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Hello all! Can anyone answer a question. I have read on your website that someone can not arbitrarily move to Costa Rica and buy a business while on a tourist visa. However, I have read everywhere that you can buy real estate on a tourist visa. So here is my question. I can not apply for residency just yet because I can not live there for 4 months of the year right now, however, if I wanted to buy a hotel/restaurant while the market is good in CR, could I buy it on a tourist visa in my S.A. and hire a manager to manage it. Or when they say real estate, they are just referring to a home or condo.
Second, my daughter would like to live in CR. She does not have $150,000 to deposit to show $2500 a month income, however, she does have $30,000 which is the asking price of a local restaurant business (it is leased)(so she’d just be buying the contents, equipment, and goodwill etc) Could she buy this business on a tourist visa and make a living from the profits? The purchase would be in the name of a S.A.
I am not necessarily asking if this is a good idea or a good investment I am just asking if it hypothetically legal.
I want to start buying down there, but am unfortunately “stuck” here for the next year or two so I do not qualify for residency since I am only there 3 or 4 weeks a year.
Also, last question. I lived there 30 years ago for 3 years..when I do apply for residency-do you think they would apply that time toward permanent residency I actually still have my card or is there a statute of limitations? My brother is a citizen-he was born while we lived there but since I am over 25 I can not use his citizenship to help me.
My guess (and it’s just that) is that your thirty year-old residency record will not help you to obtain permanent residency once you’re ready to move here long-term. Beginning your residency in a temporary status (pensionado or rentista) isn’t a major obstacle, however. Yes, there’s a little more processing but it won’t ruin you life.
As to the questions about owning a business here, legally there should be no obstacles, IF that business is owned in the name of a Costa Rican corporation. Once formed, a corporation can engage in just about any activity that’s legal. You can derive an income from the profits of the business, you can manage the business, but you cannot actually do the work of the business. The nature of your visa has no bearing on your ability to form a Costa Rican corporation or own its stock. We formed our two corporations, with the assistance of a local attorney, while we were still living in the United States.
I do wonder, however, about the advisability of owning a business in a foreign country that’s nowhere near where you live and depending on locals to manage it. The exposure seems pretty great. I wonder if any savings you might appreciate from buying something now might not be lost in mismanagement or fraud that goes on behind your back. How will you protect yourself?
Thanks for your reply. The reason I asked is Attorney Rich Phillips article
“…In the ordinary course, in order to legally work, or carry-on a business enterprise in Costa Rica, a foreigner’s immigration status must become regularized in accordance the Immigration Laws of Costa Rica. In the first instance, it is illegal to work, or engage in any business enterprise, while merely possessing a Costa Rica tourist visa.A foreigner who is found-out by the Costa Rican Authorities to be engaging in such activity, is subject to immediate deportation, with a sanction of not being able to re-enter Costa Rica for a period of ten years.”
I understand your concern with having a property managed by another vs savings by buying now. This is the main reason we have not purchased before now. The other reason we would consider to buy now would be buying something that is available now but might not be available later. There are only a few properties that meet my needs in the area I am looking at.
Again, I was wondering how the above article related to my (and my daughters) situation. In my daughters case (she is 22 so she can’t go under our residency when we eventually do apply) will she be able to buy a small business to support herself ? I can’t see her being able to amass the kind of money ($150,000) to apply for residency but she has enough to buy a small business to support herself but not enough to be considered an “investor”.
Again, I appreciate your imput.
Even purchasing any business, in the $$$$$’s this may not allow your daughter to qualify under ‘investor status’. This is pretty hard to achieve.
She must take into consideration, that to be able to purchase this business for $30,000, it will probably not generate thousands of dollars a month. So, since she cannot ‘physically perform’ the labor, she must hire staff even to perform the most basic tasks, plus pay their CAJA/INS/yearly ‘aguinaldo’ payment for each worker. Even to answer the phone and take reservations or lock up at night, is considered ‘work’.
She will also be required to leave the country to re-new her tourist visa, periodically. She could also be refused re-entry, then what will happen to her business?
This recently happened to a successful and respected restaurateur who had lived here for many years, and now he will probably lose everything, since he cannot return for 10 years.He can not return for 10 years because he was found to be “working” the business or did he overstay his visa?
I see the problems with the tourist visa thing. Even if you intended to do no work, if someone did not show up, you would find yourself working and therefore illegally.
So, sounds like we have to wait until we can be there at least 4 months a year to apply for residency. Put up $150,0000 for myself and my husband and then another $150,000 for her.
If she wanted to go down first I would I guess have to gift her the $150,000k to apply for residency.
Now I know why some insects eat their young -ha ha
He ‘overstayed his visa’ too many times.
A suggestion though. Let you daughter have a ‘three month vacation’ here, particularly if she hasn’t been here before, to make sure she liked it, and before she tried to open a business here or started residency proceedings.
Has she owned/operated a business before? In this type of business?
Does she speak Spanish?
Realize that over 50%…according to many folk/forums…of those who have moved here, return to their home grounds within the first year, due their expectations were not met.Thanks for the advice. She has been to CR 12 times in the last 5 years. She just spent a couple months there most recently this summer. She is a recent college grad and since the job out look here is not that great she has decided she’d like to live abroad for a few years. She speaks SPanish-not fluently but enough to get by. She has worked in the industry but never owned her own. I thought it would be a great opportunity to live abroad and run your own business-what a great life experience. I guess we could always withdraw the balance of the $150k if she decided to move back or transfer it into our account. We are going back down in December. It would probably be a good idea to speak with an attorney again..I just wanted to see if I could get some feedback from the members.
