Starting a Business in Costa Rica: GEOS Guide for Global Expansion

This article is apart of our weekly series associated with the The Global Subsidiary Index. The series is designed to help businesses identify the best countries for establishing a subsidiary based on key operational factors. GEOS provides a data-driven ranking of jurisdictions worldwide, assessing across 40+ criteria to bring you insights into global expansion opportunities.

Each country on the index is scored on an overall score out of 100, with each individual criterion out of 5 or 10. Higher scores indicate a more favorable environment for businesses. By leveraging these insights, companies can make informed decisions on where to establish a legal presence.

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Starting a business in Costa Rica puts you in a market that has shifted from farms to high tech. The country now competes on medical devices, semiconductors, and digital services, all supported by a strong bilingual workforce and a national focus on sustainability. Tourism and agriculture still matter, but advanced manufacturing and knowledge-based services are driving the real momentum.

Costa Rica’s rise isn’t accidental. Decades of investment in education, innovation, and environmental policies have turned it into a reliable, forward-looking hub for global companies. It’s also becoming more inclusive, with more women-led and rural businesses entering export programs.

With deep EU trade ties and renewable-powered production, Costa Rica offers a stable and trusted base for expansion. This GEOS guide explains what works, what to prepare for, and how to set up in one of Latin America’s most stable business environments.

Why Should You Expand to Costa Rica?

Costa Rica gives you a stable base in Latin America. The country offers attractive investment opportunities for both local and international businesses, supported by a favorable environment and incentives for investors. The country scores 60.8 on the GEOS Global Subsidiary Index, driven by political stability, strong talent, and steady foreign investment.

Costa Rica attracts foreign direct investment through policies such as tax incentives, free trade zones, and government programs that support business growth and export activities. When starting a business in Costa Rica, you get a predictable environment, but you should expect more paperwork and slower government processes.

Strong Access for Foreign Owners

Costa Rica allows 100% foreign ownership, earning an 8/10 on openness to foreign UBOs. Foreigners are permitted to establish and operate their own business in Costa Rica, with legal permissions in place that allow non-residents to fully own and manage a company.

Incorporation is straightforward for international investors. Recent rules now require many entities to register their beneficial owners. A third party can file the declaration with a notarized power of attorney, which helps move things along.

Deep Talent Pool and Cost Advantages

Hiring conditions are favorable when starting a business in Costa Rica. It boasts a skilled workforce, with many skilled workers who are well-educated and proficient in multiple languages, making them attractive to global companies. The country scores 8/10 for recruitment thanks to a strong bilingual workforce.

Costa Ricans are known for their strong work ethic and positive labor culture, which benefits foreign companies by supporting reliable and productive business operations. Labor costs stay well below North American levels. This makes Costa Rica a practical choice for service teams, shared operations, and technical roles.

Competitive Corporate Taxation

Costa Rica follows a territorial tax system, so only Costa Rican–source income is taxed. The corporate income tax rate is 30%, but smaller companies qualify for lower brackets. Micro and small businesses registered with MEIC or MAG receive major relief, including:

• 0% tax for the first three years
• Gradual increases between years four and six

Companies must also comply with value added tax (VAT) regulations, which require monthly filings and remittance of VAT collected on applicable goods and services. In addition to income tax, businesses are required to pay an annual tax, which may include municipal taxes and other mandatory fees related to education and culture.

A recent reform allows foreign passive income to be taxed when a company lacks local substance. Multinationals should note this when structuring new entities. Municipal taxes also apply and vary by location.

A Stable Democracy With Predictable Policy Direction

Starting a business in Costa Rica gives companies access to one of Latin America’s most future-focused markets. Costa Rica maintains one of the most stable political systems in the region. It holds a 3/5 Political Risk score and earns low risk ratings across economic and business factors. Public processes can move slowly, so many companies rely on local notaries to keep filings moving.

