Setting up a Business in CostaInRica Costa Rica Department of Research
CINDE
1 CINDE 2017. All Rights Reserved. The facts of this report are believed to be correct at the time of publication. Please note that the contents delivered are based on information gathered in good faith from both public and proprietary sources. As such, CINDE can accept no liability for loss or damage arising as a result of the use of this report, either in its published or online format.
The Costa Rican Code of Commerce rules the organization of the different companies and their commercial activities. The main differences among commercial organizations are found according to their registration procedures and the financial liability of the parties involved.
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Limited Liability Company (“Sociedad de Responsabilidad Limitada” or “SRL” in Spanish): The liability of the partners is limited to the proportion of their capital contributions. A minimum of two partners are required (physical individuals of business entities) to initiate its incorporation. Its legal standing is not altered in the event a single partner subsequently becomes the sole owner of the capital contribution.
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Corporation (“Sociedad Anónima” or “SA” in Spanish): Is equivalent to a Corporation as usually defined in the United States. It is the most widely used corporate structure when organizing businesses in Costa Rica. A “Sociedad Anónima” may be formed by other business entities or individuals, or a mix thereof, and may be eventually owned by one single individual or another business entity. In such event, the corporation’s legal status is not altered in any way.
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The following tables summarize the most important steps that must be followed in order to become an exporting company in Costa Rica. It assumes that the company requests admission to the Free Trade Zone Regime.
Manufacturing Company
Actividad 1
2
3
4
5
Months 6
7
8
9
10
11
Legal / Incorporación Elegir el representante legal en CR Incorporación de la empresa en CR
Anuncio Coordinación con Dept. de Comunicación Comunicado de prensa
Viabilidad ambiental (Construcción y actividad de manufactura) Elegir un consultor ambiental 1/ Formulario D1 (borrador)* Formulario D1 (presentación) 2/ Presentación PGA y Depósito del garantía ambiental
Edificio Negociación del terreno o edificio (selección)* Mejoras al edificio
Compra/ Inversión facturación a la empresa local
Status de Zona Franca Borrador de la aplicación* Revisión de la aplicación con PROCOMER Presentación de la aplicación Proceso de aprobación Notificación a la empresa Publicación en la el Diario Oficial La Gaceta
Empezar a hacer compras locales, con excención de impuestos local
Código aduanero (Estatus: Auxiliar Función Pública Aduanera) Elegir corredor de aduanas Presentación de documentación ante aduanas Registro del código de aduanas
3/
Empezar a importar con excención de impuestos a las importaciones
Otros registros/permisos Seguridad social, Registro de exportadores, Ministerio de Hacienda, Ministerio de Salud, Municipalidad (Patente de funcionamiento), 4/ seguros , cuentas bancarias
Migración Permisos migratorios
5/
Servicios Electricidad/ agua
6/
Telecomunicaciones
7/
Reclutamiento - RH Elegir reclutadores Proceso de reclutamiento Entrenamiento del personal
Inicio de operaciones
Notes: PGA: Environmental Management Program. * The time may vary according to the company. 1/
There are several types of Forms. This case corresponds to a D1 (the simplest one).
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12
2/
If the company is going to be located inside an industrial park,
the park already got this Construction & land permit from SETENA, therefore the company should just request it to the owners. 3/
Company will need the custom code to be able to import and exempt duties. In this case, the use or need
of the code will depend on the terms of the operations contract with the client. 4/
This includes the Ministry of Health and National Insurance Institution (INS).
5/
Company should consider registering the legal entity with the Immigration Department, to take advantage
of the fast track procedures for visas and temporary residency of expected relocated staff 6/
Will be provided by the Free Zone Park Developer, or depending on the negotiation with client to share
utilities. 7/
Company must sign contracts with local telecom providers. In this case, it also will depend on the
negotiation terms with client.
