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Foreign investment laws in Costa Rica

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Published by:

Nontle Nagasawa

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Reviewed by:

Alistair Vigier

Last Modified: 2023-09-05

Are you looking into laws in Costa Rica for investment? Costa Rica has always been known as that little Central American country with beautiful locations, excellent agricultural production, cattle farming activity, delightful tropical beaches, and forests.

Generally, it is a top-notch choice worldwide in terms of ecological tourism. As a result of that circumstance, doing business in the country has always been a secure alternative for investors in the most lucrative industries Costa Rica has to offer.

Like every other country, it’s a rule of thumb to know the essentials of the legal environment for foreign business ventures, but besides that, he or she needs to comprehend the best option for doing that. This article will explain some laws in Costa Rica.

One of the most desired choices for investment in Costa Rica is purchasing resort-oriented real estate or starting a new one in a suitable location, depending on its nature.

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PUBLIC NOTARY

The first thing that a foreign business founder must know, especially if he or she comes from the United States, UK or any other country with a “Saxon-oriented” notary system, is that Costa Rica has a Latin style of notary scheme; a public notary in Costa Rica means that he or she has also to be a lawyer, as well as a specialist in notary procedures.

What that means is any real state or vehicle purchase, LLP and LLC Costa Rican equivalents creation, mortgage constitution, and even its transformation requires to be made by this individual for that action to be publicized and acquire certain solidification.

Yes, we know that this system is a little slower and more expensive than its Saxon counterpart, but au contraire offers more security and a very stiff and consolidated registry system to have safety and reliability in investing projects.

Laws in Costa Rica – CROSS BORDER INVESTMENT

This issue tends to worry some people in any country: “I need to expand my business, but I don’t know how or if I can bring external resources.” Well, in Costa Rica, even though you must justify the origin of your capital, it’s quite permissive in terms of money moving into the country, excluding money laundering and drug dealing supervision controls.

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ACQUIRING LAND AND ENVIRONMENTAL REGULATIONS

Regarding real estate acquisition, the most desired locations always depend on the project you want to develop. For example, for hotel and housing projects, beaches like Dota, Jacó, Manuel Antonio, and Conchal, or (mountain hotels) are the most craved zones in Costa Rica, along with more city-based inns for travellers that are just passing through the country.

There is a general thought that Costa Rica is very strict in environmental regulations and wildlife protection. Well, it´s true.

Costa Rican authorities play no games when it comes to preserving nature. There´s even an environmental law principle called in dubio pro natura, which is similar to the criminal law principle “innocent until proven guilty,” but, in this case, judges will sentence in favour of the most beneficial solution for the environment, even if it means the variability of the burden of proof or condemn to pay compensatory and even punitive damages.

Nonetheless, do not fear; a well-experienced attorney can help you conduct your business correctly.

CATTLE RAISING AND AGRICULTURE

Costa Rica has a big agriculture and cattle raising scheme, being tropical fruits, beef, and pork as the most exported products. Many foreigners are investing in this activity because it´s trustworthy, and the Costa Rican government rewards this with affirmative action compensations like tax cuts or low interest rates on loans.

ABOUT TAXES

It´s not a secret that one of the most feared business risks for any investor is taxes. The problem with Costa Rica isn´t the amount of taxes per se but the number of different taxes you must amortize. For example, Value Added Tax (VAT) is charged to the final consumer of a product or service user; with some exceptions, you have to pay a 13% tax on every product.

Another illustration is income tax, where Costa Rica has a very unusual division between pure revenue tax (which oscillates between 10% and 30%, depending on the income volume) and the tariff that you may pay when you sell or buy property or vehicles or conduct any leasing operation involving them (15%).

There´s good news about the last two mentioned above: you don’t have to pay for them all; you can choose between them in a determined scenario.

Due to the brief extension of this article, land-owning tax, liquor license, tax on non-domiciled individuals, and other tributes won’t be emphasized. Still, the rest are nothing to worry about since they´re relatively inexpensive and easy to pay.

LAWS IN COSTA RICA

Costa Rica is not only an attractive place for vacation, travel or scientific investigation but also has a very unexplored market niche and offers exquisite business opportunities for any newcomer who wants to make secure and profitable investments in a beautiful country full of environmental wealth and tropical resort potential. All you need is a good attorney who not only knows the law but that has connections for making your enterprise quickly grow.

I hope you learned a lot about the laws in Costa Rica. We will continue to post articles in this Costa Rica series.

Author: Jaime A. Rivera

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