Key Sectors Driving Investment

Costa Rica leans heavily on tourism and services. Industry diversity is improving, but still limited (2/5 score). Even so, several high-value sectors stand out:

• Medical devices
• Electrical and aerospace components
• Packaged foods

Free trade zones now fuel most export activity. They also offer higher wages and attract steady foreign investment. In addition, Costa Rica’s free trade agreements facilitate international trade access and further attract investment by providing businesses with favorable conditions for exporting goods and services. Agriculture remains important, and tourism keeps expanding thanks to the country’s natural appeal.

A Strong Macroeconomic Outlook

Costa Rica has grown faster than the regional average for years. GDP rose 5.1% in 2023 and is expected to settle around 3.5% in 2025. Fiscal reforms helped stabilize public debt, and inflation should return to the 2–2.5% range. Monitoring market conditions in Costa Rica is essential for making informed business decisions and adapting to changes in the economic environment.

Considerations for Foreign Companies

Infrastructure still needs attention. About 37% of roads are in poor condition. Major logistics hubs also require upgrades. The energy system is clean but vulnerable during droughts due to heavy reliance on hydropower. When starting a business in Costa Rica, the choice of business location can significantly impact logistics, regulatory compliance, and operational efficiency.

Costa Rica also faces social pressures. Crime has risen, youth unemployment is high, and education outcomes lag OECD averages.

Bottom Line for Expansion

Costa Rica works well for companies that want stability, skilled talent, and access to the Americas. Territorial taxation keeps things simple, and labor costs remain competitive.

You should plan for slower government processes, but private-sector partners and notary networks help reduce delays. The country offers a strong foundation, especially for services, manufacturing, and export-focused operations. Strategic planning is essential to ensure long-term success when starting a business in Costa Rica.

Tax & Regulatory Environment

Costa Rica’s tax system is clear and structured, but companies should expect frequent filings and steady compliance work throughout the year. Obtaining a business license from the local municipality is a key legal requirement for operating a business in Costa Rica.

In addition to tax obligations, there are specific legal requirements for starting and operating a business in Costa Rica, such as business registration, obtaining necessary permits, and ensuring compliance with all relevant laws and regulatory frameworks.

The specific permits and licenses required may vary depending on the type of business, its location, and sector-specific regulations.

Filing and Accounting Requirements

When starting a business in Costa Rica, the basic steps for tax and accounting compliance include registering your company with the tax authorities, maintaining organized records, and submitting regular filings.

The country scores 6/10 for Tax & Accounting. Companies must submit VAT and income tax filings every month, which creates ongoing administrative pressure. Digital tools help, but several tasks still require manual steps, so organized record-keeping is essential.

Compliance and Annual Reporting

Costa Rica holds a 3/5 Compliance Reporting score because most entities must complete annual audited financial statements. These audits add time and cost and often require additional preparation for new entrants.

• Annual audits apply to most companies.
• Documentation must align with local accounting standards.

Payroll Costs and Social Charges

Employer costs stand out when starting a business in Costa Rica. Social charges add roughly 26% to gross payroll, reflected in the 4/5 Employer Payroll Contributions score. All companies must register with the CCSS, which manages pensions and healthcare. This adds another ongoing obligation and supports the 3/5 Pension Management score.

• Employer contributions: ~26%
• CCSS registration required for every company

Local Expert Insight

The Free Trade Zone Regime offers powerful tax benefits. Tax incentives in these zones include exemptions from import duties and the real estate transfer tax, making them especially attractive for foreign investors.

Eligible companies can access up to 12 years of exemptions on key taxes. The application process is strict, though. It involves multiple agencies, and compliance audits happen often.

• Up to 12 years of tax exemptions
• Multi-agency approval
• Regular compliance audits

Incorporation & Compliance Essentials

Setting up a company in Costa Rica is straightforward but still very manual. The key steps to incorporate a company in Costa Rica include choosing a legal structure, registering the business name, drafting and notarizing the articles of incorporation, obtaining a tax ID, and registering with the relevant authorities.

