Starting a Business in Costa Rica: Expert Guide

Costa Rica has become a hotspot for US entrepreneurs looking to expand their companies internationally.

More than 400 American companies are represented by the Costa Rican-American Chamber of Commerce (AmCham), and major firms including Abbot Laboratories, Continental Airways, GE, Intel and Microsoft operate in the country.²

Here are some top tips and considerations to guide you through the process of how to start a business in Costa Rica.

💡 Operating an international business requires a hassle-free way to send and receive international payments. A Wise Business account can help you save money on currency exchange and streamline the process of handling international transactions.

Why Choose Costa Rica for Starting Your Business?

Costa Rica is an attractive destination for international businesses for several reasons. The country is in a geographically strategic location, with easy access to the US and Latin American markets. Its favorable business climate provides an efficient and straightforward company registration process and free trade agreements within the Americas.

Costa Rica ranks 74th out of 190 economies in the World Bank’s Ease of Doing Business Index, from 121 before 2012, making it a favorable destination for foreign investment.¹

The country’s economy grew by 5.1% in 2023, up from 4.6% in 2022, according to the World Bank, driven by both** domestic and export demand**. The economy is still expected to grow amid the current global uncertainty and slowdown in its key trading partners, expanding by 3.9% in 2024 and 3.7% in 2025 and 2026.³

In addition, a low cost of living makes it affordable for businesses to set up without expensive rent and utilities. The government’s focus on education has created an abundance of skilled workers and there’s a local network of businesses and entrepreneurs that can provide support and opportunities.

🔍 Read on to find out:
Starting a Business in Costa Rica: First Steps Legal Requirements to Start a Business in Costa Rica Can Foreigners Start a Business in Costa Rica? Financing Your Business in Costa Rica Marketing and Growing Your Business Understanding Costa Rica's Business Environment Tips for Long-term Business Success Starting a Business in Costa Rica Discover Wise: The Account for Businesses Abroad

Starting a Business in Costa Rica: First Steps

Starting a business in Costa Rica is relatively straightforward, but you do need to make sure you keep on top of the legal and regulatory requirements.

The basic steps you should follow are set out below.

Understand the market

Before you dive into a venture in a foreign market, conduct thorough market research to understand the local business environment, consumer behavior, and potential competition. Identify whether there is a demand for your product or service, assess pricing strategies and tailor your offerings to meet local tastes and needs.

Register the business

You must register your legal company name with the National Registry (Registro Nacional). You’ll need to ensure that it’s a unique business name that doesn’t infringe on any existing company or trademark.⁴

Secure financing

Obtaining funds to establish a business can be challenging, especially in a foreign country. You may need to explore different financing options including business loans or credit from local banks, international investors, financial institutions that work with foreign entrepreneurs, or government incentives for foreign businesses.

Consult local expertise

Working with local specialists such as accountants, lawyers, and business consultants can provide you with valuable insights to understand the local market environment and comply with Costa Rican tax laws and regulations.

Open a business account

You’ll need a way to send and receive payments when your business starts trading. Using a US business account can end up costing you in foreign exchange and cross border fees. On the other hand, opening a local business account can take time, and be complicated.

💡 A Wise Business account will allow you to handle payments in Costa Rica with ease and avoid high costs. You can open an account online and exchange US dollars to Costa Rican colón (CRC) at the mid-market rate. You can also get automatic alerts for the best time to exchange funds.

What Are the Legal Requirements to Start a Business in Costa Rica?

As an American starting a business in Costa Rica, you’ll need to navigate several legal requirements. Understanding these steps is essential for a smooth and compliant process that avoids unnecessary headaches.

Choosing a Business Structure

As in the US, there are several different types of business structure in Costa Rica, including sole proprietorship and limited liability company – each with different implications for ownership, liability and taxation.⁵

• Sole Proprietorship: This is the simplest form, where the business is owned and operated by one individual. Although this is easiest to establish, the owner has unlimited liability, meaning that their personal assets can be used to cover business debts. Business income is taxed as the proprietor’s personal income.

• Partnership: This involves two or more individuals who share ownership. In general partnerships each partner shares liability and in limited partnerships some partners have limited liability.

• Sociedad de Responsabilidad Limitada (S.R.L.): Suitable for small and mid-sized businesses, an SRL requires at least two partners. This structure provides limited liability protection, and partners’ responsibilities are proportional to their capital contributions. Business income is taxed at corporate rates.

• Sociedad Anónima (S.A.): Suitable for larger businesses, the S.A. requires at least two shareholders, who may be foreigners. This structure allows for easy transfer of shares and provides limited liability protection.

You should choose the structure that most suits the characteristics of your business.

Registration and Incorporation Process

Business registration in Costa Rica involves several steps:⁶

• Obtain a Digital Signature Certificate: It’s compulsory when setting up an offshore company to obtain a Digital Signature Certificate (Firma Digital). You’ll use this to digitally sign and authenticate your legal documents.

• Draft and submit articles of incorporation: Fill out a legal document that outlines the business structure, purpose, and operational guidelines. This must be signed before a Notary Public. Submit the document to the National Registry. You’ll need to pay a registration fee of around $200-300. The process takes around two weeks.

