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This myth keeps popping up in various postings, so I thought it should be clarified.
Any person, foreign or national, can start a business in Costa Rica and take the profits from it for their own use. You can also work in that business all you want, in any position you choose. What you can’t do however, unless you have a worker’s permit, is draw a salary for that work.
That is not correct.
A foreigner can not start a business in his own name. No licenses or governmental authorizations will be approved for a non resident.
However, a foreigner can start a business through a Costa Rican Corporation, but it would be difficult to open bank accounts where a non resident could have signatory powers on the corporations account.
It is true that the profits of the business can be distributed (subject to income or withholding taxes)to shareholder foreigners.
What is NOT true at all, is that a non-resident foreigner can work on a business owned a a corporation of which he is the shareholder.
Tourists can not work in Costa Rica, period. It does not make any differece to the law if such person work for a salary or for any other type of compesation.
José Rafael Fernández
AttorneyLic. José Rafael Fernández is an attorney with the law firm of Facio & Cañas, widely recognized as the most powerful firm of attorneys in Costa Rica
You can see many of his article son this site by searching for ‘Fernandez’
Scott Oliver – Founder
WeLoveCostaRica.comJose, can you also clarifie about work permits. I see many people posting beliving it is easy to work in Costa Rica.
Is it true that really the only way to get a work permit is either be married to a Costa Rican, recive a tempory work visa with employeers approval, or become a citizen.
Again another story of the huge variation between legal theroy and practical application. Practice is: people do it al the time. Theory is: you can’t because how dare a forigner work in Costa Rica!
Costa Rica attorney use the law to scare people into their offices. Its just like that story about the politician’s wives trying to steal the property in Manuel Antonio from the gringo and when they registered the property in thier names they claimed its worth as 2,000,000 colonies!
Then in court they claimed to have paid $80,000 to the snowcone salesman that had it fraudulently transfered into his name (most likley a front man).
Again theory – declare how much your property is worth. Costa Rican politicains practice: Lie about it. What should the Gringo do – most CR lawyers would tell you to ????
Theory and practice do not walk hand in hand in “paradise.”
PS all you out there watch out for attorneys who want to sell you an expensive education about CR law theroy, and then relegate your problem to the “How much can I make of this sucker before I actually have to do any work” list.
There are some good hardworking attorney in CR – but very few who will go the extra mile for Gringos.
We’re hoping that we are recommending a variety of professionals that will go the extra mile for our VIP Members, the majority of whom are ‘gringos.’
Scott Oliver – Founder
WeLoveCostaRica.comDon José,
Thank you for your posting. Nice to have an Tico attorney online to rebut us Gringos when we get too presumptuous.
As you stated, it is not illegal for a non-resident to own a Costa Rican S.A. (or property in your own name for that matter). While some banks may give you a hard time when you try to open a corporate account where a non-resident is a signatory, it is by no means impossible. The fact remains that many non-residents are signatories for their own Costa Rican S.A.
Given this, I would definitely recommend becoming a resident if you wish to have a business, or even own a home (which may or may not be in an S.A.). If you wish to establish yourself as a permanent fixture in the country, it would be cumbersome to do so on a tourist visa.
Furthermore, I have never heard of a foreigner, resident or otherwise, being punished, reprimanded or fined in any way for “volunteering” at his/her own business. In fact, I cannot imagine owning a business in Costa Rica without taking an active role in running it. As I stated however, unless you are authorized to work, you cannot draw a salary. As owner, you don’t need to. You reap the profits (if there are any that is).
Costa Rica has many laws and regulations, and I have no reason to doubt that you are reciting them correctly. However, as an attorney, you also know that there are a lot of loopholes in the Códigos, of which many savvy Tico business people (and attorneys) take full advantage.
Please keep posting. I, and I’m sure many others on this forum, truly value your input. I’m certain it will also lead to new clientele for you as well!
From
“Sometimes Courts Lack Commonsense”
Frivolous lawsuits cost taxpayers and consumers millions of dollars each year and sometimes lead to absurd product warning labels. Michigan Lawsuit Abuse Watch last week awarded their top wacky labels for 2005. The winners:
“Not to be used as a hairdryer” on an industrial heat gun that produces temperatures in excess of 1,000 degrees.
“Never try to catch a falling knife” on a kitchen knife set.
