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Set Up a Subsidiary in Costa Rica

Set Up a Subsidiary in Costa Rica

Foreign companies setting up operations in Costa Rica can choose between the branch office and the subsidiary. While the first type comes with various restrictions, it is not the case for subsidiary entities that can complete their activities just like a domestic business. Below, you can find explained the main steps for setting up a subsidiary in Costa Rica. You can rely on our Costa Rican company formation agents for support in registering it.

 Quick Facts  
Applicable legislation (home country/foreign country) The subsidiary must abide by the Costa Rican Company Law.
Best used for


All types of commercial activities

 Minimum share capital (YES/NO)

1 USD no matter the legal form employed 

 Time frame for the incorporation (approx.) Between 4 and 5 weeks 
 Documents to be filed by parent company

– details of the foreign company;

– proof of payment of the registration fees;

– an impact survey of the subsidiary’s activity on the Costa Rican market 

 Management (local/foreign)

 There is no need to appoint a local manager.

 Legal representative required (YES/NO) Yes, a local agent must be appointed for the Costa Rican subsidiary.


Local bank account (YES/NO)

Yes, it is mandatory to open a bank account with a Costa Rican bank. 

 Independence from the parent company

The subsidiary is an independent legal entity. 

 Liability of the parent company  The foreign parent company is free of any liability the subsidiary incurs.
 Corporate tax rate


 Annual accounts filing requirements

 Subsidiaries must submit audited financial statements.

Possibility of hiring local staff (YES/NO) 

 Yes, it is advised for subsidiaries to use local workforce.

 Travel requirements for incorporating branch/subsidiary (YES/NO)

 No, there are no travel requirements imposed when opening a subsidiary company in Costa Rica.

 Double tax treaty access (YES/NO)  Yes, Costa Rica has a few double tax agreements currently.

Steps to open a Costa Rican subsidiary

The procedure to register a subsidiary company is the same as for all other domestic businesses that operate in Costa Rica, namely:

  1. establishing a company name, securing a legal address, and drafting the incorporation papers;
  2. opening a bank account;
  3. filing the documents with the Companies House;
  4. obtaining tax identification and VAT numbers;
  5. registering for social security purposes as an employer;
  6. securing any business licenses (if necessary).

If you need assistance in creating a subsidiary in Costa Rica, you can rely on our agents. We can also help immigrate to Costa Rica should you want to run your business onsite.

Documents for setting up a subsidiary in Costa Rica in 2024

In terms of paperwork related to opening a subsidiary company apart from the Articles of Association and information about the parent company, the following should also be considered:

  • an application through which the parent company requests a corporate number;
  • submitting proof of payment of all company registration fees;
  • an impact study, if the capital of the company consists in real estate assets.

Also, the subsidiary must draft an announcement about the launch of the company that will be published in the National Gazette.

All the documents can be drafted and filed by our lawyers in Costa Rica through a power of attorney. The company incorporation process can take up to 5 weeks, a similar period of time as in other countries, such as Austria.

They can also assist if you want to move and apply for residency in Costa Rica as a shareholder of the foreign entity setting up the subsidiary.

Here’s also our infographic on this subject:

The main requirements to consider when setting up a Costa Rican subsidiary

Subsidiary companies are in fact domestic companies incorporated in Costa Rica by foreign enterprises. As such, the same laws that apply to local businesses must be followed. In terms of company registration, there certain aspects to consider, among which:

  • the subsidiary must have a local registered address which must be secured before it is incorporated;
  • it must also have a local bank account;
  • in terms of ownership, the shareholder is the parent company, and its details must be set out in the bylaws of the Costa Rican business.

Foreign companies can choose between branches and subsidiaries, and an important aspect to consider is that the latter can have its own separate commercial name compared to the former.

When it comes to the duration of the incorporation process, the important thing to consider is that it depends on the structure chosen by the parent company. As a general rule, it is harder to register a joint stock company compared to a limited liability entity. In the case of the public enterprise it should be noted that it requires at least 2 shareholders.

