Do you own property or a business in Costa Rica?
Most expats form a corporation (SA or SRL )to purchase investment real estate or open a business. In Costa Rica, this corporation acts as a holding entity for your investment condo/house, land or business. There are 3 primary reasons for doing this:
Liability
Flexibility
Estate Planning
Liability: If the property is under the physical name of the person (aka Shareholder), and there is a lawsuit filed against the person, the property could be seized or a lien could be placed on it.
If it is under the company (aka corporation), the company assets will be apart, and different from, the personal assets. Therefore, there is a layer of protection for liability matters.
Flexibility: If the property is under a company, the shareholder can grant Power of Attorney (POA) to execute different requirements. Some examples of this may include:
Applying for utilities
Representing the owner at annual HOA meetings
Filing and/or paying any expenses or taxes
Complying with future legal requirements from overseas
The forming of a corporation and granting of a POA gives you the flexibility and peace of mind that the issues can be taken care while you are away from CR.
Estate Planning: For estate planning and probate matters, having the property under a corporation makes the process easier and allows for more options when defining the estate planning.
These all may seem familiar, as all countries have laws governing who may work and/or own a business and purchase property within their country. Like all countries, Costa Rica strictly regulates who, and how, business is conducted in the country.
Did you miss a deadline?
Once you have incorporated, there are several very important taxes to be paid. Depending if the corporation is active or inactive they can be monthly (Sales Tax – becoming VAT Tax) or annually (income tax, corporate taxes, etc.).
The annual Corporate Tax (Law 9428 for reference) has a deadline of January 31, each year.
Yes, that deadline has passed for 2019! It may be easy to put off paying your Costa Rica taxes on time, especially if you don’t permanently reside in the country.
Get current before it’s too late.
If for some reason you missed the January 31, 2019 deadline, get the tax paid right away to avoid interest and penalties. If this tax is not paid the National Registry will not issue, certify or register any documents for the company. Also, the company will not be able to have a contract with the Government or any public institution.
However, missing THREE or more consecutive missing payments can have major consequences. In fact, the CR Tax Office (think IRS if you are from the U.S.) will proceed with the dissolution of your corporation. Therefore, you cannot do anything on behalf the corporation and you will be required to start the process of liquidation of the corporation.
Always seek legal advice from an attorney you trust.