When choosing a legal structure, you will need to consider the main business structures available in Costa Rica, such as the limited liability company (Sociedad de Responsabilidad Limitada, or S.R.L.), which offers protection of personal assets and flexible management, and the sole proprietorship, which is simpler to set up but does not separate personal and business liability.

Most incorporations take 1–2 months, mainly due to notary schedules and tax authority processing times. The flow is predictable, yet several steps still rely on physical documents and in-person verification.

Local Representation Requirements

When starting a business in Costa Rica, companies must meet specific representation rules. Costa Rica scores 3/5 for Resident Director rules. Every company must appoint a local legal representative. Foreign directors may serve, but they must grant signing authority to someone based in Costa Rica so the company can respond to filings and notices without delay.

• Local representative required
• Foreign directors allowed with delegated authority

Original Documentation and Notarization

Costa Rica scores 2/5 for Original Paperwork because the process includes heavy notarization and apostille requirements for foreign shareholders. These steps add time and involve cross-border coordination.

A Costa Rican public notary plays a central role. They confirm identities, review bylaws, prepare the constitution deed, and file the company with the Registro Nacional. Forming a corporation in Costa Rica requires at least two shareholders, as this is the minimum number needed to legally establish a company.

A key update took effect on June 4, 2025. All legal entities must register a unique and verifiable email address with the National Registry. This email becomes the official channel for administrative and judicial notices.

It replaces the former requirement to appoint a resident agent when no local representative lived in the country. New companies must include this email in their incorporation deed. Existing companies must register it by June 5, 2026, or the Registry will stop processing filings.

Registered Address Requirements

Costa Rica scores 4/5 for Registered Address rules. Every company needs a local business address that can receive official notices. Many new entities rely on their legal or accounting provider during the first stage of operations.

Government Portal Sophistication

The TrámiteYa platform supports a smoother experience and earns a 4/5 score. It allows foreign individuals to upload documents, open digital files, and track immigration applications. The platform operates 24/7 and cuts down on long waits at government offices. Even so, company formation still requires notarial steps, so the process remains partly manual.

In-Person Travel Requirements

Costa Rica scores 2/5 for In-Person Travel. Several steps still require physical presence, including notary signings and most banking appointments. These requirements extend setup timelines, especially for companies whose directors or shareholders are abroad.

• Notary appointments often in person
• Banks frequently require the applicant to appear

Workforce & Employment Considerations

When starting a business in Costa Rica, it’s important to understand the country’s structured and protective labor environment. The country scores 6/10 for Employment Law Complexity because the rules are clear, but termination requires valid cause and can become costly if procedures are not followed.

When it comes to employees working under a business owner’s direction, Costa Rican law generally restricts employment to locals (Ticos) and emphasizes the importance of complying with local labor regulations. The framework favors employees in disputes, which is reflected in a 2/5 score for “Too Employee Friendly?”.

Labor Protections and Dismissal Rules

The labor code provides strong safeguards for workers. Employers must document cause for termination and pay severance when dismissals are not justified. These protections have expanded in recent years. 

A notable example is Law No. 10771, which took effect on November 12, 2025. The reform prohibits employers from denying leave or reducing salary when an employee must attend:

• Court proceedings
• Administrative processes before the Ministry of Labor
• Disciplinary actions within the Public Administration

Employees must provide either an advance summons or proof of attendance. This change strengthens workers’ ability to exercise their rights without financial retaliation and raises the bar for internal HR compliance. Companies with regional or global operations will need to align internal absence and paid-time policies with these rules.

Mandatory Benefits

Costa Rica scores 4/5 for Benefits. Employers must pay the aguinaldo (13th month salary) every December and provide paid vacation. These benefits, combined with social security obligations, shape the total cost of employment and influence workforce planning.

