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Investing In Costa Rica

Investing In Costa Rica

Costa Rica is a favorable destination for foreign investments. Its business-friendly policies combined with a growth strategy to attract foreign investors make it the third most important economy in Latin America. It boasts a beautiful tropical climate while located below the hurricane belt. The country successfully marketed its green brand worldwide. In 2021, Costa Rica joined the Organization for Economic Cooperation and Development (EOCD), making it the first country in Central America to do so.

The political stability of Costa Rica also encourages investment. It is the oldest continuous democracy in Latin America. In addition, Costa Rica has a well-educated workforce and a relatively young population. Approximately 47% of Costa Ricans are under the age of 30.

In the last two decades, Costa Rica has diversified its economy. From relying on agricultural activities, it takes pride in its advanced manufacturing and business services sectors. The tourism sector has also flourished as the country’s tropical beauty gains popularity with travelers.

Why Invest in Costa Rica?

There are several reasons Costa Rica has one of the highest levels of foreign direct investment (FDI) per capita in Latin America.

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First, the Costa Rican government prioritizes attracting and retaining quality foreign investments. Two organizations — the Foreign Trade Promotion Corporation (PROCOMER) and the Costa Rican Investment and Development Board (CINDE) — lead Costa Rica’s investment promotion efforts.

In addition, the Tourism Institute (ICT) attracts potential investors to Costa Rica’s expanding tourism sector. Travelers have a choice of two international airports. Namely, Daniel Oduber International Airport in Liberia serves the Guanacaste region, including the Pacific coast, while Juan Santamaria International Airport is in San Jose, the capital of Costa Rica. There are direct flights from 17 countries in the Americas and Europe.

Equally important are its laws to encourage investment. In Costa Rica, the same rules apply to foreign and local investors. It has free trade agreements in place with 49 nations. As a result, 87% of exports go to countries with which Costa Rica has a free trade relationship.

Can Foreigners Invest in Costa Rica?

Costa Rica welcomes foreign investments from individuals and corporations. More than 250 international companies do business in Costa Rica, including multinational companies, such as Sony and Coca-Cola.

When launching a new business, foreign investors abide by the same rules as local investors. To open a business in Costa Rica, an expat needs a visa and passport, at a minimum. Tourist visas are valid for only 90 days and often difficult to renew, so it is best to apply for temporary or permanent residency.

Permanent residency is expedited by financing at a certain level. For example, investors can achieve permanent residency for an investment of $200,000 in business development or a home purchase. Besides the initial investment, an applicant must reside in Costa Rica for six months or more each year to qualify for residency. After three years, the investor may submit an application for permanent residency.

Nevertheless, starting a business does not mean an investor can work in Costa Rica. The country has rules to protect its workforce. Having said that, while the investor can run the business, local employees must work there.

Costa Rica is also looking to attract digital nomads. Currently, a law is working its way through the Costa Rican legislator that would allow remote workers to obtain a work permit for one year. It would also be extendable by a year.

Foreign entrepreneurs should consult qualified Advisors in Costa Rica to help navigate required permits, establish bank accounts, and other tasks.

Top Business Investments for Foreigners in Costa Rica

When it comes to business investments, growing sectors in Costa Rica include the following:

  • Manufacturing: This includes life sciences products like pharmaceuticals, biotechnology, and medical technology. This sector also includes food and agricultural technology along with light and advanced manufacturing.
  • Knowledge-intensive services: IT services and software development are part of this category. It also includes creative industries like gaming and animation, digital marketing, and engineering and design. Corporate and business processes round out this sector, as well. These include logistics and supply chain, consulting, and technical support.
  • Health and wellness: Personal care and nutraceuticals share this category with sustainable tourism.

However, there are restrictions on foreign investments. Foreign investors are not allowed to own state-owned enterprises, such as railroads, oil refining, utilities, and telecommunications companies.

Investing into Costa Rica Real Estate

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With its location between the Pacific Ocean and the Caribbean Sea, Costa Rica offers beautiful coastlines. Its scenic landscape features towering volcanoes, lush jungles, and ocean views. Progressive ecological policies help Costa Rica maintain an unspoiled beauty that attracts thousands of tourists each year. And some stay permanently.

For individuals, real estate is a popular Costa Rica investment. Reasonably priced health care makes Costa Rica a desirable retirement destination. Furthermore, the thriving tourism industry helps investors earn rental income with vacation homes.

This is what potential investors should know before making a real estate investment in Costa Rica:

  • Low property taxes: With a tax rate of 0.25% per year, Costa Rica has one of the lowest rates in the Caribbean.
  • Property buyers’ rights: Foreign property buyers have the same legal rights as locals.
  • Restricted areas: The first 50 meters measuring from high tide to inland can neither be bought nor sold, which protects the coastline from overdevelopment. After the first 50 meters, the next 150 meters is usually municipal property. Often, beachfront hotels or other commercial real estate is in this area. Some municipalities lease this land for 20-year terms. Foreigners who wish to lease in this area must share the ownership by 50% with a Costa Rican citizen.
  • Titles: Most real estate in Costa Rica has been registered and titled. It is easy to check the registrar to be sure the property is legal and free of liens. In the unlikely event you come across an untitled property, it is best to avoid it. The legal process to settle claims can take years.
  • Buyer financing: Foreign buyers are not usually eligible for a mortgage in Costa Rica. Most lenders require borrowers to be legal residents of the country. In some cases, major developers provide seller financing.

Investing in the Costa Rica Stock Exchange

Costa Rica’s national stock exchange, known as the Bolsa Nacional de Valores, is small and dominated by bond trading, where only about 60 companies list stocks. For those who wish to obtain permanent residency, negotiable instruments and shares are counted toward the investment total required. As a result, the stock exchange could be the most difficult way for foreigners to invest in Costa Rica. Investors who prefer this option should find a brokerage that specializes in the region.

Learn More about Investment and Migration Opportunities in Costa Rica

Although smaller in pure geographic size than 75% of U.S. States, Costa Rica contains more biodiversity than most of the Americas. It also has a stable economic and banking structure that has simply been bolstered by both national and FDI over the years. Investing in Costa Rica is certainly an exotic option, but this carries certain elements of risk and it is important to make informed decisions.

Dig-deeper into related topics about investing and residing in Costa Rica. Browse qualified, bilingual experts and request consultations to address your specific questions.

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