A Costa Rican holding company is an enterprise that owns and controls various assets in other businesses called subsidiaries. If you want to set up such an entity, you can do that by incorporating a private or public limited liability company.
Below, our agents for opening a company in Costa Rica explain the advantages of holdings. We can assist with the incorporation process of your entity of choice.
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How to register a holding company in Costa Rica
The procedure to open a holding company in Costa Rica implies the following steps:
- reserving a trading name;
- drafting the incorporation papers and filing them with the Companies Registrar;
- setting up a Costa Rican bank account for the capital of the enterprise;
- obtaining a tax identification code.
In most cases, holding companies do not need to apply for business licenses as they will not engage in commercial activities.
The main characteristics of a Costa Rican holding company
Here are the main aspects that differentiate a holding company from other legal entities in Costa Rica:
- its main activities imply owning and controlling its subsidiaries by holding the majority of their voting shares;
- it has the right to make decisions about the policies, investments, and management of the same subsidiaries.
Costa Rican holding companies can own local and foreign subsidiaries.
Types of holding companies in Costa Rica
There are several types of holdings that can be created in Costa Rica, and among them, the most common are:
- the pure and mixed holding company, based on its operations;
- the immediate and intermediate holding company, based on its structure.
The pure holding is created to own stock in other enterprises, while the mixed holding will also have its own activities apart from controlling its subsidiaries. Most of the time, such activities are carried out through special purpose vehicles.
The immediate holding company has its own subsidiaries while being owned by another entity. The intermediate holding is part of a group of companies.
Holding companies are also found in the financial sector. In this case, they own shares in banks, other types of financial institutions, and insurance companies.
If you decide on this business structure, our company formation specialists in Costa Rica can advise on the proper legal entity to register.
Assets a holding company can own
Holding companies can be created to own and control various types of assets, not only shares. Among them, there are also:
- intellectual property rights;
- real estate property.
In the particular case of Costa Rica, holdings are usually created to own real estate. This is often the case of foreign entrepreneurs applying for citizenship by investment in Costa Rica and seeking to have good control over their assets by setting up such entities.
New reporting requirements for holding companies in Costa Rica
Recently, Costa Rica has adhered to the Organization of Economic Co-operation and Development regulations about the taxation of such companies. Here are the main aspects to consider from this point of view:
- Law no. 9248 provides for the introduction of an annual company tax;
- failing to pay it for 3 consecutive years will attract the dissolution of the enterprise in accordance with Article 7 of the law;
- Law No. 9392 on Minority Investor Protection also provides for large companies, such as holdings, to create corporate governance policies through which the approval of the Board of Directors is required when buying assets, mortgages, or other pledges under certain circumstances.
If you decide to open such an enterprise, our lawyers in Costa Rica can explain these new rules. Feel free to contact us if you need support in setting up a holding company.