Watch the new legal requirements on Anonymous corporations in Costa Rica.
In the past, property in Costa Rica was almost customarily purchased into anonymous corporations by foreign buyers. One of the most important reasons was to protect the property for the personal liability of the owner.
Another good reason was that several owners could possess a different percentage in the property. Also, anonymous corporations were a perfect place to hide assets from the owner’s tax authorities in other countries. Or to get instant access to some services that are a privilege for residents only, like opening a bank account.
Changes in local tax laws and Fatca have changed the panorama of practical ownership totally. In January 2017, I already published an article that a new law may affect transactions of corporate real estate, which is now happening. If you plan to buy property into a corporation or take over an existing corporation, you might need the services we offer, especially if your not a citizen or resident of Costa Rica. Click on the banner below to learn more!
Corporation tax and D-140
First, the Costa Rica tax authorities created the Corporation Tax Law # 9428 for all corporations, including anonymous corporations (Ley de Impuesto a las Personas Jurídicas) in 2017.
Then, they created form D-140 and obliged legal representatives to register in the tax office. This was necessary for both active or in-active anonymous corporations (Sociedades Anónimas or Sociedades de Respondabilidad Limitada)
Now, there are new changes that are VERY important to understand. Especially those corporation owners who live out of the country or are not a resident or citizen.
New legal requirements
Important information for the new legal requirements to register the shareholders of every corporation (active or inactive) before the “Registro de Transparencia y Beneficiarios Finales” (National CR Shareholders Registry):
In accordance with Law #9416 which is the Law to Improve the Fight Against Tax Fraud (“LEY PARA MEJORAR LA LUCHA CONTRA EL FRAUDE FISCAL”) has been approved.
The important section of this law for shareholders of corporations is that Chapter II, article 5 of this law indicates the obligation of all corporate structures such as Sociedades Anónimas (SA) or Sociedades de Responsabilidad Limitada (SRL), to be registered before the Registro de Transparencia y Beneficiarios Finales.
This is a registry of who the owners of the shares of anonymous corporations are, as well as the share distribution percentage. The registration must be done each year during April (1st-30th).
Registration of signing authority
The person who is obliged to handle this registration is the signing authority: President (S.A) or Manager (S.R.L) of the corporation. In order for the signing authority to be able to register the corporation, this person will be required to obtain a “FIRMA DIGITAL” or Digital Signature granted by the Costa Rican Government through local entities such as banks.
According to the Costa Rican Law, only CR citizens or Permanent residents can access the Digital Signature. This legal barrier does not allow foreigners that are not residents to be able to comply with this Law.
Therefore, there is only one solution for shareholders of a corporation who do not have access to the Digital Signature. To handle this obligation is to grant a Special Power of Attorney to a Costa Rican or Resident. This can be any friend or a lawyer that you trust.
Since this person has to fill out the form and make a sworn declaration for the corporation. This is a great responsibility for the designated person since he will fill out the form and make a sworn declaration for the corporation representing it.
The schedule to comply
For this specific year 2019, shareholders have to register according to a schedule the CR Tax Authority has created. Please take into consideration the last number of the corporation´s ID number.
Registration of corporations ending in 0 have until March 2019, corporation ID numbers ending with 1, in April 2019 and so on. Check your corporation ID number now and don’t wait until September 2019!!
From 2020, shareholders have to register from April 1st through April 30th.
Penalty and non-compliance
If the corporation does not register its shareholders according to the Law, the penalty is between 3 to 100 base salaries. The current base salary is 431,000 Colones ($718) so fines ranging from $2,155 to $71,833. (2019)
Also, there are other legal limitations if the registration is incomplete:
- To obtain Public Certifications from the Public Registry
- Register any kinds of documents, including the corporations’.
The era of keeping the books has ended.
Given these new regulations, it makes no sense to keep the books in your country anymore. In fact, you can’t. Your lawyer or any other person with digital signature can make the sworn declaration in the system only if they personally see the books –in the good practice. Even if there are no changes throughout the years.
Especially to foreigners with properties that won’t come to Costa Rica quite often, we really suggest the following:
Starting in 2019, you designate a person who will be making the corporation tax (Law 9428) and property tax payments, as well as the Law 9416 compliance.
Feel free to contact Lic. Francisco Molinero for more information about maintaining your corporations at email@example.com or via WhatsApp: +506-8825-0212, Skype: “jfmh.skype”
Buying or selling property in Costa Rica? Then contact the Costa Rican property experts. Also, check the services we offer for corporation owners who are not a citizen or legal resident in Costa Rica, by clicking the banner below.
By Licenciado Francisco Molinero H. – LandCo Real Estate Legal Services. LandCo specializes in real estate law and can service you in the following areas: Real estate closing procedures, Escrow and Trusts, Residential & Commercial Condominium Structure, Residential & Commercial Project Structures (Lots, Segregations, Subdivisions, Right of Way and Water Easements, Access), Adverse possession Law, Concession property System, Maritime Zone Law, Special Real Estate Law, Title Guaranty policies (Title Insurance), Real Estate Contracts of all kind, Costa Rican & US Corporate Structures.