Month: January 2021

Active And Inactive Corporation Tax Information For Costa Rica

Updated August 16, 2022

There are some new tax laws and information that I wanted to share with you.

If your corporation is an IN-ACTIVE corporation, this year you still need to file a one-time declaration with the Costa Rica Tax Authority for 2021-2022 informing the Tax Authority if it has assets and if so, the value of the investment/asset. This is for the Tax Authority to understand the present value and to avoid an increase put upon your corporation by the Tax Authority without true justification. As an example, your property is registered as an IN-ACTIVE (meaning you do not collect income from it) this filing needs to be done with an accountant indicating that the corporation has an asset and the value of that asset. THE NEW DEADLINE IS November 15th, 2022.

If your CR and or foreign corporation you have is already registered as a taxpayer (meaning you are generating income or a registered ACTIVE Corporation: as an example you are renting your property) you do not need this. Best to check with your property manager and or legal team or accountant in Costa Rica that assisted you with the purchase of your property and previous tax filings, so you are up to date.

This year is the year that the Luxury Home Tax evaluation needs to be presented to the Tax Authority. This is done every three calendar years and is based on the materials that are used in the construction of the home. Older homes do have depreciation, so a house that once meet the Luxury Home tax thresh hold, may no longer. Again best to check with your property manager and or legal team or accountant in Costa Rica.

Just as a reminder as well, after 5 years of purchasing your property and owning it, you are required to re-registered new Declaration of the value in the local municipality for property tax purposes. This must be done every 5 years.  I always recommend doing it before they do it and decide what they think your property is worth. Best to check with your property manager and or legal team that assisted you with the purchase of your property, so you are up to date.

If you own your property in the name of a Costa Rica corporation or a foreign corporation, make sure you have your corporate tax paid for holding a corporation. It blows my mind how many people forget this then after 3 years of non-payment the government shuts down the corporation. This just causes the owner of the property more grief and costs to get it re-estabilshed.

Please feel free to reach out to me if you have any questions or need any additional assistance.

Below you can find additional details and information about Costa Rican Active and Inactive Corporation Taxes.

Once upon a time in Costa Rica, it was relatively simple to form a corporation, and it was even easier to maintain it. The government imposed no annual fees, and the requirement for the corporate officers to meet once each year was no problem to fulfill.

Two factors worked together to change that. In the first place, the previous low maintenance system was prone to corruption. Unsavory types used a corporation to hide their identity and their ill-gotten gains. They could own a Costa Rican corporation anonymously and use it to launder money from the illegal drug trade or other illicit activities. Money and property could change hands without anyone knowing who the participants were. The second factor was taxes. The government realized that it was missing out on an important source of tax revenue. Tens of thousands of corporations were being used to hold assets, but the government wasn’t collecting a dime in taxes or fees from them because they didn’t have any income to report.

A new law enacted in September 2019 requires that a Costa Rican corporation  disclose the identity of their shareholders or owners. That adjustment addresses the first factor. It prevents corporations from anonymously engaging in illegal activities. Other new requirements address the second factor. Now all Costa Rican corporations must pay annual fees and make yearly reports to the government about their income, assets, and ownership.

Costa Rican corporations must hold an annual shareholders meeting either in person or by proxy. The date, time, and place of the meeting as well as the names of those in attendance are recorded in the corporation’s legal registry. Any modifications that are made to the corporation’s structure are also recorded. All corporations in Costa Rica must maintain three legal record books. If the corporation does more than hold assets–that is, if it engages in economic activity–it must also maintain three accounting record books.

The corporation’s legal representative must file annually in April with the Registry of Transparency and Final Beneficiaries of the Central Bank. The filing includes details about the corporation and the name, address, identification number, and contact information of each shareholder or owner and their percentage of ownership. To file, the representative must first obtain a digital signature card from an authorized bank. Such cards are only issued to Costa Rican citizens and residents. A non-resident who owns a corporation can comply with the reporting requirements by granting a power of attorney to a third party who will then obtain the digital signature and file the disclosure.

The government charges an annual fee that must be paid to keep the corporation in good standing. The fee is approximately $120 for non-active corporations that are used only as holding companies for real estate. The annual fee for active corporations is based on income and is typically between $200 and $380. According to law 9428, the tax must be paid by January 31 each year. The company’s legal representative is responsible to declare and pay the tax. If you don’t know if the taxes are current or overdue, you can consult the National Registry database (www.rnpdigital.com).