“Not to be used for navigation” on a Hilton Head Island , SC hotel’s cocktail napkin that shows a map of local waterways.
“Not for human consumption” on a bottle of dried bobcat urine used to keep pests away from garden plants.
The House last year passed several bills to block frivolous lawsuits, but most remain tied up in the U.S. Senate.We do need to make improvements here but let’s not forget that the USA is by far the most litigious place in the world where ‘frivolous lawsuits’ cost the tax payer hundreds of billions of dollars per year.
Staggering medical malpractise insurance rates are forcing many medical professionals to choose other careers and soaring product liability costs are an additional factor that is pushing many manufacturers ‘offshore’.
What was it Shakespeare said about attorneys? (Not applicable to Jose of course) 🙂
Scott Oliver – Founder
WeLoveCostaRica.comScott, There are states in the US where obstetricians will not deliver babies because of the malpractice suits. A doctor can be liable for the child he delivers up until the child is 21 years of age. Many doctors will give prenatal care and then not show up at the hospital at time of delivery and let a resident deliver the baby. Many other doctors have closed their practices altogether, while some will not even get into this specialty. The cost of malpractice insurance alone is making it difficult for a doctor to practice medicine. This will only continue to drive up the cost of healthcare here.
I think we have gone a bit too far.
How do we go from can I work in my own business in Costa Rica to the problems with US litigation issues. I know the US issues they have been in the news for years as has medical costs malpractice issues and so on. What I don’t know are the Costa Rican laws or practices. Can we for once stay on point and run the issue that was started into deep details so I can learn. I want to learn from experiences in Costa Rica about Costa Rica’s issues. Whether it is the law in fact and the law in enforcement. And so on with every issue we raise about anything Costa Rica let’s keep it Costa Rica and not US issues unless they are related. It seems over and over someone finds a way to bash or find fault with the US. Scott maybe you could start a sister site called Screw Costa Rica learning let’s just bash America evry chance we can.
Good question GringoTico.
Can the owner of a business volunteer his/her labor without having a work permit? I believe that is your question.
I’m not a lawyer, but I’ve spent a lot of time in the bars in San Jose with many of them owned by foreigners without work permits. I have always been told that in this situation they can not perform any labor whatsoever. An example I have witnessed often is when cases of beer come rolling in on the trolleys form the truck outside. While the owner is there supervising, they can not even move the beer from one location to another inside the premises without a work permit. They need to tell an employee to this labor.
Of course I suspect this law is enforced much more strictly in downtown San Jose as opposed to some small beach town.
Would be interesting to read more input on this from attorneys.
Jon
There is a very good article in AMCostaRica.com dated 26 January 2007 that relates to many foreigners currently and proposed changes to those current laws…
One excerpt states:
“Temporary residents, such as inversionistas, pensionados and rentistas would still be forbidden to work for a salary, but the law spells out clearly that they can do work on their own account. That has been interpreted as running their own businesses. They must spend at least six months in the country each year, according to the proposal.”The whole article is still online as the cover page at http://www.amcostarica.com. After 28 January 2007 you will have to visit the archives for 26 January 2007 to retrieve the article.
Still Dreaming
Bill MaesWow, what a glaring example of unrelated US bashing Scott. The point of the thread was in relation to the legalities of working in your own business in Costa Rica. Even when the topic swerved into the topic of law suits the subject or discussion had absolutely nothing to do with litigation in the US. So I ask you Scott, explain to us why as you put it, when it comes to the discussion at hand do we have to, “….but let’s not forget that the USA is by far the most litigious place in the world where ‘frivolous lawsuits’ cost the tax payer hundreds of billions of dollars per year.” The attempts by the regular US bashers is getting comical and pathetic. Scott I suggest you have a permanent section on US politics where the VIP members can limit their political diatribe to that location. I can tell you that I have talked to more than one person that no longer use WLCR because of the constant unrelated US bashing. That being said Scott…..I still love you.
This is my fault for trying to keep up with every posting on the site to make sure we don’t have any ‘problems.’
This posting was partially in response to the another thread about how atrocious some Costa Rica attorneys (the blacklist posting) are and I was trying to point out that many people have problems with attorneys, excessive litigation etc but I did not post it in the right place….
Scott Oliver.
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