Incorporating a Business in Costa Rica

“Opportunities don’t happen. You create them.”
— Chris Grosser

The opportunity to begin a business venture in Costa Rica is not as daunting as one may imagine. All it takes is the commitment to make it happen. While the country’s legal framework may appear formal and highly structured, it is designed to provide clarity, legal certainty, and long-term stability for businesses operating within its borders.

To incorporate a company in Costa Rica, the following steps must be completed:

• Meeting of the founding members of the company with a Notary Public

• Signing of the articles of incorporation

• Payment of the applicable taxes

• Filing of a notice with the government newspaper

• Filing of the articles of incorporation with the Mercantile Section of the National Registry

• Final filings required to legally conduct business

Each of these steps plays a specific role in transforming a business idea into a legally recognized entity.

Drafting and Signing the Articles of Incorporation

To register a company, the founding partners must appear before a Notary Public to draft and sign the articles of incorporation. These articles form the legal backbone of the company and generally contain provisions related to the company’s administration, organizational structure, bylaws, and permitted business activities.

At this stage, it is strongly advised to hire an attorney to assist with the preparation of the articles of incorporation. Although Costa Rican law allows for standardized corporate structures, the details included in these documents can have a significant impact on the company’s internal governance, liability exposure, and future flexibility. Thoughtful drafting helps protect both the business and its shareholders.

Costa Rican law requires a minimum of two persons to appear before a Notary Public to sign the incorporation documents when forming a corporation.

Corporate Tax Obligations

As of September 2017, the annual corporate tax is once again mandatory. This tax applies broadly to corporate entities, including corporations, limited liability companies, limited partnerships, partnerships, and individual limited liability companies.

Failure to comply with the corporate tax requirement has practical legal consequences. Companies that fall behind on this obligation will be unable to obtain certificates of good standing and may be barred from completing certain legal transactions, including registrations, amendments, or formal certifications.

Choosing and Registering the Company Name

During the incorporation process, the company name must be selected and verified. It is advisable to check the availability of the proposed name through the National Public Registry’s online platform before proceeding.

The proposed name must be sufficiently distinct from existing registered entities. If the name is deemed too similar to one already on record, the incorporation process may be delayed until an acceptable alternative is provided.

Once the name is confirmed, the signed articles of incorporation are filed by the Notary Public with the Mercantile Section of the National Registry. This filing is currently completed through an online system, which has streamlined what was once a fully paper-based process.

Publication in La Gaceta and Registry Approval

After the articles of incorporation are filed, the National Registry publishes a notice of registration in La Gaceta, the official government newspaper. This publication serves a formal legal purpose: it allows third parties the opportunity to raise objections to the formation of the corporation.

The typical processing time for a corporation to be fully registered ranges from 15 to 30 days. Once the registration is approved, the National Registry notifies the Notary Public, and the company is officially considered incorporated.

At this point, the Notary Public issues the legal books of the company. The number and type of books depend on the corporate structure:

• Sociedad de Responsabilidad Limitada (SRL):

  • Shareholder registry book

  • Shareholders’ meeting book

• Sociedad Anónima (SA):

  • Shareholder registry book

  • Shareholders’ meeting book

  • Board of Directors’ meeting book

These books are mandatory and must be properly maintained throughout the life of the company.

Registration with the Tax Department

Once incorporated, and before engaging in any business activity, the company must register as a taxpayer by filing Form D-140 with the Tax Department (Hacienda).

The nature of the business determines the type of tax registration required. Some retail businesses may qualify for a simplified registration, which requires monthly reporting of purchases and sales. Other businesses must comply with traditional tax filings, which are generally submitted on an annual basis.

Choosing the correct registration category is important, as it affects reporting obligations and compliance requirements moving forward.

Business Licenses and Operating Permits

Incorporation alone does not authorize a company to operate. After tax registration, the company must obtain the licenses and permits applicable to its specific business activity.

Businesses with a physical location are generally required to obtain a municipal business license and a Health Permit. Depending on the municipality, this process can take one to two months.

Certain industries, such as restaurants, hotels, and tour operations, are subject to additional regulatory requirements. These may include sector-specific permits or inspections. Consulting with an attorney at this stage is essential to avoid delays or compliance issues.

Employer Registration and Labor Obligations

If the company intends to hire employees, it must register as an employer with CAJA and obtain worker’s compensation insurance.

Employer obligations include mandatory contributions equivalent to approximately 26% of each employee’s salary, paid to CAJA. In addition, worker’s compensation insurance premiums must be secured. These premiums vary depending on the nature of the business and the risk level associated with each position.

For example, a messenger or field worker typically represents a higher risk of injury than an office clerk, resulting in different insurance costs.

Final Considerations

These are the fundamental elements to consider when incorporating and registering a business in Costa Rica. While the process involves multiple steps and formal requirements, it is manageable with patience and the assistance of professionals familiar with Costa Rican corporate law.

Once completed, the business is legally positioned to operate within Costa Rica’s regulatory framework. With proper planning and compliance, incorporation becomes the foundation upon which long-term success can be built.

The process of incorporating a business requires diligence, but once completed, may every success accompany the newly incorporated Costa Rican enterprise.

This article was completed with the collaboration of Sandra Silva, Esq.