What will happen if the tax isn’t paid? According to the Costa Rican code of taxation rules and procedures, sanctions and penalties will apply. A short term consequence of non-payment is that the National Registry will not issue, certify, or register any documents for the corporation until the taxes are paid. Neither the government nor any public institution will do business with an overdue corporation. The long-term consequences are even more severe. If the tax is not paid for three years in a row, the corporation will be dissolved. What about dissolving the corporation voluntarily? Even then, any outstanding debts must be paid first.

Clearly, the task of maintaining a corporation in Costa Rica is not as simple as it used to be. Especially if you were thinking to use one for the sole purpose of holding a property in the name of the corporation. Now it is a lot easier and more simplified to just purchase a property and put it in your personal name. The key to success is to hire a knowledgeable notary to keep you up to date and help you stay legal.

Whales in Costa Rica

Mother Humpback Whale with Albino Baby

Updated October 10th, 2022

Something spectacular has been spotted off the Papagayo coast… a baby Albino humpback whale! A special few have recently witnessed this ghostly calf swimming alongside its mother in our beautiful blue waters. 

This occurrence is truly something special since only one in 10,000 humpback whales are born with albinism. This may even be the first albino whale to swim in Costa Rican waters! Frank Garita, a cetacean specialist, believes that the albino whale was recently born in Costa Rican waters and is only a few weeks old. 

You may think that a white whale is easier to spot but sightings are still quite rare and there is no guarantee the whale will be seen again. As for now and according to migration records the humpback whales will begin to move south. Let’s keep our fingers crossed and hope that the next time the whales are near the Papagayo coast, our white whale will return!

Humpback whales have been wintering in Costa Rica’s warm coastal waters for thousands of years. How you can you time your visit to be here when the whales arrive?

One way to perfectly time the arrival of Humpback whales is to have a home to call your own! Then you will never miss whale watching season, and you’ll have a place to enjoy year-round.

Whales leave the Pacific northwest in the late fall as the water begins to cool. They travel south for 5,000 miles arriving off the coast of Costa Rica in December and staying until April. Their South American brothers depart the southern Pacific, as that hemisphere’s winter approaches, and spend July through November in Costa Rican waters. Their migration is the longest of any mammal in the world–they journey up to 11,500 miles round trip! There are no long layovers for these travelers. One humpback was recorded making a 3,000-mile trip in only 36 days.

Beautiful bay for watching Humpback Whales in Costa Rica

When the humpbacks arrive, do they do what other tourists do? Lay around a pool with an umbrella drink in hand? Of course not, and they are not here on vacation. Humpbacks use the months in warm water to go about the serious (yet fun) business of finding a mate, breeding, and rearing their young. Since one female will have multiple male partners during her lifetime, competition for her attentions is fierce. The magnificent displays of breaching, lob-tailing, tail- and fin-slapping, rolls, lunges and dives ending in a flourish of the tail are all for the benefit of the ladies. Males also attract females by singing and making elaborate bubble displays. Eleven months later, a baby whale is born that weighs up to one ton and is 12-16 feet long. That seems to be where the female whale’s fun ends, but from the displays of affection that pass between Mama and Baby, it doesn’t seem as though she minds motherhood too much. The baby stays by its mother’s side for up to a year.

The two migrations do not overlap, so there is an opportunity to see humpback whales in the waters off the Pacific Coast of Costa Rica nine months out of the year. The Antarctic migration has the most whales and peak season is August to October. This is also a great time to come and visit.

Costa Rica’s northern coast has fewer whales passing by, but humpback whales and other types of whales are often spotted on catamaran, snorkel, or dive tours during the peak months of the migration. Every year though, a female whale comes to Bahia Culebra in the Pacific northwest and birth a calf. If you are fortunate enough to spot the whale near your boat you will never forget it. Watching the mother teach her baby to rise and breath or dive is just an incredible site. Humpbacks are a friendly species that interact with bottlenose dolphins and other whales. Not all the antics have to do with mating. Whales have been observed playing with other species in various locations around the world.

It needs to be mentioned that Costa Rica does not allow swimming with dolphins or whales. Of course, if you are swimming and they approach you, it means they are unaware of the rules and you are not at fault. But resist the urge to dive from your boat and join them.

