Starting a Business in Costa Rica
By Roger A Petersen
If you want to start a business in Costa Rica the first thing you will need is lots of patience. The World Bank has ranked Costa Rica 118 out of 183 countries for starting a business. That is a 10 point drop from 2014 to 2015. The image below shows the rankings for Costa Rica for the annual Doing Business report published by the World Bank.
The business practices, customs, and the bureaucratic procedures involved in getting into business in Costa Rica require patience and persistence.
Of course all this depends on the type of business that you will be starting. The most common form of business ventures in Costa Rica are (1) providing retails goods or services to a customer base in Costa Rica. (2) Outsourcing. This means a foreign company establishes an office in Costa Rica to either manufacture or provide services which it then sends back to a head officer or sells to other parts of the world. (3) Work at home. Due to the growth of the Internet and facilities to work at home many types of ventures operate from home and then provide services to customers located around the world. The following diagram illustrates the most common form of business ventures which are established in Costa Rica:
Once you have decided to establish a business in Costa Rica then your first decision will be to decide whether to operate as a sole proprietorship or in the name of a corporate entity. You will probably be better off to set up as a corporate entity since any liabilities of the corporation are limited to the capital contribution of the shareholders. Discuss the options with your Attorney or Accountant.
Now that you have your corporation set up and ready to go you need to start the next process which legally allows you to operate the business and that is obtaining the Business Operational License referred to locally as the “Patente Comercial”. The governmental entity you will be dealing is the Municipal Government where your commercial property is located.
Check the specific requirements with your local municipal government BEFORE you start. Generally the Municipal Government will require that you submit a zoning request certification (Certificado de Uso de Suelo) to ensure that they type of business you want to start is allowed in the area where you are locating. Once the zoning request is approved you can begin completing the Business License Application Form (Solicitud de Patente Comercial) which must include : (1)Name of applicant; (2) Date the business initiated operations; (3) Specific description as to the nature of the business; (4) Commercial name of the business; (5) Exact location and telephone number of the business. The application must be signed by the applicant and the owner of the commercial local where the business is located. If the owner of the local does not sign the application you will need to attach a copy of the lease on the local where the business will be located.
The application must be accompanied by: (1) Copy of the light bill for the commercial local, (2) Certified copy of the identification document of the applicant. If a corporation a Certificate of Standing and certified copy of the identification of the legal representative. (3) Zoning Certificate (4) Property Survey Map (plano catastrado) (5) Certified copy of the Commercial Lease. (6) Proof of an existing Workman’s Compensation (Poliza de Riesgos del Trabajo) issued by the National Insurance Institute
Depending on the type of Business you are running you may also have to Provide proof of (1) Registration of Employees with the Social Security Administration (Caja Costarricense de Seguro Social) (2 Authorization from the Department of Public Health for food and hygiene related business operations who will issue a health permit (Permiso Sanitario de Funcionamiento).
In addition to the application you will have to register with the Costa Rica Tax Department (Tributación Directa) and show proof to the Municipal Government that you are registered with the Tax Department.
The length of time it takes to process an application varies for each Municipal government. Also depending on the type of business there may be additional requirements to comply with so research the requirements before you begin.
You can view a sample Business License Application from the Municipality of San Jose below.