Corporate Structuring for Property Investment

Property in Costa Rica is frequently held through a corporation. Done well, that structure serves asset protection, succession planning and transfer efficiency. Done carelessly, it transfers somebody else’s problems to you along with the land.

Buying the company that owns the property

It is common to be offered the shares of the corporation rather than the property itself, often framed as a way to save on transfer taxes. What is rarely explained is that acquiring the company means acquiring everything else the company carries: its tax history, its unfiled returns, its debts, its prior obligations, its corporate-book irregularities.

Sometimes the share purchase is the right structure. It should be a decision made after review, not a shortcut accepted at the closing table.

What we handle

Formation of Costa Rican corporations and limited liability companies, governance and legal representation structure, shareholder registry and corporate books, annual obligations including the corporate tax and the transparency and beneficial ownership registry, restructuring of existing holdings, and coordination with foreign counsel on cross-border tax exposure.

Personal name or company

Holding property in your own name is simple and has no annual corporate cost. Holding it through a Costa Rican company separates the asset from your personal affairs, allows several owners to define their rights through shares and corporate agreements, and can make succession considerably easier, because what passes to your heirs is the shares and not the registered property.

A company also brings obligations. It must keep legal books, maintain a legal representative, pay the annual corporate tax, file its beneficial ownership declaration and, even when it only holds a house, file the tax returns that apply to it. A company that falls behind cannot register documents at the National Registry, which tends to be discovered at the worst possible moment: when the owner wants to sell. A company that leaves the corporate tax unpaid for three consecutive periods is exposed to dissolution.

If the property will produce rental income

A property that is rented, particularly on short-term platforms, is an economic activity. It has to be registered with the tax administration, it charges VAT where applicable, and it pays income tax under the regime that fits the operation. The structure should be decided before the purchase, because moving a property from one owner to another afterwards is a new transfer with its own cost.

Frequently asked questions

S.A. or S.R.L.?

Both limit liability. The sociedad anónima requires a board of at least three people and a statutory examiner; the sociedad de responsabilidad limitada can be run by a single manager and restricts the transfer of quotas to third parties. For most foreign owners holding one or two properties, the S.R.L. is simpler to keep in order. We recommend one after we know who the owners are.

Can my U.S. or Canadian LLC hold the property?

A foreign entity can own Costa Rican property, but to act here it has to prove its existence and representation with apostilled and translated documents every time, which is slower and more expensive than acting through a local company. We review it case by case with your tax adviser at home.

Does owning a Costa Rican company affect my taxes at home?

It may create reporting obligations in your country of residence. We do not advise on foreign tax law; we coordinate with your accountant or tax counsel so that the Costa Rican structure does not produce a surprise on the other side.

I was offered the shares instead of the property. Is that acceptable?

It can be, after a review of the company that is as careful as the review of the land: tax filings, debts, litigation, books and every act of its past representatives. If the seller cannot produce that history, buy the property and not the company.

Can you keep the company in good standing for us?

Yes. We handle the annual filings, the corporate books and the legal representation requirements for clients who live abroad.

Munduss Legal — José David Garro Castro, Attorney at Law and Notary Public. Office in Tamarindo, Guanacaste. Request a consultation.