- Can a foreigner own a business in Costa Rica?
- What is the inflation rate in Costa Rica?
- What is Costa Rica’s economy based on?
- How is the tourism infrastructure for business travelers?
- What is the typical business attire in Costa Rica?
- How is the investment climate in Costa Rica?
- What are some advantages of operating a business in Costa Rica?
- Does Costa Rica have high unemployment?
- What are some business opportunities in Costa Rica?
- How do I determine how much to pay my employees?
- Can I operate my company in a free-trade zone?
- What is CAFTA-DR, and how does it affect business in Costa Rica?
- What are the different corporation types?
- How easy is it to open a Costa Rican corporation?
- Will I have to pay taxes on my Costa Rican-earned income?
- Am I allowed to work in my own business?
- Can I hire foreigners to work in my business?
- What’s the average monthly salary?
- Can I open a bank account?
- What is the exchange rate?
- What business hurdles am I likely to encounter?
- What kinds of business incentives exist?
- Will I need a lawyer?
Yes, it is legal for foreigners to own a business. To protect your investment and your legal status in Costa Rica, it is best to apply for residency. A special investor group, known as inversionista (investor) residency, is available to entrepreneurs who invest $50,000-$200,000 in a government-approved industry, often tourism and reforestation.
For 2010, annual inflation was estimated at 5.8%.
Costa Rica's economy has transformed over the past decade, moving away from its longtime dependence on agriculture to one based on technology and microprocessor production and tourism. Costa Rica has been dubbed the “Silicon Valley of Latin America," and has attracted commercial giants such as Microsoft, GE, Abbot Laboratories, Continental Airways and Intel Corporation.
Business travelers will enjoy an advanced telecommunications system, modern infrastructure and excellent array of hotels and restaurants while visiting or working in Costa Rica.
A suit and tie are appropriate for men, but in warmer climates, such as on the coast, a jacket is optional. Women wear a dress or skirt and a blouse for formal meetings, but pants are common as well.
Costa Rica’s business environment is one of the safest in Latin America. Foreign investment is encouraged by means of incentives such as low tariffs and competitive tax rates. Investment opportunities have steadily grown with new legislation designed to attract foreign investment and promote increased private sector activity in general.
In addition to its political, social and economic stability, the country enjoys a strategic location and preferential market access, a highly educated workforce as well as infrastructure geared to import-exports.
Costa Rica’s Ministry of Labor and Social Security (MTSS) strictly regulates workers’ rights, and national labor law makes every effort to keep jobs local. As a result, Costa Rica’s 2010 unemployment rate was just 6.6%; by comparison, unemployment in the United States reached 9.7% in 2010.
Turnkey eco-lodges and bed and breakfasts, import-export businesses, U.S. franchises, restaurants and bars, consulting firms, and specialty shops catering to North Americans, among others.
The Costa Rican Ministry of Labor and Social Security (MTSS) determines minimum daily salaries for almost every profession. Additionally, you are required to pay your workers’ public health insurance and pension plan – equaling about 22% of their total salaries – and end-of-year bonus, or aguinaldo, equivalent to one month’s salary.
Free trade zones, known locally as zona francas, help draw foreign investment to Costa Rica. To operate within a zona franca, your company must have fixed assets of at least $150,000. Tax exemptions include relief from import and export taxes, real estate transfer tax, capital tax (10 years), income taxes (100% for 8-12 years and 50% for the following 4-6 years), property tax, and selective consumption tax.
CAFTA-DR stands for the Central American-Dominican Republic Free Trade Agreement. In 2007 Costa Rica ratified CAFTA by public vote. The principal effects of CAFTA are to open the local market, much of which used to be controlled by government monopolies, to foreign investment. Previously, the Costa Rican Code of Commerce restricted business operations (not ownership) to Costa Rican citizens or residents of at least 10 years; as CAFTA is implemented, these restrictions will cease to exist.
The Costa Rican Code of Commerce details five different types of corporation, although only two – the Sociedad Anonima (S.A.) and the Sociedad de Responsabilidad Limitada (Limited Liability Company or LLC) – are commonly used. Corporations and LLC’s are easy to manage, especially with respect to decision-making issues and powers of representation.
Setting up a corporation is a simple process with your lawyer, and usually takes a few months and between $300-$1,000. Alternatively, you may purchase a “shelf corporation,” which is a pre-formed and registered company that is ready to go. If purchasing a shelf company, make sure your lawyer settles any restructuring issues, and verifies that the company holds no preexisting liabilities.
Americans who conduct business in Costa Rica may be required to pay taxes to the United States and Costa Rican governments. Several exemptions and deductions exist, so it is wise to consult an experienced accountant in order to file correctly.
Only inversionista, representante and permanent residents are legally permitted to work in Costa Rica. Pensionados and rentistas are only permitted to own a business and earn income, but they may not work in any business.
By law, your work force may be comprised of no more than 10% foreign employees. All foreign workers must have work permits and/or legal residency that allows them to work legally.
In 2009, Costa Rica’s average per capita income was $575 per month, which breaks down to about $2.85 per hour.
Yes, you may choose from several state-owned and more than 20 private banks. All offer services to foreigners – residents, students and employees – although tourists will find it harder to open an account. You will need a valid passport, a current utility bill, initial deposit and references.
The current exchange rate hovers around 500 CRC to $1 USD. The Costa Rican Central Bank sets Costa Rica’s floating exchange rate. A daily band – minimum and maximum for buying and selling colones, or CRC – exists, and individual banks and currency houses set their exchange rates from within the set band.
The major hurdle you’re likely to encounter is government red tape; expect more forms, lots of stamps, and longer wait times than you’re used to back home.
The Costa Rican government provides incentives, usually in the form of tax exemption and grants, for business in the following industries: tourism, forestry, agriculture, and certain import/exports.
Yes, an excellent lawyer will be indispensible to business operations in Costa Rica. Be sure to interview several, and find one with whom you have very little or no language barrier. Your lawyer will help you navigate every stage of starting and owning a business, and will be an integral piece to helping you maintain success.