Incorporating May be the Answer

A corporation (Sociedad Anónima) is a commonly used figure of Mercantile Law in Costa Rica. Corporations are often used to acquire goods such as properties and vehicles, because it is fairly easy to form one and there are several advantages to registering a good in a corporation as opposed to a "regular" person.

Some of the advantages are:

1. Responsibility

   
   
   It is recommended that each good be registered under a different corporation. This way the entity’s civil responsibility, should there an event that generates this responsibility (such as an accident), falls exclusively on the good(s) that belongs to the corporation This way, the owner of the corporation and his/her assets cannot be pursued.



2. Non-Payment of Transfer Taxes

   
   
   When you make a transaction with your property in a corporation (sale, transfer, donation), you only have to sign over the corporation’s shares to the new owner and register the naming of the new representative that the shares determine. This avoids the need to pay transfer taxes and legal stamps for inscription each time the property is economically moved to a different person or company.



3. Anonymity of Shareholders

   
   
   The new property represented by the corporation remains off the legal books that the corporation must have, and the property is not registered. This guarantees anonymity for the shareholders.



4. Passing down in life

   
   
   In the case of passing properties down, it is less expensive to sign over shares in life to the person you wish to have your property when you die, than it is for your relatives to open a probate proceeding (which is an expensive, lengthy process in which interested third parties could participate).

It is important to take into account that upon acquiring a property that is registered under a legal entity that you seek advice from a well-known or trusted attorney. He or she should make sure that the property has no previous debts that could place the property in question in danger. The notary or attorney will research the property’s previous movements in the Registro de Personas Jurídicas (Corporate Registry) and ask for financial statements and tax declarations from he or she who will sign over the shares.

It is true that the cost of setting up a corporation before acquiring a property is an additional expense. However, in the long run it becomes a more versatile and less onerous alternative for economic activities with the property, as it involves the additional attraction of not having to pay transfer taxes, as well as the immediate transfer of the property.

Courtesy of Costa Rica Traveler. Published with permission.