary company

 Minimum number of shareholders

2
 Minimum number of directors

– 1 for the private company,

– 3 for the joint stock enterprise

 Resident director required (YES/NO) No, there is no need to appoint a resident director. 
Local legal address required (YES/NO) Yes, any company must have a local registered address.
 Minimum share capital

No specific minimum capital is required to open a company in Costa Rica. 

 Local bank account required (YES/NO)

 Yes

 Business registration steps

– documents drafting,

– paperwork filing with the Companies House,

– tax and VAT registration,

– licensing,

– employment registration if applicable

 Registration documents

– company statutory documents,

– information about the company’s activities,

– bank account statement indicating the capital,

– proof of local address,

– details about the management structure

 Visit required for incorporation (YES/NO)

Yes, for setting up the company bank account.

 Taxes to pay

– VAT,

– withholding taxes for payments made to foreign companies or people on dividends,

– interests,

– royalties,

– personal services,

– transportation and communication services

Corporate tax rates 

– 5% on the first CRC 5,761,000,

– 10% on amounts above CRC 5,761,000 and up to CRC 8,643,000,

– 15% on amounts above CRC 8,643,000 and up to CRC 11,524,000,

– 20% on amounts above CRC 11,524,000,

– 30% on gross income over CRC 122,145,000,

– 0% on income generated outside Costa Rica 

 Advantages of opening a company in Costa Rica

– quick registration,

– no local director required,

– proximity to the US market

 Business registration support (YES/NO)  Yes, you can rely on our company formation agents for support in opening a company in Costa Rica.

Steps to set up a company in Costa Rica

No matter the type of company you want to establish in Costa Rica, similar steps must be taken for each of them, as follows:

  • creating the incorporation papers that are different based on the selected business form;
  • filing the documents with the Trade Register;
  • opening a bank account;
  • obtaining a tax identification number and a VAT number;
  • registering for employment purposes.

Considering most foreign investors are interested in entities they are acquainted with, they can choose to set up an LLC in Costa Rica, which is quite popular at a worldwide level.

Opening a company is also a good option for those who want to immigrate to Costa Rica and want to obtain residency here.

Set up a bank account when opening a company in Costa Rica

The bank account opening procedure is one of the most important steps when launching a company in Costa Rica, as it is one of the lengthiest. These are some of the paperwork needed in Costa Rica in order to open a bank account:

  • the Certificate of Registration issued by the Trade Register;
  • the Certificate indicating the distribution of shares;
  • the registered address of the company;
  • its bylaws.

You can address our company formation agents in Costa Rica for support in setting up an LLC or another business form.

Registration for employment

One of the steps that are often not paid enough attention to is that when you open a company in Costa Rica, you are required to obtain an employer number.

This is the last stage when you open an LLC in Costa Rica and it implies registration with the Costa Rica Social Security Agency (CCSS). Following that, each employee must be registered for social security.

Every month, the employer is required to make a monthly contribution to each employee’s healthcare fund. For this purpose, you can rely on our accountants in Costa Rica.

A new requirement that regards all legal businesses is that they have to register their UBOs (Ultimate Beneficial Owners) after being admitted as a new member of the Organization for Economic Co-operation and Development (OECD) in May 2023. Our lawyers in Costa Rica can offer more information on the UBO Register.

Articles of Association of an LLC in Costa Rica

The Articles contain the name of the company, which has to be unique and in Spanish (if it’s in English a certified translation must be provided), followed by the termination SRL or Sociedad de Responsabilidad Limitada, information regarding the founders (names and addresses), the date and location when and where the company is being registered, type of company and its goals, the company’s availability (may be unlimited or limited), the capital stock and information regarding the quotas, description of each member’s contribution to the capital, registered address of the company, the designation of the registered agent, the appointment and powers of the manager(s), details regarding the creation of the reserve fund (10% from the company’s capital), reasons why the company may be liquidated, the way of making balances and share the profits and losses among the members, details regarding the procedure of liquidation and other information decided by the shareholders. You can count on us for guidance if you want to open a company in Costa Rica.

Any modification of the Articles of Association must be presented in front of a notary and announced at the Commercial Sector of the Public Registry immediately. We also offer tailored services related to company formation in Costa Rica in 2024.

We can also advise investors who want to apply for residency in Costa Rica. If you are interested in starting a business in another country, such as the Netherlands, we can put you in touch with our local partners.

