Population

Population in Costa Rica is approximately 4.2 million, more than a million living in the Central Valley. 94% of the population in Costa Rica are either European (mainly Spanish) descent, or are Mestizo (mixed European and indigenous) ancestry.

Political Structure

Costa Rica's democracy and social policy in the 1949 Constitution as their cornerstone. This guarantees Costa Ricans the freedom of speech and mobility, and promotes the sanctity of human life and private property. Costa Rica's democratic national government comprises three separate branches: Legislative, executive and judicial.

Executive Branch: Presidential elections take place every four years and the president is elected by popular vote. No president can serve in the presidency for more than four years, incumbent presidents and ex-presidents cannot be voted into office. The President appoints two vice-presidents and 20 cabinet members. The president must be elected by at least 40 percent of the vote or a run-off election is held.

Legislative Branch: Costa Rica has an assembly legislative assembly with 57 seats. Representatives are elected by popular vote. The Legislature has six permanent subcommittees that oversee agriculture and natural resources, economic affairs, government and administration, budgeting and taxation, legal affairs and social affairs. The Legislative Assembly may decide to overide the presidential decisions with a two-thirds majority vote and is responsible for declaring war and the selection of judges of the Supreme Court. Legislators can be re-elected, but only after spending one term out of office.

Judicial Branch: The judicial branch is responsible for administering justice in Costa Rica, and consists of the Supreme Court, appellate courts and trial courts. There are 22 judges elected by the legislature assembly every eight years. They can be re-elected.

Infrastructure and Economy

The economy has traditionally been based on agricultural commodities such as coffee, cocoa, bananas, sugar and beef. In recent years, successful efforts have been made to introduce new exports, services and tourism. Costa Rica is a member of the World Trade Organization. It has developed incentives for companies operating under the Free Trade Zone regulations and other export goods programs.

Language

Spanish is the official and spoken language. English is widely spoken in urban areas and is often used in marketing and international trade.

Currency

Costa Rican Colon (¢)

Exchange Control

None.

Types of Law

Based on French civil law.

Principal Corporate Legislation

Commercial Code, Law No. 3284, passed on September 19, 1964, and its subsequent amendments.

Type of Company for International Trade and Investment

Generally, public companies are incorporated as "Sociedades Anónimas" under the Commercial Code, Articles 102 ff

Procedures to incorporate

After the presentation of the proposed Corporation's signed articles of incorporation before a notary public who creates a public deed for registration at the public registry

Restrictions on Trading

Private banking, public finance, investment funds, collective investment schemes and pension funds are allowed, but the government must approve the activity. Insurance and distribution of petrol, gasoline, and diesel is prohibited as they are state-owned monopolies. There are also restrictions on the provision of utilities such as telecoms and energy. Trustee services are permitted.

Language of Legislation and Corporate Documents

Spanish

Registered Office Required

Yes, must be maintained in Costa Rica at the address of the registered agent.

Name Approval Required

Yes

Shelf companies available

Yes

Time to incorporate

3-4 weeks, subject to name approval.

Name Restrictions

A name that is similar or identical to an existing company. Names of well known companies incorporated elsewhere or a name that suggests government patronage.

Language of name

Names can be expressed in other languages using the Latin alphabet. Registrar requires a Spanish translation.

Names Requiring Consent or a License

Bank, savings, quality assurance, reinsurance, fund management, investment fund, or their foreign equivalents language. "Trust" or "trustee" is allowed.

Suffixes to indicate limited liability

"Sociedad Anónima" or the abbreviation "SA"

Disclosure of Beneficial Ownership to Government Authorities

No requirements.

Authorized and Issued Share Capital

Standard authorized capital stock is 10,000 Colones divided into 100 common voting shares into 100 Colones each but 25% of the issued capital must be paid up on incorporation. The capital may be expressed in any convertible currency. Minimum share capital is one share at par value.

Classes of Shares Permitted

Preferred shares and registered (nominal) shares.

Taxation

No tax is levied on income derived from business not sourced in Costa Rica.

Tax Return

Company must submit a tax return each year, whether it is liable to pay tax on its income.

Double Taxation Agreements

Only Tax Information with the United States. The authorities have started negotiations with several countries to avoid double taxation of income. In 2009, the tax treaty had been signed but not yet ratified by Spain, Germany and Romania. Negotiations with Israel, Korea, Switzerland and Canada are ongoing.

Investment Protection Treaties

Germany, France, Romania, Chile, Britain and Switzerland.

Government Fees

Annual Return US$ 51 is payable.

Accounting Requirements

There is no requirement to submit audited accounts with the authorities, it is a company requirement to keep records, which reflect the financial position of a company

Directors

Costa Rican companies are required to appoint at least three officers (president, secretary and treasurer), which can also serve as directors and may or may not have Costa Rican citizenship. In addition, a statutory comptroller (any natural person but may not be one of the three aforementioned officers) are required. Meeting can take place anywhere in the world provided that provision is made for this in the articles.

Shareholders

The minimum initial number of shareholders (subscribers) at the time of incorporation is two, then a single shareholder is allowed, which may be an individual or legal person.

Meeting of Shareholders

Must be done annually and can be held anywhere in the world provided that provision is made for this in the articles.

How can I get more information on company formation in Costa Rica?

Please contact us if you wish to open a company in Costa Rica and we will be pleased to discuss your Costa Rican company formation matters in greater detail.

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