• File an Ultimate Beneficial Owner (UBO) declaration: All legal entities must file an Ultimate Beneficial Owner (UBO) declaration to register the personal information of shareholders and ultimate beneficiaries of a company that own 15-25% of its share capital.

• Obtain a legal representative: If your company is domiciled outside the country, you’ll need to name a registered local agent.

• Register for taxes: You must register the business with the Costa Rican Tax Administration (Ministerio de Hacienda) to obtain a corporate identification number (Cédula Jurídica) for corporate tax and value-added tax.

• Register with the social security agency: Once you’re ready to hire employees, you must enroll with the Costa Rican Social Security Fund (Caja Costarricense de Seguro Social, or CCSS) with the social security agency as an employer to cover employees’ health insurance and pensions.

Licenses and Permits

Depending on your products or services, you may need to get licenses or business permits in Costa Rica to operate.⁷

If your company will have a physical presence in the country, you’ll need a business license (Patente Municipal) from the local municipality. The cost varies depending on the business location and type.

Businesses related to food, health, and hospitality sectors need a health permit issued by the Ministry of Health (Ministerio de Salud). This involves an inspection and a fee based on the size and nature of the business.

Businesses that have an impact on the environment need permits from the Ministry of Environment and Energy (MINAE). And extra permits may be required for regulated industries such as finance, pharmaceuticals, and telecommunications.

To obtain permits you’ll need to submit an insurance policy issued by an authorized local insurance company to cover the risks of your business activity.

Can Foreigners Start a Business in Costa Rica?

It is legal for a foreigner to start and own a business in the country, although you may want to apply for residency to protect your legal status. Costa Rica offers residency for entrepreneurs who invest $150,000 in assets in the country such as real estate, operating businesses, stocks, bonds, and so on.⁸

Financing Your Business in Costa Rica

To get your business started, you’ll need to make sure you have sufficient funds.

How Much Does It Cost to Start a Business in Costa Rica?

The steps detailed above to register a business involve several expenses, including registration fees, permits, taxes, and legal services.⁹ Although costs will vary depending on your business, here’s a general summary:

• Registration fees: $500-1,000
• Permits and licenses: $500-1,500
• Legal services: $1,500-3,000
• Office space: $300-900 monthly
• Equipment: $1,000-5,000
• Taxes: Vary by business type

A Wise Business account offers a cost-effective way to pay for the required fees when starting a business, saving you on currency conversion fees and processing times.

Funding Options

There are various options for securing funding, ranging from traditional banking to venture capital opportunities, government grants, and international investors.

Costa Rica has a well-developed banking sector with numerous local and international banks like Banco Nacional, Banco de Costa Rica, Citibank and Scotiabank offering business loans, credit lines, and other financial products tailored to entrepreneurs. For smaller loans, microfinance institutions like FINCA Costa Rica offer financing to support entrepreneurs.

The country has a growing venture capital scene with several firms actively seeking investment opportunities.

The government supports entrepreneurship through various grants and funding programs aimed at fostering innovation and business development. These include the Promotora del Comercio Exterior de Costa Rica (PROCOMER), which offers grants and incentives for export businesses, and the Instituto Nacional de Aprendizaje (INA), which provides funding and training programs for skill development and business growth.

If you’re looking for international investment, it’s worth participating in international business forums and pitch events to connect with potential investors.

Managing Financial Transactions

You’ll need to consider your banking and currency exchange setup to maintain cash flow and smooth business operations.

If you choose to open a local bank account for handling daily transactions, evaluate local banks such as Banco Nacional and Banco de Costa Rica based on their fees, services, and customer support. Look for online banking services for convenient access to your accounts, bill payments, and fund transfers.

Maintaining accounts in both the CRC and USD can help you manage exchange rate fluctuations and simplify transactions with international clients. Stay updated on exchange rates to optimize when you make currency exchanges and reduce the risks associated with currency fluctuations. Consider hedging strategies to protect against adverse currency movements.

To help maintain a cash flow, create detailed budgets to track expenses and revenues, ensuring you have enough liquidity to cover operational costs. You should also use efficient invoicing systems to ensure clients pay on time. Regularly review your financial plans and adjust them based on your business performance and market conditions.

Marketing and Growing Your Business in Costa Rica

To successfully market and develop your business, you’ll need a combination of effective strategies tailored to the local market.

Marketing Strategies

Standing out in Costa Rica's competitive market requires a mix of digital and traditional marketing techniques to appeal to local and international customers.

• Digital marketing: Use social media platforms like Facebook, Instagram, and LinkedIn to reach a broad audience. Invest in search engine optimization (SEO) to improve your online visibility and pay-per-click (PPC) advertising to drive website traffic.

• Content marketing: Create engaging content tailored to your target audience, including blog posts and videos that highlight your products or services and provide value to customers.

• Email marketing: Develop an email marketing strategy to keep your audience informed about new products and promotions. Personalize messages to increase engagement and conversion rates.

• Traditional marketing: Methods such as print advertising, billboards, and direct mail can be particularly effective for reaching local customers.

