Costa Rica
Company Formation Services

Incorporating in Costa Rica
Types of Corporate Entities

Corporate Entities

Currently, in Costa Rica there are only two main types of Corporations. Even though the general structures are similar the two entities have important differences. These two structures are described in detail below. Note that laws and regulations on corporations are frequently changing so please consult a legal professional before proceeding with the incorporation process.

Sociedad Anónima (SA)

Corporate Identification:

The Sociedad Anonima commonly refered to as a S.A. You can normally tell that a corporation is a S.A. because it will contain the letters S.A. at the end of the name and within its ten digit corporate identification number you will see 101 in the second bracket, for example 3-101-XXXXXX.

Governance:

A Sociedad Anónima is governed by a board of directors which must have at least three members. The three members must be a President, Secretary and Treasurer. There is also usually two other members known as the auditor (fiscal) and an resident agent that are initially appointed by the constituents. Other positions may be created by the shareholders as deemed necessary through Share Holder Assemblies.

Representation:

The representation of the corporation is defined by the shareholders and may be as broad or specific as determined by the shareholders. The board of directors may or may not be shareholders of the corporation depending on the circumstances. Even though a minimum of two individuals or legal entities are required to set up a Sociedad, after the corporation is formed, the totality of the stock may be transferred to one single person.

Liability:

The Sociedad Anónima´s liability is limited to the corporation´s assets and to the totality of the contributions made by the shareholders.

Legal Books:

All Sociedades Anónimas must have six legal books including: three administration books and three accounting books. The administration books are 1) Board of Directors Log, 2) Shareholer Assembly Log and 3) Shareholder Registry Book. The accounting books are 4) Balances 5) Mayor 6) Diario.

Stock:

Stock of a Sociedad Anónima is called shares. The shares represent the capital stock of the corporation. Share Certificates are considered securities paper and therefore subject to the laws regarding securities in Costa Rica as well as in the United States. Shares Certificates represent the capital stock of the corporation. Shares are transferred through endorsement of Share Certificates and recordation of transfer in the Shareholder Registry Book. Share Certificates may be negotiated according to the Securities Laws of Costa Rica. Shareholders may transfer their interest to third parties freely unless stated otherwise in the articles of Incorporation or Pacto Social.

Taxes:

A “S.A.” is a taxable corporation and must register at the Tax Administration in order to pay taxes in Costa Rica. The Sociedad Anónima must file a yearly declaration for income tax. If income is under US$50,000.00, the corporation will be considered small enterprise and will be subject only to a 10% tax of its taxable income. If the corporation´s income is over US$50,000.00 it is taxed a 30% of its taxable income. On any dividend declared that constitutes a habitual source of income, there is a duty to retain a 15% of the total amount distributed to the shareholders. Taxes are deductible in the United States.

Sociedad de Responsibilidad Limitada (SRL)

Corporate Identification:

Sociedad de Responsibilidad Limitada commonly refered to as a S.R.L. You can normally tell that a corporation is a S.R.L. because it will contain the letters S.R.L. at the end of the name and within its ten digit corporate identification number you will see 102 in the second bracket, for example 3-102-XXXXXX.

Governance:

A Sociedad de Responsibilidad Limitada is goverened by at least one manager who may or may not be a quota holder and must have an auditor and a resident agent. The manager or managers are initially appointed by the constituents and may be later removed and appointed by the Quota Holders through a Quota Holder Assembly. There is no limit to the number of managers allowed.

Representation:

The representation of the corporation is defined by the quota holders and may be as broad or specific as determined by the quota holders. The managers managers may or may not be quota holders of the corporation.

Liability:

The Sociedad de Responsibilidad Limitada´s liability is limited to the corporation´s assets and to the totality of the contributions made by the quota holders.

Legal Books:

All Sociedad de Responsibilidad Limitadas must have five legal books including: two administration books and three accounting books. The administration books are 1) Assembly Book and 2) Quota Holder Assembly Book. The accounting books are 3) Balances, 4) Mayor, and 5) Diario.

Stock:

Stock of a Sociedad de Responsibilidad Limitada is called quotas. The quotas represent the capital stock of the corporation. Quota Certificates are not considered securities. Quota Certificates do not have any real value, only serves informative purposes and do not accurately represent the capital stock of the corporation necessarily. Quotas are transferred through an Quota Assignment Agreement and recordation on the Quota Holder Registry Book. Quota holders have by law a right of first refusal provision for the sale of quotas. This means that quota holders are not free to transfer their interest without offering their interest to the rest of the quota holders first. The acceptance of said transfer by the quota holders must be performed through a quota holder meeting.

Taxes:

A S.R.L.  is a taxable corporation and must register at the Tax Administration in order to pay taxes in Costa Rica.  The Sociedad de Responsibilidad Limitada must file a yearly declaration for income tax. If income is under US$50,000.00, the corporation will be considered small enterprise and will be subject only to a 10% tax of its taxable income. If the corporation´s income is over US$50,000.00 it is taxed a 30% of its taxable income. On any dividend declared that constitutes a habitual source of income, there is a duty to retain a 15% of the total amount distributed to the quota holders. Taxes are not deductible in the United States.