Does owning a Costa Rican S.A. (Sociedad Anonima) have to be disclosed on my United States tax return if I am still a United States citizen?
Yes. For those that are United States citizens, the U.S. tax law is fairly stringent on reporting income generated outside of the country, no matter where it might be. That applies to S.A. organizations as well as all U.S. citizens are compelled to disclose their business holdings if that person owns a 10 percent stake or larger in a particular organization.
Do I have to report on my United States tax return if I am a United States citizen my business dealings with an S.A. corporation even if I make no money and the company has not turned a profit?
Yes. You fall under the same requirements to disclose a 10 percent stake or larger in any foreign corporation, no matter if it is an S.A. or not and no matter if it makes a profit or not.
How can I find a Free Zone to operate in if I want to bring my business to Costa Rica?
Meléndez & Bonilla would be glad to help you develop a list of potential sites for your business. Most Free Zone sites have some kind of publicity push and many have their own web pages that can be searched for and found with a few keyword searches online. For a full list, you can consult the Costa Rican government web site or contact Meléndez & Bonilla for assistance.
Can I perform business transactions in Costa Rica without being a resident of Costa Rica?
Yes, but you have to organize a corporation in Costa Rica to do so. Organizing an S.A. or other corporation in Costa Rica can not only give the ability to do business there, but provides the ability to do corporate banking there as well, often a significant perk. Meléndez & Bonilla is greatly experienced in these dealings and can certainly help you set up an organization within Costa Rica.
Is it really true that I am subject to no tax if my Costa Rican investment grows in value?
Yes. There is no capital gains tax in Costa Rica and as long as your business function within Costa Rica is not solely to invest in other opportunities, you can avoid any tax on the appreciation of your investment. This is one of the prime reasons foreign investment has grown in Costa Rica over time and remains a popular investment opportunity.
Do I have to claim Costa Rican income on my United States tax return if I am still a United States citizen?
Yes. The United States has requirements that you list all of your earnings, no matter where those earnings take place. However, personal earnings that are generated overseas only become taxable above $78,000 each year for a single person and $144,000 for a married couple. Conversely, Costa Rica does not perform any kind of income tax assessment on earnings that take place outside of Costa Rican borders. Costa Rican income tax payments are only made on earnings generated within Costa Rica.