Costa Rica is a country that offers a variety of opportunities for expats who wish to become self-employed or start a business. The process of registering as self-employed or setting up a company in Costa Rica can seem daunting at first, but it is relatively straightforward. In this article, we will explore how self-employment works for expats in Costa Rica, provide a step-by-step guide to registering as self-employed, discuss the possibility of working as a digital nomad, and outline the steps to starting a company in Costa Rica.
Self-Employment in Costa Rica
Foreigners who wish to become self-employed in Costa Rica must obtain a residency permit. This permit allows them to work legally in the country and pay taxes. Once they have the residency permit, they can register with the Costa Rican Social Security Administration (CCSS), which will provide them with health and pension benefits.
Self-employed individuals in Costa Rica are responsible for paying their own social security contributions, which are based on their income. They must also pay income tax, which is calculated on a sliding scale. The tax rate ranges from 0% for those earning less than CRC 832,000 per year (approximately USD 1,300) to 25% for those earning more than CRC 114,000,000 per year (approximately USD 181,000).
Registering as Self-Employed in Costa Rica
To register as self-employed in Costa Rica, expats must follow these steps:
Obtain a residency permit: Expats must obtain a residency permit before they can register as self-employed. This can be done through the Costa Rican embassy or consulate in their home country or through the immigration office in Costa Rica.
Obtain a tax identification number (NIT): Expats must obtain a tax identification number from the Costa Rican tax authority, known as the Dirección General de Tributación (DGT).
Register with the Costa Rican Social Security Administration (CCSS): Expats must register with the CCSS to obtain health and pension benefits.
Register with the National Registry: Expats must register their business with the National Registry (Registro Nacional) and obtain a business license.
Obtain a municipal permit: Depending on the type of business, expats may need to obtain a municipal permit from the local government.
Working as a Digital Nomad in Costa Rica
Costa Rica is a popular destination for digital nomads, thanks to its high-speed internet, affordable cost of living, and beautiful natural scenery. While there is no specific visa for digital nomads, those who work remotely can enter Costa Rica on a tourist visa and stay for up to 90 days. After 90 days, they can leave the country for a few days and then return for another 90-day stay.
To work as a digital nomad in Costa Rica, expats must ensure that their income is sourced outside of Costa Rica and that they do not provide services to clients within the country. They must also comply with the tax laws in their home country.
Starting a Company in Costa Rica
If you are an expat looking to start a business in Costa Rica, you have a few options to consider. You can set up a Sociedad Anonima (S.A.), which is similar to a limited liability company, or a Sociedad de Responsabilidad Limitada (S.R.L.), which is similar to a partnership. Here’s a step-by-step guide on how to set up a company in Costa Rica:
Choose a company name: The first step is to choose a unique name for your company. The name must be approved by the Registro Nacional and the Costa Rican government.
Appoint a legal representative: You will need to appoint a legal representative who is a Costa Rican citizen or resident to sign legal documents on behalf of your company.
Register with the Registro Nacional: You will need to register your company with the Registro Nacional. You will need to provide the company name, legal representative information, and other relevant information.
Obtain a tax identification number (NIT): You will need to obtain a tax identification number from the Costa Rican government. This number is necessary to pay taxes and carry out business operations.
Register with the Costa Rican Social Security System: You will need to register your company with the Costa Rican Social Security System, which provides health and retirement benefits to employees.
Obtain business permits and licenses: Depending on the nature of your business, you may need to obtain permits and licenses from the Costa Rican government.
Open a business bank account: You will need to open a business bank account to manage your company’s finances.
File tax returns: You will need to file tax returns with the Costa Rican government on a regular basis.
Maintain proper accounting records: You must maintain proper accounting records for your company, including financial statements and tax returns.
Obtain legal advice: It is recommended to obtain legal advice from a Costa Rican attorney who is familiar with local business laws and regulations.
Are there any incentives or programs to encourage expats to become self-employed or set up a company in Costa Rica?
Yes, there are several programs and incentives that are designed to encourage expats to become self-employed or start a business in Costa Rica. One of the main programs is the “Pensionado” program, which offers tax incentives to retirees who move to Costa Rica. Under this program, retirees can receive a tax exemption on foreign-source income and a discount on property taxes.
Additionally, Costa Rica offers several free trade zones that provide tax incentives and other benefits to companies that operate within them. These zones are designed to promote foreign investment and job creation in Costa Rica.
Furthermore, Costa Rica has a number of programs that support entrepreneurship and innovation, such as the Incubator Program and the Seed Capital Program. These programs provide funding and support to startups and small businesses that are just starting out.
Overall, Costa Rica offers a welcoming environment for expats who want to start a business or become self-employed. With its stable economy, business-friendly policies, and supportive programs, Costa Rica is an attractive destination for entrepreneurs and innovators.