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Investing
in Costa Rica |
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| In
the states, our legal system is based on Common Law whereas
Civil Law is used in Costa Rica. This is an important distinction
to make in regard to how judges make decisions and how contracts
are written. Civil Law is more restricted with less interpretation
by the judges. Precedent is not necessarily a factor and may
be considered or viewed only for clarification purposes. The
Supreme Court or Sala Cuarta, is the exception and will hear
cases where the lower courts were restricted to rule only on
provisions provided in the civil code.
Written
contracts in Costa Rica are of a simpler form than their stateside
counterparts. Contracts include only what the law does not
already state. Under Common Law, contracts are more specific
and detail oriented since they must allow for as little interpretation
as possible.
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| You
may ask, "Can the government take my property from me?" Yes,
it is possible, but very difficult. One thing to understand
is that there are similar conditions we find even in the United
States and other countries where the government has and can
expropriate private property for public interests, i.e. roads,
easements, protected areas, etc. There have been cases in the
past where the Costa Rican government has expropriated lands
for national parks and protected areas, however these are the
exception and not the rule. Especially today with new constitutional
procedures where the government must legally demonstrate public
interest and justly compensate the landowner. Article 45 of
the Costa Rican Constitution guarantees equal rights and protection
of private property, be it owned by nationals or foreigners.
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| Income Tax - Costa Rica is a "source" jurisdiction
from an income point of view. Residents, non-residents and
corporations generally are subject to tax only on their Costa
Rican source income. For this reason, Costa Rica offers no
credit for foreign taxes paid on foreign source income by
Costa Rican residents or non-residents. Tax Rates - 30% on
corporations / 30% catch-all rate on non-residents, and a
graduated scale of 10% - 25% for nationals depending on the
type of income source. There is no capital gains tax in Costa
Rican unless the income is derived from "habitual" activities.
National sales tax is 13%. Property taxes are 0.025%
of the declared property value. |
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Under certain conditions, Costa Rica allows foreigners to
gain residency status. This is not to be confused with citizenship.
Being a Costa Rican resident allows certain benefits while you
reside here but still maintain your foreign citizenship. Foreigners
"living" in Costa Rica on a tourist visa do not necessarily
qualify for residency as they must first meet certain requirements
( listed below). As a tourist, your visa must be renewed every
90 days (depending on the country of origin) by checking out
of the country for 72 hours. Aside from not having to renew
your tourist visa, benefits of residency include access and
discounts on some public services like health care, insurance,
and education.
In
years past, Costa Rica was a haven for retirees, offering
foreign residents certain incentives like importation of household
goods and a vehicle exempt from import duties. These incentives
were discontinue several years ago. Today, benefits are few
unless you qualify through an investment scenario.
You can own property as
a foreigner and live here on tourist visa.
One
of the confusing issues is gaining residency but also having
the right to work. Working status is not part of your residency
and is given only under special circumstances, like an investment
scenario. This requires a lengthy and bureaucratic process
so be sure this is something necessary to your plans or project.
In
all cases, you must provide a series of documentation from
your home country such as certificate of birth, marital status,
police report, photos, income certification, etc. All documents
must be certified by the Costa Rican Embassy in your home
country and then translated here in Costa Rica. Fingerprints
and a written declaration are taken in Costa Rica at the immigration
office. If you solicit for investor status, you will be required
to provide a financial study of your project. If the project
involves real property, you must provide proof of ownership.
In theory, the process should only take a few months but this
would be an exception. Some cases can take up to a year or
more depending much on the efficiency of your lawyer.
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| Most
attorneys will do immigration work but very few specialize in
it. It is best to talk to an immigration specialist to see if
you qualify before getting started. |
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