Costa Rica

Executive Summary

The Republic of Costa Rica is located in Central America and borders Panama and Nicaragua. The Pacific Ocean is to the west and south, while to the east the Caribbean Sea is located. The country covers a total area of 51,100 sq km. It is known for having been the first country to constitutionally abolish its army. It also has one of the highest environmental performance index rates in the world and has set the aim of becoming a carbon-neutral state by the year 2021.

San José is the capital of Costa Rica, and Spanish is its official language. It is a democratic republic and one of the most politically stable countries of the region. The government enjoys a monopoly over such market segments as telecommunications and electricity supply; it owns several commercial banks and insurance businesses. Costa Rica has implemented a modern welfare-state model that is comparable to the countries of Scandinavia. Costa Rica is a member state of numerous international organizations.

The national government offers tax exemptions to foreign investors who wish to invest in the country. Intel microprocessor production, for example, contributes approximately 5% to the GDP of Costa Rica and is responsible for 20% of the country’s exports. Electronics, IT, pharmaceuticals, financial services, and ecotourism are currently the main economic sectors of Costa Rica. The country is also known for its high-quality coffee.

The Costa Rican colón (CRC) is the national currency.


The climate of Costa Rica is classified as tropical to subtropical; December–April is the dry season, and May–November is rainy. Its landscape is rich with coastal plains and mountains that count more than 100 volcanic cones. In addition to active volcanoes, other natural hazards may include earthquakes, hurricanes, flooding of lowlands, and landslides during the rainy season.

The flora and fauna of Costa Rica is rich, with the country being home to a diverse range of animals and plants.

Map, Flag and Coat of Arms


political map of Costa Rica
the flag of Costa Rica coat of arms of Costa Rica


Types of Company

Sole Proprietorship

This structure unites characteristic traits of a limited liability company and a limited partnership, and is different from this structure used in common law jurisdictions. There is one owner whose liability is limited to the capital invested in the business. Company’s profits may be distributed only via dividends. Only a private person and not a corporate entity can become an owner of a Sole Proprietorship.

General Partnership

All the partners are fully liable to the debts of a partnership. Profits among partners are distributed in accordance to the percentage of the equity held by each partner.

Limited Partnership

At least one general partner with unlimited liability and one limited partner who is liable to a partnership’s debts up to the capital invested, may form a limited partnership. Limited partners must not actively participate in a partnership’s management; if the contrary is true, they become unlimited partners.

Limited Liability Corporation

Every member has a limited liability to the value of the unpaid capital. All the shareholders must be private persons. Such a corporation is administered by a manager, rather than directors, who is assigned wide powers of attorney. This type of company is not frequently chosen for business purposes.

Stock Corporation

At the time of incorporation there must be at least two subscribers, subsequently only one shareholder is allowed. Shareholders may be private persons and corporate entities. Annual shareholders’ meeting must be held and may be organized anywhere in the world, if this option is specified in the Articles. There are no requirements for a minimums share capital. Preference and deference shares may be issued, while shares of no par value and bearer shares are not allowed. This type of company must have a registered office in Costa Rica, a registered agent and three directors. Annual tax returns must be filed.

Public Limited Liability Company

It is a Stock Corporation which can offer its shares to the general public, and they can be traded on a stock exchange. It is obliged to have at least 10 shareholders and its minimum share capital must be CRC 50 million. It is controlled by the Central Bank of Costa Rica.

Collective Corporation

Shareholders of this corporation have unlimited liability. Therefore, it is no longer used for many types of businesses, as more attractive alternatives can be chosen.

Foreign Corporation

A foreign company can register its branch in Costa Rica by submitting all the required documents to the Companies Registry.  Subsidiary companies have a more favourable tax treatment than branches, particularly for withholding tax purposes. At any time a foreign company may decide to redomicile to Costa Rica, following a specifically set procedure.



Even though Costa Rica is a civil law jurisdiction, trusts may be established there.


The tax year in Costa Rica starts on 1 October and ends on 30 September.


Taxation of private persons is based on the territoriality principle, i.e. only the income derived from activities conducted in Costa Rica is applied with taxes, all the other profits are exempted. In such a way, there is no distinction between residents and non-residents for taxation purposes.
Income tax has a scalable nature, employers and employees are liable for paying social security contributions. Capital transfer tax and stamp duty are payable on certain transactions. Sales tax is levied at a standard rate of 13%; medicine, real estate, food products and several other items are exempted from this tax. Generally, sales tax is not levied on services. Selective consumption tax is levied at a varying rate from 0% to 60%. Different property tax rates are levied on properties which exceed a certain value.


Costa Rica is not considered a classical offshore centre. However, foreign sources of income are exempt from taxes. Corporation tax is levied at a standard rate of 30%.

The standard rate of withholding tax is 15%, which is levied on dividends paid to shareholders, interest, and other types of distributions. There are certain exemptions for this tax, and these must be addressed on an individual basis. Corporate entities are also liable to stamp duties: first, there is a stamp duty for all entries in the Companies Registry, and second, an annual stamp duty is payable, the amount of which depends on the company’s issued share capital.

More Information

Click here for more information about creating a Costa Rica Offshore Company.