No matter the type of legal structure you choose, you can rely on our Costa Rican company formation agents for its establishment in 2024.

Setting up a local bank account for a subsidiary

After the subsidiary has been incorporated, it will need to open a corporate bank account and deposit the startup capital. Depending on the chosen bank, it might pay certain setup fees. The parent company can choose the bank to open the account with, however, it is worth noting that there are both local and foreign financial organization operating in Costa Rica which offer a variety of choices from this point of view.

The bank account can be established in the local currency, the Costa Rican colon, or in foreign currencies, a preferred choice being the US dollar thanks to the proximity to the United States. You can rely on our local advisors for support in opening the company bank account.

Tax requirements for subsidiaries in Costa Rica

All companies operating in Costa Rica are subject to taxation for which they must register. Upon registration, which implies submitting a D-140 form, the tax authorities will issue the tax identification code. Please note that the subsidiary needs its registered address upon the time of applying for a tax number. Alternatively, a Costa Rican virtual office can be used temporarily. At the same time, the new enterprise may also apply for VAT registration.

Another aspect that implies taxation is registering for social security and labor risk insurance as an employer. Then, every employee must also be registered for social security purposes.

For these stages in the subsidiary registration process, you can rely on our accountants in Costa Rica.

Licensing procedures for 2024

Compared to the branch office that will operate in well-regulated industries that may need specific licenses, this may not be the case of a Costa Rican subsidiary that can undertake general activities, such as trading, sale of retail goods, and even wholesale of products which implies fewer creation formalities, among which the lack of business permits in some cases.

After making your choice, you can rely on our advisors for support in expanding your business in Costa Rica through the selected enterprise.

Why incorporate a Costa Rican subsidiary?

The subsidiary can be registered as a private limited liability company or as a stock corporation in Costa Rica in 2024. This means that it must abide by the laws of this country from an operational point of view while reporting to the foreign company.

Depending on the type of entity chosen, Costa Rica’s subsidiary laws may apply. A minimum of 2 shareholders and one director are required for the formation of a private limited liability company, which is also the fastest to register. Also,  a minimum of 1 USD share capital is also required to complete the incorporation process.

One of the main advantages of choosing to create a subsidiary is having the opportunity to take up employment in Costa Rica, a procedure that is quite difficult through other channels. Moreover, both the subsidiary and the parent firm will be safeguarded in terms of liability to third parties. This means that the parent company’s liability for the subsidiary‘s activities is limited, while the subsidiary is free to operate in Costa Rica.

If you need assistance with the company formation process in Costa Rica, you can rely on our specialists. We can also help you if you want to open a company as a foreigner in another country, such as Canada. Our local partners can assist you start a business in Canada as a foreign investor. If you want to expand your business in Canada, there are many programs available, such as the Owner Operator program in Canada, which can grant to eligible candidates the right to permanent residency. 

Here is a video on the Costa Rican subsidiary:

Doing business in Costa Rica

Over time, there were many studies that attested to Costa Rica’s good reputation as a business destination. One of the most recent was completed by the World Bank in its last Doing Business Report for 2020. Also:

  • in 2021, Costa Rica made a strong economic recovery, its Gross Domestic Product increasing by 7.8% compared to 2020;
  • in 2023, this growth is expected to be maintained but at a slower pace of 2.7%;
  • 2024 is set to bring a slightly higher increase of 3.1% thanks to expanding exports.

The Central Bank of Costa Rica revealed in a recent statement that it revised its prior projection of 4.2% GDP growth in 2023 by 0.9 percentage points. However, the International Monetary Fund’s (IMF) lower growth projection. According to IMF projections, Costa Rica’s real GDP growth will be 3.0% in 2023 and 3.2% in 2024.

The National Bank updated its economic prediction for this year because it anticipates an increase in foreign demand for the manufacturing, agricultural, and tourism sectors of the Central American country. Additionally, the statement mentioned how increased local demands are thought to contribute to faster economic growth.

If you need advice or assistance in setting up a subsidiary in Costa Rica, please contact us.