Services Company Proceso de Instalación Servicios Actividad 1
2
3
4
5
6
7
8
9
10
11
12
13
14
Semanas 15 16 17
18
19
20
21
22
23
24
25
26
27
28
29
30
Legal / Incorporación Elegir el representante legal en CR Incorporación de la empresa en CR Anuncio Coordinación con Dept. de Comunicación Comunicado de prensa Viabilidad ambiental Elegir un consultor ambiental Certificado Ambiental Edificio Negociación del terreno o edificio (selección)* Mejoras al edificio Estatus de Zona Franca Borrador de la aplicación* Revisión de la aplicación con PROCOMER Presentación de la aplicación Proceso de aprobación Notificación a la empresa
Empezar a hacer compras locales, con excención de impuestos local
Publicación en la el Diario Oficial La Gaceta Código aduanero (Estatus: Auxiliar Función Pública Aduanera) Elegir corredor de aduanas Presentación de documentación ante aduanas 1/
Registro del código de aduanas Otros registros/permisos Seguridad social, Registro de exportadores, Ministerio de Hacienda, Ministerio de Salud, Municipalidad (Patente de funcionamiento), seguros 2/, cuentas bancarias Migración
Compra/ Inversión facturación a la empresa local
Empezar a importar con excención de impuestos a las importaciones
+12 sems
Permisos migratorios 3/ Servicios 4/
Electricidad/ agua Telecomunicaciones 5/ Reclutamiento - RH Elegir reclutadores Proceso de reclutamiento Entrenamiento del personal Inicio de operaciones
Notes: * The time may vary according to the company. 1/Company
will need the custom code to be able to import and exempt duties. In this case, the use or need
of the code will depend on the terms of the operations contract with the client. 2/
This includes the Ministry of Health and National Insurance Institution (INS).
4
3/
Company should consider registering the legal entity with the
Immigration Department, to take advantage of the fast track procedures for visas and temporary residency of expected relocated staff. 64
Will be provided by the Free Zone Park Developer, or depending on the negotiation with client to share
utilities. 5/
Company must sign contracts with local telecom providers. In this case, it also will depend on the
negotiation terms with client.
The Costa Rican government has been working to decrease the time it takes to incorporate a company in the country. Through the platform “Crea Empresa” of the Digital Government entity, it takes approximately 1 week to incorporate a company in Costa Rica. It takes an additional 4-6 weeks to incorporate the company under the Free Trade Zone Regime.
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- For Legal Incorporation The company must be recorded in a notarized public instrument and registered in the Public Registry. The Registry will then provide an identification number (“cedula juridica”).
- For the others Permits Ministry of Treasury registration: The Company must register in the General Income Tax Office, which is part of the Ministry of Treasury. The reason is that every person or entity that performs one or more economic activities in the country must register as a taxpayer. The procedure is executed at the Tax Administration offices. Employee’s insurance: To conform to the Costa Rican Labor Code, the employer must secure an occupational risk insurance policy for its employees. For this, the employer has to underwrite a policy from the National Institute of Insurance (INS), at the beginning of the operation and has to be in force during the operation. To underwrite an occupational risk policy, the applicant has to go to the Central Office or a branch of the INS, a commercial Insurance Agency or an authorized Insurance Agent. Afterwards, the company will be automatically registered as an employer at the INS. Once the policy is underwritten, the employer has to remit to the INS on a monthly basis a status of the forms indicated: names of the workers, days and hours worked and the salaries paid.
Social Security registration: According to the Costa Rican law, the employer must contribute to the social security regime of its employees with a fixed
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percentage of the employees’ salary. The employee must also contribute a fixed percentage of their salary. Therefore, the company must first be incorporated as an employer with the CCSS; this can be done at the central office or any of the regional offices of the CCSS. The company’s incorporation as an employer and the registration of its employees must be done within the first eight days after hiring its employees. Also, there are three mandatory social contributions: social charges, Christmas bonus, and hazard insurance, there’s also a non-mandatory contribution that is recommended to add, the severance pay. These costs are calculated as unloaded salary multipliers: Mandatory a/
Social charges Christmas bonus Hazard Insurance b/ - average Total mandatory cost
Amount 0.2633 x unloaded salary 0.0833 x unloaded salary 0.0345 x unloaded salary 0.3811 x unloaded salary
Non-mandatory, but recommended Severance pay c/ – average (accounting provision) Total non-mandatory cost
Amount
0.0300 x unloaded salary 0.0300 x unloaded salary
Notes: a/
0.2633 applies from January 2015 to December 2019.
b/
Range 1.9% to 5%. Average 3.45%. Required by law.
c/
Range 1% to 5.33%. Average 3.0%. To finance a company Employer-sponsored
Workers Association, severance provisions must exist. The employer contributes with a portion of the severance provisions, and the employees contribute with personal savings.