• Community engagement: Participating in local events, sponsoring community activities, and collaborating with local influencers can build brand awareness and loyalty.

Utilizing Local Networks and Resources

Networking is crucial for identifying new opportunities and resources. Join organizations like AmCham or the Costa Rican Chamber of Commerce. They offer networking events, business seminars, and resources to help you connect with other entrepreneurs and potential clients.

Engage with local business groups and industry associations to stay informed about market trends and best practices. These groups often provide valuable insights and support.

Resources from government agencies such as PROCOMER and the Costa Rican Investment Promotion Agency (CINDE) can help with export promotion, investment opportunities, and business development support.

Understanding Costa Rica's Business Environment

To successfully navigate the market, it’s essential to understand the key sectors and economic factors that influence Costa Rica’s business opportunities.

Key Sectors and Opportunities

Several sectors in Costa Rica are particularly ripe for investment and new business initiatives:

• Tourism: As one of the country’s largest industries there are extensive opportunities for businesses in hospitality, adventure tourism, ecotourism, and travel services.

• Real estate: Costa Rica’s real estate market is booming, particularly in popular tourist destinations and urban areas. There are opportunities in residential, commercial, and vacation property development.

• Agriculture: Costa Rica’s fertile land supports a robust agricultural sector, offering potentially lucrative opportunities in organic farming, specialty coffee production, and export-oriented agribusinesses.

• Technology: The country is emerging as a tech hub in Central America, with growing opportunities in software development, IT services, and tech startups.

Economic Factors and Incentives

Costa Rica’s political and economic stability and government incentives make it an attractive destination for business ventures. The country has a high literacy rate and a skilled workforce.

Corporate tax rates range from 10% to 30% depending on income, and there are tax treaties to avoid double taxation with several countries, including the US.

The country has several free trade zones (zona francas) that offer tax incentives, including exemptions on import duties, corporate income taxes, real estate transfer tax, and sales taxes.

To operate within a zona franca, a business must have at least $150,000 of fixed assets. Raw materials for manufactured products that are subsequently exported can also be imported duty free to encourage foreign direct investment (FDI).¹⁰

Various government programs support entrepreneurship and innovation. For example, the Costa Rican Development Banking System (SBD) offers financing options for SMEs, and PROCOMER provides export promotion services.

Tips for Long-term Business Success in Costa Rica

Achieving long-term business success requires strategic planning, a deep understanding of local culture and business practices, and ongoing regulatory compliance.

You’ll need sustainable growth strategies such as diverse product or service offerings to meet changing market demand and a focus on delivering high quality. Fostering strong relationships with customers, suppliers, and local partners is key. Use technology and data analytics to streamline operations, improve customer service, and inform your marketing efforts.

Take the time to understand Costa Rican culture and business etiquette. Respecting local customs can build trust and improve business relationships. As Costa Rica is known for its commitment to sustainability, eco-friendly practices can attract environmentally conscious consumers.

What Is the Best Business to Start in Costa Rica?

Choosing a business to start in Costa Rica depends on market demand, your interests, and the resources available to you.

Given the country’s popularity as a travel destination, businesses related to tourism and hospitality, such as eco-lodges, adventure tour companies, and travel agencies are highly lucrative. The real estate market also offers opportunities especially in tourist-heavy areas and urban centers for vacation rentals and property management services.

With a growing technology scene, opportunities in the sector include software development, IT services, and startups in areas like fintech, edtech, or healthtech. The health and wellness industry is expanding, offering the potential to establish wellness retreats and medical tourism services.

Starting a Business in Costa Rica: Conclusion

Starting a business in Costa Rica from the US can be rewarding and offer significant growth potential. The country’s stable economy, strategic location, and welcoming business environment make it an attractive destination for entrepreneurs.

Whether you're drawn to its thriving tourism industry, burgeoning tech sector, or fertile agricultural lands, there are diverse opportunities for business growth.

Proactive and informed planning is crucial to overcoming challenges and pursuing opportunities. Engaging with local experts, staying updated on regulatory changes, and continuously adapting your strategies will help ensure long-term success.

Discover Wise: The Account for Businesses Abroad

If you’re operating an international business, a Wise Business account is a low-cost, hassle-free way to manage all your payments.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in 40+ currencies. You can get major currency account details for a one-off fee to receive overseas payments like a local. You can also send money to 160+ countries, including Costa Rica.

Find out more about Wise Business

Or read the guide on how to open a Wise Business account

Features of the Wise Business account include:

• International payments at the mid-market rate
• No monthly fees
• Ability to hold over 40 currencies and manage multiple currencies all in one place
• Account details to accept major currencies like a local
• Easy batch payments
• QuickBooks connection to track bill payments

You can learn more about all the account features and sign up here.

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Sources:

¹ Rankings - Business
² The Chamber
³ Costa Rica Overview: Development news, research, data | World Bank
⁴ Registro Nacional
⁵ Doing business in Costa Rica A comparative guide
⁶, ⁷ Costa Rica Doing Business 2020
⁸Business FAQs
⁹ Understanding Business Start-up Costs in Costa Rica
¹⁰ Costa Rica - Corporate - Tax credits and incentives

All sources checked May 2024.