Union Activity

The 3/5 Union Score reflects moderate union presence. Unions are strongest in public services, utilities, and healthcare, and they play an increasingly active role in labor reforms—such as the push for Costa Rica to ratify ILO Convention 190, which addresses violence and harassment at work. This debate continues to influence workplace policy discussions and employee-rights expectations.

Population and Talent Availability

Costa Rica scores 2/5 for Population. The domestic market is small, which limits large-scale hiring for labor-intensive industries.

For those starting a business in Costa Rica or considering starting a small business in Costa Rica, it’s important to understand the local constraints. Legal ownership rules, complex labor laws, and bureaucratic steps can make running a small business more challenging than in some other countries.

Even so, the talent pool remains strong. The workforce is well-educated, and sectors like technology, shared services, and medical devices continue to attract foreign investors who value the country’s skilled professionals.

Onboarding and Social Security Compliance

Before hiring any employee, companies must register with the CCSS. This step is mandatory for payroll and healthcare contributions. Failing to register can delay onboarding and lead to fines. Local experts emphasize that CCSS registration should be completed before extending employment contracts.

• CCSS registration required before any hire
• Delays can affect payroll activation

Evolving Worker Protections

Costa Rica continues to strengthen employee safeguards through both local reforms and international commitments. The discussion around ratifying ILO Convention 190 has elevated expectations around workplace safety, gender-based protections, and anti-harassment policies. Unions and civil-society groups actively support this shift, signaling that employers should expect ongoing updates to workplace standards.

Talent Availability & Salaries

Costa Rica offers a strong professional talent base, especially in technology and life sciences. The country’s 3/5 Developer Talent score reflects a growing IT ecosystem centered around San José, Heredia, and Alajuela. This cluster continues to attract foreign investment and has helped expand the country’s pipeline of trained engineers.

Technical Talent and Specializations

Costa Rica now has more than 45,000 tech specialists, most of them concentrated in major IT hubs like San José, Heredia, Alajuela, and Cartago. Strong public and private investment in tech education has supported this growth and created a diverse skill set across the workforce.

Local engineers often work across multiple programming languages. Current estimates show:

• 15,000 developers specializing in JavaScript
• 14,000 in Java
• 10,000 in C# and Python
• 7,100 in .NET
• 6,300 in C++

This range of expertise makes Costa Rica appealing for companies building engineering teams or long-term development centers.

Business Talent in Finance, Marketing, and Sales

The country scores 3/5 for Finance, Marketing, and Sales talent. The bilingual talent pool is reliable, especially in shared services and customer-facing roles. The main gap is mid-level and managerial talent, which can be harder to source due to the country’s small population and high competition from multinationals.

Language Skills

Costa Rica scores 3/5 for Language. English proficiency among professionals is strong, especially within ICT roles, according to the EF English Proficiency Index. This reduces communication friction for global teams and supports collaboration across time zones. Still, Spanish is essential for legal filings, HR processes, and government interactions.

Sector Clusters and Salary Dynamics

Costa Rica’s tech and life sciences clusters around San José and Alajuela continue to grow. These hubs draw global companies and create access to specialized talent with strong English skills and international training.

Salaries in these sectors tend to be higher than the national average because large multinationals compete for the same talent, but overall compensation remains more cost-effective than in North America. Additionally, the low cost of living, affordable rent, and low operational expenses make Costa Rica an attractive destination for foreign investors and entrepreneurs looking to start a business.

Local Expert Insight

Local experts note that these clusters give foreign companies a strong base for hiring software engineers, analysts, and technical managers. For anyone starting a business in Costa Rica, partnering with local specialists is essential. They help navigate the hiring process, ensure compliance with Costa Rican regulations, and unlock the advantages of the local talent market.

The combination of bilingual skills, global exposure, and diverse technical expertise makes the country an attractive destination for both outsourcing and direct investment.

