Costa Rica Real Estate – Buying in a Corporation – A Mini-Legal Q&A

Q: I am told that there are different kinds of corporations available. What types of Costa Rica corporations are available?

A: Costa Rican Mercantile Code allows SIRL (sociedad individual de resposabilidad limitada) which is a unipersonal sort of hybrid corporation, SC (sociedad en comandita) that would be similar to a simple partnership, SRL (sociedad de responsabilidad limitada), that is the Limited Liability company and SA (sociedad anonima), which can assimilate to the normal corporation.

More than 95% of incorporated companies, are SA, followed by SRL, and almost a non existing percentage of SIRL and SC.

Q: Is there a specific purpose that’s best suited to each type of corporation?

A: For normal business purposes for a foreigner in Costa Rica, the Sociedad Anonima is definitely the structure to set up.

The SRL could work as well, but it best serves the purpose of a “family” business, in which the people involved are more important than the mere “shareholder”.

Q:Why should someone buy Costa Rica real estate in the name of a corporation?

A: Two main reasons to own Costa Rica real estate in the name of a corporation: a) asset protection, and b) tax purposes in the case of a re-sale of the home.

Having Costa Rica real estate registered in public records in the name of a corporation places that corporation as a “firewall” between you and predators.

In the case of a re-sale of the house, you can transfer the shares of the corporation, instead of changing the ownership on public records. That can save some 3.5% of the value of the assets in taxes, making your property more attractive to prospective buyers.

Q:When should someone not buy Costa Rica real estate in the name of a corporation?

A: It depends, really there is no valid reason for not using a corporation, but the client must take into serious consideration the way his corporation is set up with regards to who has ‘power of attorney’ to buy or sell corporate assets.

In Costa Rica, by law, the Chairman of the Board, must have full and unrestricted powers, thus, if the client himself has reasons not to appear as the Chairman of record, he must trust in the law firm or individual with power plays a vital role.

Q: Can I choose my own Costa Rica corporation name?

A: Sure, any name in any language is valid, as well as made up names.The only restriction is that the name must be original, and must not be phonetically or morphologically similar to any existing name.

Q: Do I have to live in Costa Rica to have a Costa Rican corporation?

A: Not at all. You can set up your own corporation when you are in Costa Rica or, you can buy one “off the shelf” if available, without the need of being in Costa Rica, then change the name, change the members of the Board of Directors, if so you want and receive the endorsed shares.

Q: How long does it take to set up a coporation?

A: No longer than 15 days.Faster is possible.

Q: How much does it cost to set up a corporation?

A: Prices are directly linked to the law firm providing the service and will also depend on what services would be required after the formation of the corporation.Prices varies widely, but in general a corporation cost can be in the range of $500-$900

José Rafael Fernández Quesada has been in private practice as an International Law counselor in Costa Rica since 1985. He works mainly with foreign clients from Europe, Canada and the USA who are living in or doing business in Costa Rica.

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Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.