Share capital in a Costa Rican limited liability company in 2024

No minimum share capital is required if you want to start a business in Costa Rica as an LLC in 2024.

The capital is divided into registered quotas. The particularity of this type of company is that the quotas cannot be freely transferable to a third party, unless the majority of the shareholders agree with this. Sometimes, the articles of association stipulate that for this type of action is not necessary the unanimous votes, but at least 75% of the votes must be in favor of the decision.

If the votes were not obtained, the quotas must be purchased by the shareholders, no longer than 15 days since the general meeting where the discussion regarding this matter took place. The action must be recorded in the shares registry and other certificates of quotas must be issued with updated information.

LLC management in Costa Rica

Usually, one manager or more of a 2024 limited liability company opened in Costa Rica is taking the daily decision in a company limited by shares in Costa Rica. They can be shareholders or third parties and are appointed for a limited or unlimited period of time. If they are elected for a while, they may be re-elected after that specific period. The names of the managers must be provided by the Articles of Association and must be published in the Official Gazette and registered in the Mercantile Public Registry.

The manager may be discharged only if the shareholders take this decision. We can guide you to start a business in Costa Rica.

Another legal requirement for registering a limited liability company in Costa Rica in 2024 is keeping the account statements and book and submitting them to the Tax authorities. The following books must be kept: Minute Books for Shareholders’ meetings, Journal, General Account and General Ledger.

The LLC vs. the joint stock company in Costa Rica

If you want to open a company in Costa Rica, private and public companies are the most common in this country. While in terms of incorporation, they are quite similar, there are certain differences between them.

The joint stock company must have at least two shareholders, three directors, a president, a secretary, and a treasurer. The corporation’s stock is divided into shares, each of which is transferable by endorsement and requires registration in the Shareholder Registry Book.

The limited liability company in Costa Rica, on the other hand, is a simpler company type because it only needs one director and one shareholder. The liability of a shareholder in this kind of business is capped by the assets of the business. The shares make up the capital of this type of entity.

In terms of uses, both entities can be employed for the activities. Please mind that you need to appoint a Costa Rican residence permit holder as a representative if you are a foreign investor and do not intend to move here.

Among the reasons to choose to apply for a Costa Rican residence permit are freedom of movement and the possibility of buying properties. Furthermore, renters and retirees are allowed to own and run businesses, yet they are not authorized to work for local companies. Contact us for details on relocation. After moving to Costa Rica, you are required to contribute to the social security system as a self-insured person for social security and healthcare benefits. The procedure involves filing a few documents with a local office of the Caja Costarricense de Seguro Social (CCSS). We can also assist those who want to apply for citizenship in Costa Rica.

Gaining permanent residency in this country allows foreign citizens to work as employees for Costa Rican companies. Considering employment of expats is difficult, it is best to consider another way of moving here. However, once one becomes a full resident, one can also aspire to Costa Rican citizenship.

Our immigration lawyers in Costa Rica can also provide information on citizenship by investment in Costa Rica that can be obtained through entrepreneurship or retirement. For retirees, Costa Rica is a popular location. People no longer always wait until retirement to move to Costa Rica. Regardless of the path you take, you can apply for permanent residency after three years of temporary residency. So, feel free to contact our local specialists for support in starting the immigration procedures as soon as possible.

Costs to consider when you set up a company in Costa Rica

Setting up an LLC in Costa Rica implies the following costs:

  • the issuance of the registration stamp;
  • the publishing in the Official Gazette;
  • the issuance of the share certificate;
  • public notary fees.

Furthermore, it might be necessary to complete additional legal procedures, which vary depending on each business line and include the drafting and implementation of a shareholder agreement and the processing of permits and licenses.

Why move and open a company in Costa Rica

Estimates from various analyses indicate that Costa Rica’s GDP will expand by 3.5% to 4%. This implies that the country’s growth rate will be slower than it was in 2023. This would occur as a result of the worldwide circumstances in global marketplaces, external demand will be lower than in 2023. A modest recovery is anticipated at the level of domestic demand, which has not recently been the engine of the Costa Rican economy.

Innovations in technology will also have an impact on business. Companies are constantly driven to be technologically updated by globalization and the demand to remain competitive on a worldwide scale. This allows them to enhance their production, efficiency, and procedures.

Contact us if you want to open an LLC as a foreigner and also need support in applying for residency in Costa Rica.