Thanks again…all good points
iceide, you should take some of the opinions here with a grain of salt. Many of the people on this forum are lerft wing, that is, they take the theory of the law to the inth degree. Law theory is important but you have to balance it with the customary practices here. For example: “Even to answer the phone and take reservations or lock up at night, is considered ‘work’.” Well theoretically, it may be, but practically this is total misinformation. Every foreign business owner I know answers their telephone and locks their doors. Total rubbish.
The residency thing is yet another can of warms where theory and practice again part ways. You should find yourself a consultant that knows the ins and outs of things to facilitate your needs. Consultants are a great liaison between attorneys and clients, and usually prevent attorneys from charging you for an unneeded course in the theory of Costa Rican law.
This forum has gone round and round regarding the two camps (follow the letter of the law and be different from the locals, because you are not one (which I totally disagree with); or do as they do in Costa Rica because you are in Costa Rica, and you have the same right as citizens except of course you can be deported (a worthwhile difference).
However, if you follow the social mores and take time to learn Spanish, you will get what you want and usually a lot easier that the by-the-book types. I am not suggesting bribing anyone or doing stupid or obviously illegal things that the locals do not do, just watch the locals and learn. You would be wise to go with the flow instead of disregarding customs because most ordinary Ticos (non-attorney types) think gringos who put the letter of the law before customary practices are foolish. A good attorney (I know that was probably an oxymoron) well tell you so too.
Silly me! All this time I’ve been thinking it was the rightists who were such gung ho law-and-order types.
The following received today may be useful with regards to the “inversionista” residency category…
This is Costa Rica & Canadian Attorney Rick Philps response to a related post:
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“I have not heard of any changes for the requirements of this Category of Residency. The amount of the investment to qualify is $200,000.00 U.S. My understanding is that it is not merely buying a property for personal use for that amount that qualifies an Applicant, but that it must be an investment in something that would be deemed by the Immigration Department as being for the “social good” of Costa Rica, creating jobs for Costa Ricans, etc.
An Application in this Category has always required a significant amount of support documentation to be submitted, in the form of accounting and business plans. At the end of the day, the granting of this Category is discretionary in nature, on the part of the Immigration Department and has always been, in my opinion, an expensive and risky Application to make.
There may be some Regulations to the new Immigration Act that have not been made public as yet, but I’m certainly not aware of them at this moment. I will say this, if the posts on the Forum regarding this Residency Category are correct, it will be a marked departure from the philosophy which applied to an Application under this Category of Residency previously.”
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Scott Oliver
WeLoveCostaRica.comEven if you, 2BNCR, consider it ‘rubbish’ that to ‘answers their telephone and locks their doors’ could cause immigration to jump in make charges.
Of course, it is not a common occurrence, but it does and can happenYes David you more than most would know what the right wing looks like as I am sure you see it in the mirror evey day (LOL).
Thank you all. Optimally I would like her to follow the laws as to minimize the possibility of deportation. Not only to protect her investment, but also to protect the incomes of the people who depended on her for a job.
I bet both of you are right. Many people don’t follow the law and work their own business to some degree while on a tourist visa and never get caught because who really cares if they are answering the phone if they are paying taxes and employing local citizens. Where there might be trouble is if a competing business or someone who you’ve somehow ostrisized reports you then yes, you might get a little “visit”.I guess a last option would be to have my brother (who is a CR citizen) buy the business and then my daughter could “visit ” and “help out” (for free)to keep from “getting bored”.
Deportation? You brother is a Tico and you are asking these kind of questions. Look if your brother can’t set you straight about owning a bussiness here, than you probally should not put the biz in his name. No one is deported unless they commit a serious crime. Working illegaly in this country is against the law, but it is hardly considerd a serious crime, Just ask many of the illegal Nicas working here. You got to keep this thing in perspective and the sometime narrow views found on internet forms can amplify the topic and cause a loss of perspective.
Foreigners who own homes
may get temporary residency
By Chrissie Long
Tico Times Staff | clong@ticotimes.netWhen Costa Rica’s immigration reforms were approved in August, there was one change that seemed to escape the headlines of local newspapers and media reports.
Nevertheless, it could be the most significant reform for foreigners.
Under the new law, non-residents who own more than $200,000 in property can apply for temporary residency as an investor, allowing them to take advantage of the country’s public health care system along with other services not available to them as tourists. The clause is expected to take effect March 1, 2010.
For Michael Newhouse, an agent with GoDutch Realty, this could be a key to jumpstarting the country’s flagging real estate market.
“The market has been so down,” said Newhouse, who has worked as a realtor here for four years. “But maybe this will be an incentive for people to buy.”
According to Newhouse, property owners in Costa Rica have not reduced their sale prices, despite the worldwide recession. Neither have many people defaulted on mortgages, which is a major factor in driving down home prices in the United States.
Unlike the United States and some European countries, where the governments have introduced homebuyer programs to stimulate the market, Costa Rica has seen no such programs.
“Instead of people coming to Costa Rica to buy a home, many are finding better deals in places like Phoenix, Arizona,” Newhouse said, expressing optimism that this reform could turn things around.
“We hope this will be an incentive for people to spend over $200,000,” he added.
The opportunity to become a temporary resident through owning a home doesn’t just apply to new buyers, according to the communications office of the Immigration Administration. Current homeowners can also take advantage of the change.
Temporary residency lasts one year and is renewable. After five years, residency can be renewed every two years.
Other reforms to the immigration law include higher fines for undocumented foreigners, the ability to apply for residency entirely within Costa Rica and the opportunity to renew a tourist visa without leaving the country.
Temporary residence for investors
is applicable to those who can prove:
Investments equal to or above U.S. $200,000, according to the official exchange rate determined by the Central Bank of Costa Rica, whether in real estate, shares, stocks or in projects of national interest. For renewal of immigration status, a person needs to prove that the investment is properly registered and taxed.Source: Memorandum from the Immigration Administration
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