Financial & Banking Considerations

Costa Rica offers a predictable financial environment with moderate operating costs. Both local and international banks are available to provide a range of financial services and support for businesses in Costa Rica. The country’s 6/10 Average Budget score reflects that businesses can run efficiently compared to other Latin American markets, but they should still plan for conservative banking practices and detailed compliance requirements.

Banking Requirements and KYC Procedures

Costa Rican banks take a cautious approach when onboarding foreign companies. The 3/5 KYC Requirements score reflects strict identity checks for all shareholders and ultimate beneficial owners. Banks typically require in-person verification and a full set of supporting documents. Opening a business bank account is essential for managing company finances, ensuring legal compliance, and facilitating both local and international transactions.

A standard KYC process includes:

• Full identification details
• Proof of address
• Contact information
• Source-of-funds explanations
• Beneficial ownership details for legal entities

When opening a bank account, banks may charge a registration fee during the account setup process, which is a mandatory and variable expense.

Costa Rica’s AML rules derive from the country’s narcotics and anti-terrorism financing law, in force since 1998. For financial institutions and FinTech firms, the General Superintendence of Financial Entities (SUGEF) oversees AML controls and enforces customer due diligence. Most banks require these checks to be completed before a business relationship can begin.

While due diligence can be outsourced to third parties, the bank or regulated institution remains fully responsible for compliance. Outsourced providers must still meet local AML standards.

Expense Management and Accounting Rules

Costa Rica scores 3/5 for Expense Management. Companies must follow local GAAP (NIIF para PYMEs) for accounting and reporting. Expense documentation must align with tax rules and support monthly VAT and income tax filings.

For anyone starting a business in Costa Rica, monitoring and optimizing cash flow is essential. Strong controls help maintain liquidity, support compliance, and reduce financial risk. This makes organized processes critical, especially for companies operating across multiple jurisdictions.

Corporate Banking Environment

Local experts describe Costa Rican corporate banking as highly conservative. Account openings often take several weeks because banks review documents carefully and may request certified translations or apostilled records for foreign shareholders.

Banco de Costa Rica is a popular choice for business banking; to open an account there, you will need to provide company documents, proof of address, and identification for all shareholders. Delays are common when:

• Shareholder structures span several countries
• Documents are not recently issued
• Identity records require additional verification

In-person appointments are typically required, especially for signing final forms and completing identity checks.

Practical Considerations for New Entrants

Foreign companies should budget extra time for banking approval and ensure their corporate documents are fully legalized before submission. Preparing translations and apostilles early helps shorten review times. Because account opening is a prerequisite for payroll, tax payments, and vendor activity, early planning is essential.

Immigration & Work Permits

Immigration in Costa Rica is manageable but not fast. The Immigration Complexity Score of 3/5 reflects a system that is accessible, yet procedural. Companies need to plan ahead because immigration status links directly to hiring and payroll. Understanding your residency status is crucial, as it determines your legal ability to work or operate a business in Costa Rica.

For foreigners, obtaining temporary residency is typically the first step and is a prerequisite for work authorization. This process must be completed before you can legally work or start a business in the country.

Additionally, permanent residency is often required for long-term work authorization and deeper business involvement in Costa Rica.

Residency Before Local Employment

Work permits sit on top of legal residency. In practice, a foreigner needs residency in place before signing a local employment contract or going onto Costa Rican payroll. That timing affects when you can:

• Register the employee with the CCSS
• Enroll them in local benefits
• Start paying full local salaries and withholdings

This structure protects the local labor market but slows down onboarding for foreign hires.

Work Permits and Processing Times

Work permits are available for most executive and specialist roles, but approvals move slowly. Authorities review documentation carefully and expect consistent information across contracts, company registrations, and immigration files. Even with the TrámiteYa platform handling more digital submissions, many cases still require follow-up and extra clarifications.

