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Is it difficult to file my own corporate taxes. The corporation was created to puchase land-there is no business and no income. Thanks. Christine
I know others will differ with me on this, but our accountant has advised us that if we have no economic activity in the corporation that holds our real estate we can skip filing the annual report altogether. There is provision for a small fine, but he doubts we’ll ever be caught, and the fine is less than the cost of having an accountant do the filing.
I have been advised to and do file taxes (now is the time) for all my Costa Rica corporations.
Is it difficult? I don’t honestly know, it’s one of the things that I would not dream of doing myself.
Scfott Oliver – Founder
WeLoveCostaRica.comDavid, regarding the real estate corporate filings you mean you just pay the real estate property tax and skip all the book work? Or is there no RE tax and you are “supposed” to pay a corporate tax but just skip it. The attorney that handled setting up our corporation that holds our property wants about $500 per year to make all the book entry’s and all other associated filings. They are quite a big firm so I know I may be able to do better but was leaning towards them because I trust them. I know you are just letting us all know how you are doing things and not suggesting that is the way to go…but do I have what you’re doing correct?
My lawyer told me that when he set up my SA to hold my property that he declared the corporation “inactive” so it is not necessary to file corporation taxes. I’ve had my corporation for 3 years now and have never filed a return. Nor do I intend to, nor do any of my friends who also have an “inactive” SA that hold their property.
Do you pay real estate taxes?
FYI:A) OF THE TAXES:
According to the Costa Rican Law, the fiscal period is near to end ( September 30th).
The Costa Rican law, stipulates that once finished the fiscal period it is necessary to present all the procedures corresponding with the taxes of your companies.
Article number 155 of our Commerce Code (Law number 3284 of the Republic of Costa Rica, of April 24th, 1964), indicates in connection with the Shareholders Meetings of Corporations that:
“An Annual Ordinary Shareholders Meeting shall be held at least once a year, during the three months after the end of the fiscal period, in which it shall be discussed, aside from other issues included in the agenda, the following:
1. Discuss and Approve or Disapprove the annual report on the results of the previous period filed by management, and take any measures deemed appropriate in connection with it;
2. Agree if need be on the distribution of dividends as stated in the bylaws of the corporation;
3. If necessary, appoint or revoke the appointments of management and the comptroller; and,
4. Any other ordinary issue included in the bylaws of the corporation.”The above duty to hold an Ordinary Annual Stockholders Assembly within the 3 months after the end of the fiscal period, also applies to Limited Liability Companies pursuant to Article 94 of the same Commerce Code, and the agenda for said meetings is the appointment or revoking of the managers and sub managers, if necessary, as well as the analysis and approval of the inventory and the balance sheet of the company for the previous period.
Article 2 of our Income Tax Law (Law number 7092 of the Republic of Costa Rica, of March 24th, 1988), section a), identifies as tax payers the duly incorporated corporations or companies that have an economic activity in the country. Additionally, article 4 of said law establishes the fiscal period as the year going from October 1st until September 30th of the next year. Articles 20 and 21 of the Income Tax Law indicate that the tax payers, as described in article 2, must file their tax returns and simultaneously pay their taxes, within 2 months and 15 calendar days after the end of the fiscal period, that is, until December 15th of the respective year, even if the corporation or company does not have to pay any taxes for whatever reason.
Yep, I pay real estate taxes, but no income taxes, and no, I have never had an annual meeting of shareholders or any of the other things they are talking about in this article, and I have been assured by my lawyer and other people in the same position, that if the corporation is “inactive” none of that is necessary, especially filing the tax return. I hope my lawyer is right, but then he does mostly corporate law, so I would suppose that he is.
Do you mind giving me the name and location of your attorney? Mine is charging 450.00$ to do this for us. We just purchased property this year.
ThanksMy lawyer is in San Ramon. His name is Adolfo Hidalgo and I don’t have a phone number for him because it’s in my cell phone that I can only access from Costa Rica. Is your corporation inactive? Regardless, $450 sounds like a lot of money to file a return. I don’t pay that in the States! LOL
Lotus, we absolutely DO pay our annual real estate taxes. As an aside, Grecia keeps wanting to collect just one quarter’s taxes at a time. We have to argue with them to get them to take the whole year’s levy.
I’m one hundred percent with Maravilla on this. We have never held an annual meeting and we’ve never filed a corporate INCOME tax return. As a corporation with no economic activity, we’ve been advised that it’s really not necessary.
We also own our car in a (separate) corporation. While we have expenses for both the car and the house, but no income for either, we also do not hold an annual meeting for the car corporation and we file no income tax return for it either.
I also agree that $450 or $500 per year to take care of these matters seems excessive. My attorney, in whom I have great faith, charges us about c10,000 for an hour’s consultation — less than twenty bucks. What can these other guys be doing to earn $500?
I third david and maravilla. “Inactive” is the operative word and purposes set up that way just to hold real estate. My Escazu attorney, who is quite prominent in CR and virtually limits his practice to real estate and associated SA’s states the same as previously mentioned.
It’s not so much about saving money, although that’s nice, as much as it’s about not doing something that isn’t required. If I had an “active” corporation, of course, I would file the necessary returns, but my SA is only for holding title to my property. I’m all too happy to pay my RE taxes given they are 1/10 of what I pay in the States.
I mean saving money on someone fileing the paperwork…I of course am paying my real estate taxes. But lets not forget according to Costa Rican law active/inactive we are supposed to file.
FYI – My accountant tells me:
“All Costa Rica corporations must file the Income tax return form D101, no later than December 15 for the year ended on September 30, regardless if it had revenues or not. This applies to corporation that have no economic activity that may only be used to own real estate.”
Scott Oliver – Founder
WeLoveCostaRica.com
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