In Costa Rica every year both corporations and real estate owners must comply with several obligations in relation to tax returns. In ERP Lawyers we have prepared a calendar with the obligations of Corporations and Real Estate Owners in Costa Rica for this year 2022.

January

i. Payment of corporate income tax

Every year this tax must be paid as from January 1. The corporations obliged to pay this tax will have until January 31 to comply with the payment, without interest or fines.

The amounts to be paid this 2022 for the inactive companies, those that are not registered before the Tax Office under any lucrative activity, will be the same that should be paid during 2021, which corresponds to the amount of ¢69,330, equivalent to approximately US$120; and for the active companies depending on the gross income declared in the previous fiscal period, or according to whether they are taxpayers or not, they will pay as follows:

1. Companies registered as income tax payers that declare zero income or no activity or registered companies that have declared gross income of less than 120 base salaries, that is, less than ¢55,464,000 colones, pay 25% of the base salary, that is, the amount of ¢115,550.00, equivalent to approximately US$200.

2. Companies with gross income greater than 120 base salaries but less than 280 salaries, i.e. less than ¢129,416,000 colones, pay 30% of the base salary, i.e. the amount of ¢138,660, equivalent to approximately US$240.

3. Companies with gross income greater than 280 salaries pay 50% of the base salary, namely the sum of: ¢231,100, equivalent to approximately US$395.

4. New companies: all those companies that are incorporated during the course of the year will pay the corporate income tax proportionally, taking into consideration the date of their registration and the last day of the 2022 period.

Timely compliance with this tax is of utmost importance to avoid financial penalties. As of February 1 there is a fine of 1% per month elapsed. Companies in arrears will not be able to make any transactions before the National Registry, nor contract with the State or any other public institution. Also, take into consideration that the lack of payment for three consecutive periods of this tax will be cause for dissolution of the company.

ii. Declaration of the Value of Real Estate and Payment of Real Estate Tax.

All those persons who have any real estate in the country are obliged to declare before the municipality where the property is located the purchase value. This must be done when acquiring the property and every five years thereafter.

Failure to declare the value of the property entitles the municipality to charge a fine equivalent to the amount not paid.

In addition, the payment must be made on a quarterly, semi-annual or annual basis as determined by the corresponding municipality. Such payment will be 0.25% of the value registered with the municipality as of January 1 of each year.

iii. Solidarity Tax Declaration and Luxury Home Tax Payment

By means of an Executive Decree, the Ministry of Finance establishes each year the corresponding tax brackets to be paid for the solidarity tax for the strengthening of housing programs, better known as the Luxury Homes Tax Law.

The declaration must be made every three years within the first 15 calendar days of January. Failure to file such declaration brings with it a minimum fine of three base salaries corresponding to ₵1,386,900, equivalent to approximately US$2500.00. This amount varies every year.

The exempted amount for this year is the sum of ₡137,000,000.00, this means that the owners of houses with a value higher than such amount are the ones obliged to pay this tax. It is very important to take into consideration that such amount is considered for the existing constructions within a property, the cost of the land must be excluded. The following are the tax brackets to be paid:

February

iv. Payment of the Education and Culture Stamp

This payment must be made annually to the Ministry of Finance in the months of February and March. It is a tax payable by all legal entities based on the amount of net capital reported in the income tax return of the previous year. For those companies that are not income tax payers, they must previously file the form “Official payment receipt D-110”. If the payment is not made on time, interest will be generated.

March

v. Patrimonial Declaration for inactive legal persons

All inactive companies in Costa Rica, those that do not carry out a lucrative activity in the country but have some kind of assets, whether movable property, real estate or rights, must file the Statement of Assets must file the Patrimonial Declaration. Declaring their assets, liabilities and patrimony on an annual basis.

Last Friday, March 11, 2022, Legislative Decree No 10160 was published regarding the Simplification of Tax Procedures for legal entities without lucrative activity, this initiative brings with it three important points that deserve to be highlighted:

1. Article 2 of the Income Tax Law is amended, eliminating the condition of inactive companies as taxpayers, becoming only filers. This means that the only obligation they must comply with is to provide the Tax Administration with the assets, liabilities, and capital stock and in case the information does not change from one year to another, the Tax Administration will allow confirming the existing content.
2. Non-domiciled entities that hold a legal identification number beginning with 3-012 and that do not carry out any activity in the country, as is the case of foreign companies that grant a power of attorney in Costa Rica, may request the National Registry to eliminate the legal identification number that was issued to them, without prejudice to the validity of the act for which it was granted.
3. The presentation of the declaration of assets, liabilities, and capital stock is extended for 3 more months, this must be completed in the month of June.

If you have a company in which you have your house or your vehicle, you must present such declaration and have the necessary legal support before an eventual audit of the Administration.

April

vi. Declaration of Beneficial Owners and/or Register of Shareholders.

It is a requirement in Costa Rica that all legal entities file with the Central Bank the declaration of Transparency and Beneficial Ownership Registry, such declaration is a detail of all the shareholders that make up the capital stock of the company, as well as the beneficial owners of the same, meaning those individuals who have control of the company.

This is an obligation that must be fulfilled in two circumstances:

a. If there is a change in the capital stock that equals or exceeds 15%, the declaration must be filed within the following 15 business days, counted from the date of the entry in the respective ledger.

b. If there is no change in the capital stock, the declaration must be filed annually during the month of April of each year.

The fine for failure to file such obligation may range from 3 to 100 base salaries, for a maximum of ₡46,230,000.00, equivalent to approximately US$72,118.00.

Other Obligations

vii. Resident Agent

All those companies that do not have an attorney-in-fact residing in Costa Rica must have a Resident Agent, who must be an attorney with an office open in the country whose function is to receive administrative and judicial notifications in the country.

viii. Holding of Ordinary Meetings

The shareholders of a company must hold at least one Ordinary Annual Meeting within three months after the end of the fiscal year, which refers to the fiscal period. At this meeting, the shareholders will discuss how the company has been managed, in case there are dividends, the distribution of profits is agreed upon, and if necessary, the appointment or revocation of the administrators is appointed or revoked.

It is of vital importance to comply with all these obligations. At ERP Lawyers we are at your disposal to help you with this issue. Contact us and we will gladly assist you through info@erplawyers.com.