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In this manner: 𝑇𝑜𝑡𝑎𝑙 𝑙𝑎𝑏𝑜𝑟 𝑎𝑛𝑛𝑢𝑎𝑙 𝑐𝑜𝑠𝑡 = 𝑢𝑛𝑙𝑜𝑎𝑑𝑒𝑑 𝑠𝑎𝑙𝑎𝑟𝑦 + 𝑚𝑎𝑛𝑑𝑎𝑡𝑜𝑟𝑦 𝑐𝑜𝑠𝑡 + 𝑛𝑜𝑛 𝑚𝑎𝑛𝑑𝑎𝑡𝑎𝑟𝑦 𝑐𝑜𝑠𝑡. 𝑇𝑜𝑡𝑎𝑙 𝑙𝑎𝑏𝑜𝑟 𝑎𝑛𝑛𝑢𝑎𝑙 𝑐𝑜𝑠𝑡 = 1 + 0.3811 + 0.03 = 1.411 For example, an employee has an unloaded salary of US$522 per month = US$6,264 annually. 𝑈𝑆$6,264 ∗ 1.411 = 𝑈𝑆$8,838.504
Health permit: In accordance with the General Health Law, companies must request authorization, or an Operation Certificate, from the Ministry of Public Health prior to the initiation of operations. This is a requisite prior to obtaining the municipal business license. The activities that are subject to said process, as well as the requirements for obtaining the permit and the duration of such a permit, are defined in Executive Decree N° 34728 and its amendments, and in the Regulations on Sanitary Registry of Establishments Regulated by the Ministry of Public Health. Municipality Patent: All lucrative activities require a municipal license (or permit) from the canton in which the activity is developed. The license involves the payment of a tax during the time of operations. In virtue of the municipal autonomy, the forms and requisites to obtain a license may vary among municipalities, pursuant to their legislation and administrative dispositions.
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Prior to initiation, all new projects that impact the environment must undergo the environmental impact evaluation process of the SETENA. To determine the potential impact of said activities, it is necessary for SETENA to execute a prior evaluation which will determine the potential impact that the activity will have and the evaluation instrument that must be presented to measure the potential impacts. This previous approval must be obtained prior to initiating other administrative processes or construction works. The procedure to obtain Environmental Feasibility, carried out before the SETENA is comprised of three phases. The procedure will depend on the classification of the activity. In this sense, a general description of the procedure is presented below: 1. Initial Environmental Impact Assessment: Through this procedure, the developer will preliminarily be aware in which group his activity, work or project is classified, and therefore, can subsequently proceed to fill out and complement a document (form) of environmental evaluation, as it may relate, to determine if it effectively pertains to the group. The final environmental classification granted by the SETENA will depend on the analysis of this document.
2. Preparation of the Environmental Impact Assessment Instrument: Once the developer has executed the initial environmental qualification of the activity, through the presentation of the Environmental Evaluation Document, SETENA will grant the Final Environmental Qualification, which not only confirms or changes the category of the Project, but also indicates the type of environmental evaluation instrument that must be presented. 9
3. Control and Follow-up: Once the Environmental Feasibility is granted and at least one month before the startup, the control and follow up instruments established by SETENA must be complied with Control and Follow-up Instruments (ICOS), such as: Deposit the Environmental Guarantee, the record of the Environmental Log, designation of the individual responsible for environmental matters, periodic environmental reports.
The environmental impact evaluation can be executed by an interdisciplinary team of consultants registered at the SETENA and must be in compliance with the guidelines and instruments prepared by that Secretariat. For more information about the Environmental Approval see document Guide to obtain the Environmental Feasibility.
If the company is an exporting company, but will not operate under any special export system, it must present the required Export Registration Cards at the One Stop Window of the Costa Rican Foreign Trade Corporation (PROCOMER). If the company wishes to gain access to one of the special export systems, PROCOMER currently administers two types of special regimes: Free Trade Zone system and Special Drawback System. For more details on the Free Trade Zone Regime, please refer to document: Free Trade Zone Regime in Costa Rica.
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