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Monday, September 26, 2022

Moving or Investing in Costa Rica? Here is what you need to know

Natural beauties, tropical climate, beautiful beaches, jungles full of exotic flora and fauna, volcanoes, social peace, stable democracy, country without an army, 6% of the world’s biodiversity, happiest country in Latin America, business climate, are just some of the reasons why people consider living and starting their business in Costa Rica. If you are considering one of these options the first thing you should do is hire ERP Lawyers. We are a multidisciplinary legal team that will be able to guide you with your relocation, business and any legal aspect in the country.

The following is a small guide that will be of much help to you if you are interested in coming to Costa Rica

Living

Any person from any country in the world can enter Costa Rica; however, it’s important to verify if you require an entry visa. There is a regulation called Entry Visa Guidelines, according to the nationality, what type of visa you must apply for.

Once you have entered the country, the immigration authorities will give you a period of authorization to stay in Costa Rica, which cannot exceed three months. If a foreigner doesn’t leave the country within the authorized period, they will be subject to a $100.00 monthly fine, for each month they overstay or they could be prohibited from reentering Costa Rica up to a period of three times as long as every month their overstay.

For example, if a foreigner stays 3 months after the expiration of his authorization, must pay USD$300 dollars or will not be able to enter the country for the next 9 months.

Prior to the expiration of your authorization period and if your objective is to stay in the country for a longer period of time, you have two options:

  1. Exit the country and re-enter the country.
  2. Initiate a residency or work permit process in the country.

Legal advice is required for your immigration proceedings, ERP offers you an experienced team that will assist you and guide you to fulfill your needs. 

What are the most common types of residences in Costa Rica?

  • Permanent residency: It can be requested after the foreign person completes 3 years of being a temporary resident or by link with a Costa Rican (father, mother, minor children, adult children with disabilities, minor siblings and adult siblings with disabilities).
  • Temporary residency: It grants temporary residency for a determined period of time to the foreigner in Costa Rica. Eventually in some of the subcategories, a permanent residency could be requested. The main subcategories are:
  • Residence as spouse of a Costa Rican: the main requirement is to present marriage certificate and in case it has been celebrated in other countrie, it will be necessary the previous inscription in the Civil Registry. 
  • Residence for investors: The main requirement is to demonstrate a minimum investment in the country of $150,000.
  • Residence for pensioners: The main requirement is prove with a document issued by a competent authority that enjoys a lifetime pension, which amount shall not be less than $1000.
  • Residence for Digital Nomads. (Proof that you receive a stable monthly remuneration, fixed income or an average monthly income, during the last year for an amount equal to or higher than USD$3000, in the case of bringing your family group of USD$4000.) Specially designed for people who have a remote job and wish to work from Costa Rica.
  • Work permit.

If you are interested in applying for any of these residences, please take into consideration the general and most common requirements, which are: affiliation form, a letter stating the reasons for applying for residency, receipt of payment of US$250,00 (cost of the residency), legal stamps, two passport photos, fingerprint registration issued by the Ministry of Public Security, consular registration, birth certificate issued in the country of origin (duly legalized or apostilled), certification of criminal record of the foreigner (duly legalized or apostilled) and certified photocopy of all the pages of the passport.

How long does a residency process take?

Currently as a result of Covid -19 the process is taking approximately 9 months. 

What aspects should be taken into consideration?

  • All residency applications must be made while the foreigner is legally in the country.
  • Requested documents that have not been issued in Spanish must be provided with the corresponding official translation to said language.
  • In case your civil records have disappeared in your country of origin, you must provide a certification from the Ministry of Foreign Affairs of your country indicating this, duly legalized, and submit an affidavit
  • All documents submitted must be original or duly certified copies.
  • All requirements must be presented at the time of application, before coming to Costa Rica remember to bring your criminal record from the place where you lived for the last 6 months and birth certificate from your country of origin.

Real Estate Overview

Now that we have established the available options for your migratory status in Costa Rica, it’s time now for you to settle in this beautiful country, which offers not only great living conditions, but also attractive opportunities to invest and start your business.

How does Real Estate property work in Costa Rica?

