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August 21, 2020

Costa Rica Shareholder Declaration

Costa Rica has been on a tear lately passing new tax laws, and though they won’t make your life any easier, ignoring them can make your life much more difficult.

Case in point: the “Law to Combat Tax Fraud,” which you might think should be called “Law to Cause Everyone a Big Headache.” This law requires virtually every company in Costa Rica to file a complicated declaration stating how many shareholders it has, what their stake in the company is, what types of stock are held, and many other details.

The ostensible reason for this requirement is to comply with international requirements for tax transparency — in part, to satisfy conditions to become a member of the Organization for Economic Cooperation and Development. The requirement is also intended to reduce tax evasion and combat money laundering.

The requirement applies to the smallest mom-and-pop company — S.A. companies (“Sociedad Anónima”), LLCs (“Sociedad de Responsabilidad Limitada”), general and limited partnerships, branches of foreign corporations in Costa Rica, trusts and others.

Costa Rica shareholder declaration requirements

The list of information required is long and complex, including company identification, type of stock, total number of shares, names of shareholders and beneficiaries, details of share ownership and more. Unless you know off the top of your head what terms like “usufruct” mean, you may need some help to fill out the form correctly.

An additional complication is that to complete the online-only shareholder registry form, you must first obtain a digital signature (“firma digital”) from an authorized Costa Rican bank. This is a USB device inserted into a computer with a digital card identifying the holder. And of course there’s a catch: Only Costa Rican nationals or foreigners with legal residency can obtain the digital signature.

The work-around? You can assign power of attorney to another party, including Special Places of Costa Rica, to use their digital signature to fill out the shareholder declaration for you.

Failure to make this declaration is punishable by pricey penalties — starting around $2,000 and in some cases, believe it or not, reaching nearly $79,000. So ignoring this requirement is really not an option.

If you have a Costa Rican company and have not fulfilled this requirement, contact Special Places of Costa Rica to find out how we can help you. We are a full-service property management and vacation rental company, and even if the Costa Rican tax authorities aren’t committed to making your life easier, we are! Feel free to contact us at specialplaces@crvr.net.

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