Costa Rica is one of the most reputable and economically stable offshore jurisdictions to open a business in 2024. The country is welcoming to many types of business activities, imposing little to no restrictions on anyone wanting to incorporate a company in the country. What are the requirements for opening a business in Costa Rica and how long can it possibly take?
Permitted business models in Costa Rica
Among offshore jurisdictions, Costa Rica has one of the most stable business and economic environments, encouraging growth in multiple spheres, particularly cryptocurrencies and online gambling. In Costa Rica, entrepreneurs can form businesses for the following purposes:
- Crypto companies: it is advised to secure a Crypto License in Costa Rica to provide crypto-related services to customers legally;
- Online gambling services: according to the local law on gaming, companies who intend to provide online gambling products and services do not need to obtain a license or any other sort of legal permit in Costa Rica;
- Holding companies: a good idea for FinTech projects holding and controlling shares of other companies. Forming a holding is useful for tax planning, probate avoidance, and asset protection;
- E-commerce services: e-commerce has an ever-growing popularity in Costa Rica, but you must remember that you will have to pay income taxes if you sell any goods or services to the local population;
- Asset management: a company of asset managers assists investors with minimizing risks by adopting safe investment practices. It is possible to open and run an asset management business in Costa Rica as long as your company complies with the local tax and labor laws.
Costa Rica is a particularly friendly jurisdiction toward crypto, gambling, and GameFi projects. Opening a company in Costa Rica and securing a local crypto or gambling license is one of the best ways to start a legal, reputable, and long-lasting business.
Requirements & taxes for business registration in Costa Rica
It is possible to incorporate a company in Costa Rica by being physically present in the country or remotely. The process for Costa Rica company formation involves the following requirements and steps:
- Choosing the business structure that fits the company’s activities best;
- Forming a Costa Rica LTD Company with a physical address in the country;
- Hiring at least one director (doesn’t have to be a resident of Costa Rica);
- Opening the company’s corporate bank account;
- Depositing the starting share capital of as little as 2,500 CRC (around 4 USD).
As for the country’s taxation policy, Costa Rica offers a strong investment environment and advantageous tax laws, allowing businesses to grow quickly and reach their full potential. The government treats both offshore and onshore companies equally and doesn’t apply tax to the income earned outside the country.
The country provides numerous tax incentives for foreign investors and entrepreneurs. With a territorial tax system, Costa Rica separates income into foreign and domestic categories. Under this system, business owners and entrepreneurs are not taxed on profits made outside Costa Rican borders. However, if you generate profit from selling goods or services within Costa Rica, you are legally required to pay income taxes, with rates ranging from 5% to 30%.
Benefits of starting a business in Costa Rica
Incorporating a business in Costa Rica brings such undeniable advantages as lenient taxation with a 0% income tax rate on profits generated outside the country, a relatively fast company set-up with minimum documentation and requirements, and the possibility of remote operation. Costa Rica is open and friendly to innovation, which makes it an ideal jurisdiction for crypto, online gambling, and GameFi businesses.
Business registration in Costa Rica: challenges & drawbacks
Even though remote incorporation is possible in Costa Rica, you will still need to open a local office with a legal address in order to run a business in the country. Besides, in order to stay compliant with Costa Rica’s legal framework at all times, you will have to file an annual tax return.
While Costa Rica has one of the most lenient legal frameworks, its reputation also falls behind compared to traditional “onshore” jurisdictions. To combat possible challenges that may occur in the incorporation process, we highly recommend using the services of a professional lawyer.