Investor Residency for Executives

Foreign executives often choose Investor Residency Permits. For anyone starting a business in Costa Rica, these permits can streamline key steps, especially tax and CCSS registration. They do come with conditions. The applicant must show:

• A minimum capital investment; or
• Ownership in a Costa Rican business that meets the required thresholds

For companies building a long-term presence, using investor residency for founders or senior leaders can align immigration status, tax registration, and banking setup more smoothly.

Practical Takeaways for Employers

Immigration and hiring are tightly connected in Costa Rica. To avoid delays:

• Start residency and work permit planning before making an offer
• Choose the right route (employee permit vs. investor residency) based on role and ownership
• Build immigration timelines into project launch and hiring plans

Local experts consistently stress one point: treat immigration as part of your entity setup and HR strategy, not as a last-minute task.

Unique Costa Rica Expansion Insights

Costa Rica offers a welcoming environment for foreign investors, but expansion works best when you understand the local dynamics that shape how business gets done. Understanding the Costa Rica setting for business operations is crucial, as it involves navigating specific legal requirements, conducting thorough market research, and often collaborating with local partners.

When establishing a business in a foreign country, you must consider unique challenges such as legal compliance, financial regulations, and logistical hurdles that differ from your home market.

To succeed long-term, it is essential to continuously monitor and optimize business performance to maintain a competitive edge and adapt to the evolving Costa Rican market.

The Central Role of Public Notaries

Notaries are not just document certifiers — they are core operators in Costa Rica’s legal system. Every incorporation must go through a Costa Rican public notary, who drafts deeds, verifies identities, and files the company with the Registro Nacional. Because of this structure, timelines often depend on notary availability and the strength of your local intermediaries.

Sustainability as a Competitive Edge

Costa Rica’s commitment to renewable energy and carbon-neutral goals gives the country a clear advantage for ESG-focused companies. For organizations starting a business in Costa Rica, this sustainability framework strengthens brand positioning and aligns easily with global reporting standards.

• Nearly all electricity generated from renewable sources
• Long-term national targets for carbon neutrality
• Strong brand value for companies prioritizing ESG impact

Digital Government Transition

Costa Rica is phasing out paper filings and introducing more digital processes. It’s a gradual shift, so businesses still juggle a hybrid system. Digital changes include:

• Wider use of digital signatures
• More online submissions and status checks
• Reduced long-term compliance time, once fully implemented

Despite this progress, notaries remain involved in most core filings.

Relationship-Driven Bureaucracy

Administrative procedures advance more quickly when managed by respected local intermediaries. Working with local partners and business consultants can simplify legal registration, help navigate regulatory requirements, and provide valuable insights into Costa Rica’s cultural and regulatory nuances.

This affects everything from tax filings to bank onboarding, where banks often respond faster when documentation comes through known channels. The specific permits and licenses required will depend on the type of business, location, and sector-specific regulations.

• Local relationships help prevent back-and-forth delays
• Especially important for CCSS registration and corporate banking
• Common accelerator for foreign-owned entities

How GEOS Simplifies Your Expansion into Costa Rica

GEOS removes much of the friction from entity setup. Incorporation runs through vetted notaries, ensuring filings move cleanly through the Registro Nacional. GEOS also handles your registered address, keeps the entity compliant, and coordinates with banks and the CCSS to minimize delays.

AI-Powered Support Through Geovanna

Geovanna automates reminders, tracks compliance deadlines, and guides you through Costa Rica’s mix of digital and manual procedures. She keeps filings on schedule and reduces the administrative load on your local and global teams.

Is Costa Rica the Right Fit for Your Business?

Costa Rica’s GEOS Global Subsidiary Index Score of 60.8 reflects a balanced environment: stable governance, attractive operating costs, and strong bilingual talent. For companies starting a business in Costa Rica, this combination creates a dependable foundation for long-term growth.

Notarial dependencies and manual procedures still shape the business landscape, but the country’s sustainability policies and Free Trade Zone benefits offer clear advantages for service-oriented and tech-driven companies.

📩 Contact GEOS for a customized expansion plan.

This article does not constitute legal advice.