A Guide for Foreign Investors in Costa Rica: Legal Considerations and Investment Opportunities

Costa Rica has established itself as one of the most attractive destinations for foreign investment in Central America. The following is a basic guide for those interested in investing in Costa Rica.

1. Legal structures that can be used

- S.A. (Sociedad Anónima): The most common structure for foreign investors. It allows limiting the liability to the capital contributed.

- S.R.L. (Limited Liability Company): Ideal for small and medium sized companies, this structure offers flexibility and less formal requirements than an S.A. or work as a holding company.

- Branch of a foreign company: If an investor wishes to operate directly in Costa Rica without creating a new entity, he can open a branch of his existing company.

2. Legal Requirements and Procedures

         - Registration under the Ministry of Health: All businesses must register in order to comply with tax obligations in Costa Rica.

         - Business license and local permits: Depending on the type of activity, it will be necessary to obtain municipal permits and specific licenses.

         - Opening a bank account: Investors will need to open a local bank account, which is essential to conduct business operations and comply with tax regulations.

- Contracts and agreements: In many investments, investors will need to formalize agreements and contracts that comply with local law, such as employment contracts, buy-sell agreements, and leases.

3. Key Investment Areas

         - Tourism: Costa Rica continues to be a world-class tourism destination, offering opportunities in hotels, ecotourism, and hospitality-related services.

         - Technology: With an expanding technology sector, Costa Rica has become a hub for software companies, IT services and startups.

         - Real Estate: Investing in property, both commercial and residential, continues to be a popular option, especially in areas such as the capital area, San José, and the coastal region.

         - Renewable Energies: Costa Rica has committed to be carbon neutral by 2050, offering attractive investment opportunities in renewable energies, such as solar and wind.

4. Tax Benefits and Exemptions

         - Free Trade Zones: Costa Rica offers free trade zones with tax exemptions for companies investing in sectors such as manufacturing, technology, and exports.

         - Investment Incentives: The government offers tax benefits and subsidies for priority sectors such as biotechnology, renewable energy, and pharmaceuticals. 

- Double taxation agreements: Costa Rica has agreements with several countries to avoid double taxation, which benefits foreign investors in terms of taxes.

5. Foreign Property

         - Property rights: In Costa Rica, foreign investors have the same rights as nationals to acquire real estate, which facilitates investment in property.

         - Maritime-terrestrial zone: It is important for investors to be aware of the restrictions on property ownership in areas close to the sea, where there are limitations related to the distance to the coast.

6. Labor Considerations

         - Hiring of employees: Costa Rican labor legislation protects workers' rights, including minimum wage, social benefits (Christmas bonus, vacation, etc.), and the right to unionize.

         - Employment contracts: It is essential that investors draw up clear contracts that comply with labor regulations to avoid conflicts.

8. Advice for Investors

         - Local legal advice: It is highly recommended to have lawyers specialized in corporate, tax and labor law to guide the investment process.

         - Market research: Be sure to conduct a thorough analysis of the local market before making a significant investment. This includes identifying potential risks and local competition.

Conclusion

Costa Rica offers a promising investment environment, with a stable economy and diverse opportunities in key sectors. However, as with any foreign investment, it is crucial to be well informed about the country's legal, tax and labor requirements. Having the right advice can facilitate the process and minimize risks.

If you are interested in obtaining more details on how to invest in Costa Rica or need specialized legal advice, do not hesitate to contact our law firm for a personalized consultation.