It’s important for you to know that Real Estate is protected by its registration before the Real Estate Section of the National Registry of Costa Rica. This means that any person national or foreigner can acquire Real Estate on same conditions, holding all the rights associated to being an owner and have it duly registered, which can make you certain that what you purchased is yours and will be protected by Law and the robust Costa Rican legal system.

How to purchase Real Estate in Costa Rica?

There are multiple ways to do so; however, the most common and recommended is to purchase through a Direct Transfer by means of which the seller transfers the property in favor of the buyer (regular purchase agreement for Real Estate) which can be either an individual person, multiple people, or a company.

This type of purchase will require legal advice, which ERP Lawyers offers you, this will be necessary as you require to have a Notary Public to complete the required deeds for the registration of the property and its transfer, as well we highly recommend hiring legal advice to run a Due Diligence to ensure your interests are protected and avoid any potential contingencies, all this process can be completed in just one week.

What are the expenses associated with purchasing Real Estate in Costa Rica?

Acquiring Real Estate in Costa Rica has some costs associated aside from the purchase price. The main expense associated with purchasing a property in Costa Rica is the Transfer Tax; when transferring Real Estate, you must file a tax form and pay a tax which is 1.5% of the value of the property. At ERP Lawyers we can help you to file the required Form and ensure the tax payment is duly processed.

Who must cover these expenses?

Well Costa Rican legislation establishes this can be negotiated between the parties; however, keep in mind that it has become customary that the buyer will cover the expenses.

What obligations will you have as a Real Estate owner?

Well, the answer it’s simple, you must pay taxes. Real Estate Taxes are paid to and before the Municipality on where your property is located, this tax is equal to the 0.26% of the value of your property which will be paid yearly; however, keep in mind that some Municipalities divide this payment quarterly.

To pay this tax, you must file at least every 5 years a Real Estate Declaration which the Municipality of the place where your property is located will review and determine the value of your property, which will be set as the base to calculate the Real Estate Tax. Each Municipality has their own method and procedure established; therefore, we recommend hiring legal advice to guide you and assist you with this, in ERP Lawyers we have vast experience working with the different Municipalities established in Costa Rica and can help you with this process.

Corporate and Business Overview

Why invest and start your business in Costa Rica?

Costa Rica has a growing and developing economy which makes it a great place to invest, as well the Government offers incentives and benefits for foreigners to invest in the country.

To name just one example we can mention:  the “Law for the Attraction of Investors, Rentiers and Pensioners” which establishes duty free conditions to import (once) your household goods, duty free to import two transportation vehicles, Real Estate tax exemptions as well as import tax exemptions for instruments or materials used for professional or scientific activities, among other benefits.

Keep in mind that to take advantage of these benefits you will need to fulfill certain requirements when investing; therefore, legal advice is required to determine and complete the specific requirements, at ERP Lawyers, we take pride in not only providing exceptional legal advice, but as well being a business partner to our clients.

How to create a company in Costa Rica?

Establishing a company in Costa Rica is a fairly simple process (when done with the proper legal advice) and can be done with just one person, you will need to decide what type of company you want to create, the most common types are Corporations and the Limited Liability Companies. 

Both types of companies are safe and protected by Law, responsibility is limited to the shareholders contribution on both companies, as well they both pay the same taxes, and differences between these companies are mainly on the structure of the company.

To create your company, you will need to create the bylaws of the company, and the corporate books which will be registered before the Public Registry who will provide you with a Corporate ID once the company is duly registered, in our experience at ERP Lawyers, this can be done in just a couple of days when done right with proper legal advice. Please keep in mind that certain type of businesses are specifically regulated and might have additional requirements in order to start operating.

Best option to assist you with your moving and investing process in Costa Rica

At ERP Lawyers, we have a multidisciplinary and experienced team that can help you with the process of moving and investing in Costa Rica, just to mention some of our services include:

  • Due Diligence: We offer you, due diligence process for any type of transaction. 
  • Real Estate: purchase agreements, public deeds, trusts constitutions, rental agreements, evictions, Real Estate Tax and all you need to secure your Real Estate investment.
  • Immigration: We assist you and advise you on how to obtain your residential permit as well as working permit.

Corporate and Business: ERP Lawyers can assist you in creating and administrating your companies, it’s legal structure, commercial agreements, free zones and special export regimes, international trade, asset purchases, private equity and venture capital and all day-to-day operation needs of a company.

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