Maybe you have a reason to dissolve your Costa Rican corporation?
As many of you are aware, or certainly should be aware by now, the Costa Rica government imposed an annual corporation tax on all Costa Rican corporations. This is done by way of Law No. 9204 in 2012.
The date the law was implemented is important for two provisions that I will discuss in detail in this article. There are two options to dissolve your Costa Rican corporation:
(1) The permission for the legal representative of the corporation to unilaterally resign from the Board of Directors and
(2) The Dissolution of the corporation for non-payment of the corporation tax.
1. The Resignation of the Legal Representative
The first option to dissolve your Costa Rican corporation is the resignation of the legal representative. Since the Corporation Tax Law holds the legal representative personally liable for the corporation tax the law allowed a period of 2 years for the legal representative to resign from the corporation. The period to unilaterally resign expires on April 1, 2014.
The legal representative of the Costa Rican corporation can be
- The President
- Or any other officer or non-officer of the corporation that holds a Power of Attorney (Apoderado).
In order to resign, the legal representative must draft a resignation letter. The legal representative must deliver this resignation letter at the officially recorded legal domicile of the corporation. The corporation officer must then appear before a Costa Rica Notary Public. The notary public must certify that they delivered the resignation letter and request an extract of the resignation. The Notary must file this resignation in the National Registry of Costa Rica. Once the National Registry records the resignation it becomes effective against third parties.
The National Registry is supposed to charge 2,000 Colones in registry fees to record the resignation (This is pursuant to Article 2 of Ley de Aranceles del Registro Nacional). Likewise, the Costa Rican Bar Association imposes a minimum fee scale for a protocolization: 75,000 Colones. That is the minimum. So if a Notary Public wants to charge more they may do so if the client consents.
2. Dissolution of the Costarican Corporation For Non-Payment
The second option to dissolve your Costa Rican corporation is the dissolution for non-payment. Any Costa Rican corporation that has not paid the tax for 3 consecutive periods is dissolved administratively. That 3rd period of the corporate tax became due on January 31, 2014, which means corporations which had not paid any tax would become delinquent and subject to dissolution on February 1, 2014.
This has created a lot of confusion. The law did not specify the procedure or the notice to the corporation prior to dissolution. The most drastic assumption is that one day your corporation can be deleted from the corporate registrar for accumulating 3 tax payments.
The National register is currently drafting some guidelines to regulate the process. Possibly, therefore, the Costa Rican corporation can be stricken off the corporate registrar for non-payment of the corporation tax.
In any event, if your intent is to keep your corporation functioning then pay the corporation tax to avoid any surprises in the future.
Have you decided not to dissolve your corporation, and you are not a citizen or resident of Costa Rica? Then, you will need to comply with the new obligations for corporation owners. Click on the banner below to see how we can assist you in accomplishing this.
This article was written by real estate attorney Lic. Roger Petersen, Attorney at Law for the GoDutch Realty real estate blog. For more legal information visit his website.
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