Living Pura Vida

Perspectivas

Living Pura Vida

If you decide to retire in Costa Rica or just invest on a vacation home, there are some important points to consider

By: Manrique Blen, Senior Tax Manager

Costa Rica is recognized worldwide as a great place to live, not just because of beautiful rainforests and beaches, but also because of its people. Nevertheless, if you decide to retire in this beautiful country or just invest on a vacation home, there are some important points to consider.

Most nationalities do not require a visa in order to visit Costa Rica as a tourist, nevertheless it is always important to check the official list. A US Visa may be used to cover this requirement, and no additional permit would need to be obtained.

Bear in mind that this is just for tourism, and if you would like to extend your stay, work locally or retire you would need a different permit. Such permit would need to be requested at the Immigration Office in Costa Rica, and depending on its type it could take up to a year to get approved. Nevertheless, from the day the request is filed, you could stay in Cost Rica for as long as it takes to have it approved.

Living Pura Vida

Let’s assume that you loved Guanacaste (which is not hard at all), and want to purchase a beach front house. We would always recommend to perform a legal and tax due diligence of the lot, in order to be sure of what you are buying and that you are not assuming any liability.

Most of the information is public and may be found at the National Registry Office. Nevertheless, we would recommend for a local attorney to take a further look just in case the seller has some skeletons in the closet regarding the land or house.

If you would like to set-up a local company, there are mainly 3 options: Sociedad Anónima (similar to a Corporation), Sociedad Responsabilidad Limitada (LLC) or a branch of a foreign entity. All of them have the same tax treatment from a Costa Rican standpoint, but the Corporation and LLCs are easier to incorporate and would take a couple of weeks at the most.

Branches are not a good option, not just because the time it would take to have one registered locally, but also because it would be harder to open bank accounts. Please be aware that when opening a bank account here, information about your banking record and disclosing the source of your income is a must.

Foreigners may incorporate any of the above entities in Costa Rica, but in some cases may need to appoint a local attorney in order to receive notifications.

Last but not least, if you are going to invest bear in mind the tax consequences of the operation. Capital Gains are not always taxable and VAT may apply to some types of rentals. Costa Rica follows a territorial taxation system, which means that you would only need to pay taxes for the income produced locally.

In order to “Live Pura Vida” it is always a good idea to carefully review every step of the way. Even paradise has its challenges.

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