If seeing a humpback whale is on your bucket list, make plans to visit Costa Rica when they do: August and September. Have your camera in hand and your sense of awe at the ready. You are about to have an experience you will never forget.

Want to keep up with everything that is happening here in Costa Rica?  Join my email list!

Want more information about Costa Rica in general visit https://www.costarican-american-connection.com/Costa_Rica_FAQs/page_2575549.html

Interested in owning a property in Costa Rica, checkout some great options here

Travel Insurance for Costa Rica

During the Covid-19 pandemic, many countries are requiring tourists to purchase travel insurance prior to visiting, and Costa Rica is no exception. Even as a seasoned traveler, it may not have been your habit to acquire travel health insurance. But in the new reality of pandemics, it is something to be considered even if not required.

Beautiful Costa Rica luxury Villa overlooking the Pacific

The government of Costa Rica is currently requiring tourists to purchase health insurance covering the exact number of days you plan to be in Costa Rica. The insurance must cover medical and accommodation (lodging and food) expenses for 14 days of quarantine should your stay need to be extended due to exposure to the virus. The coverage amount required is $20,000 USD in Covid-19 medical coverage if you use a Costa Rican insurance company. Currently, there are two companies approved to sell Covid insurance: INS (the government insurer) and Segicor (a private company). Policies can be purchased on their websites. Segicor’s rate is a flat daily rate, which usually makes it less expensive for shorter trips than INS. The INS rate is variable taking into account your age and length of stay. INS is reportedly less expensive for longer stays.

If you use an international company, the minimum amount is $50,000 USD for health and $2,000 in case of quarantine. Tourists entering Costa Rica have reported using other international insurance providers that have been accepted by the Costa Rican Tourism Institute. To confirm your insurance will be accepted by the Costa Rican government, you will need to complete an Online Epidemiological Form (Health Pass) within 48 hours of your flight (NO earlier). You will be asked for personal information like your name, age, nationality, passport number, flight details, and accommodation arrangements in Costa Rica. You will then upload your insurance policy so that the Tourism Institute can verify it in advance of your arrival. If approved, a QR code is generated, which you will show on your mobile phone to immigration officials in the airport upon arrival.

One day (we hope) Covid-19 will be a thing of the past, and we will all be able to travel freely again without the fear of being attacked by a lethal virus while innocently sitting in an airport waiting room. But, you may ask yourself: is travel health insurance a good idea even in “normal” times? There is no better way to ruin a relaxing vacation than with a freak accident or sudden illness.

It may be that the local insurance company where you live will cover health care costs on foreign soil. To find out, you should call the customer service department of your health insurance company to verify whether their medical coverage extends to regions outside the U.S. Some insurers cover emergency situations. Some coverage may have limits on the amount of time you are covered so triple check. Medicare and Medicaid do not cover foreign health care costs. With regard to Canada’s healthcare coverage, the government website clearly states that it does not pay for hospital and medical bills incurred while abroad nor does it cover the expense of medical evacuations.

Some insurance companies allow you to add foreign coverage to your existing policy at an additional cost. Be aware that there are a lot of options offered by insurance companies – read the fine print. Other factors that may affect the cost are the country or countries you plan to visit, length of stay, and the total cost of the trip. An excellent tool to simplify the process of comparing and choosing an insurer is the website TravelInsurance.com. Simply submit your trip information and you will receive multiple quotes from the best insurance companies, customized to fit your specific needs.

Should you have the misfortune of finding yourself visiting an emergency room during your visit to Costa Rica, be assured that the health care system here is one of the most advanced in Latin America. Public and private medical attention is readily available throughout the country, and that is no exception in the Playas del Coco area. Recently, Costa Rica’s Ministry of Health affirmed that no patient will be refused medical care because of their nationality or undocumented legal status.

Travel health insurance covers emergency medical treatment may be just the thing to relieve that last little bit of nagging worry prior to your trip, allowing you relax completely during your visit to the tropical paradise that is Costa Rica.

Want to keep up with everything that is happening here in Costa Rica?  Join my email list!

Want more information about Costa Rica in general visit https://www.costarican-american-connection.com/Costa_Rica_FAQs/page_2575549.html

Interested in owning a property in Costa Rica, checkout some great options here