Expats are by nature intrepid sorts, willing to decamp from their home, ready to set up a new life in a new country. So it’s no surprise that many are also daring in business, willing to commit to a new idea or product, throwing time, effort and money into turning a profit.Some expat destinations are great at incubating young businesses to give them the best start. One country that does particularly well is Costa Rica.
Small, rugged and jungle-covered, the Central American country has both Caribbean and Pacific coasts, along with some of the world’s richest biodiversity. It’s hardly surprising that with 19 percent of expats in Costa Rica running their own business, many focus on eco-tourism and adventure sports.
The country’s name is a good omen for future business fortunes, translating literally as ‘rich coast’, a promise the country keeps. With near universal literacy, widespread English, political stability and reliable infrastructure, Costa Rica promises almost everything a new business could need to find its feet.
With high-speed internet and widespread mobile phone signal, the leadership of Costa Rica have been forward-looking with development and are still looking to the future. The government has committed to making the country carbon-neutral by 2020.
The country is famed for its friendly tax regimes, with individuals paying a flat rate of 10 percent and businesses 30 percent. However, smaller ventures can seek exemptions and allowances depending on their turnover.
Incentives also exist for larger enterprises, with zonas francas or free trade zones offering tax breaks for big companies. A business on one of these zones which has assets of more than USD$150,000 is exempt from import tax, capital tax and even income and real estate taxes.
One of the few limiting factors about working in Costa Rica is that expats are more than welcome in the economy, provided that they don’t take a job that would otherwise be open to a local person. And when employing locals, strict rules on minimum wages, pension contributions and health insurance must be followed. These costs can quickly add up.
This puts a lot of pressure on businesses to prove that any expats they sponsor are essential and provide a level of expertise that cannot be found in the country. For this reason alone, setting up shop on your own may seem like an attractive option.
Setting up a business in Costa Rica is relatively straightforward; and getting to stay there is even easier. In order to get residency in the country, it isn’t always necessary to start a venture from scratch.
Many countries in the Caribbean offer ‘citizenship by investment’ schemes. Simply put, this means you can buy your right to stay in the country for life by chucking money at the economy. In most cases, this means getting a national passport in exchange for financial investment in a government-sponsored business.
Costa Rica offers a variation of this, with a generous and relaxed alternative. Although it grants the right to reside rather than full passport-holding citizenship, the Residency by Investment scheme allows expats to put USD$200,000 into any business or real estate purchase of their choice. Where similar schemes provide a limited list of businesses, Costa Rica allows expats to choose freely, and even to break down the amount into separate investments.
Residency by Investment then allows holders to come and go as they please, provided they stay in the country at least one day per year. After three years, they can apply for full citizenship.
Of course, not every expat has USD$200,000 of ready capital at hand, and many who do are looking for the challenge that a new business offers.
Starting a business in Costa Rican is relatively simple. It can even be done when visiting on a 90-day tourist visa. As a business owner, you’ll still need to duck back out of the country to renew that visa. There are two other visa options which also give the right to own a business in the country.
The pensionado visa was intended for retirees who wanted to enjoy a relaxed retirement in the sun. However, there is no minimum age requirement to obtain this visa. What the rules do insist on is proof of a guaranteed income of USD$1,000 per month for your entire life. This is usually from a pension or welfare fund, but rental income from properties can also be used.
Although the pensionado visa bars holders from being employed, it doesn’t prevent them from starting their own businesses. Another positive is that the income requirement applies to just the visa applicant, who can then bring along spouses and dependents at no extra cost.
The next visa to consider is the rentista, which requires an income of USD$2,500 or a bank deposit of USD$60,000 into a Costa Rican account. After two years, income must be proved again, or another deposit made. Again, rentistas cannot work for a business, but are entitled to own and run one.
All visas require enrolment into CAJA, the Costa Rican health service, which should be no hardship. For minimal cost, you’ll get access to one of the best healthcare systems in the Americas and pay nothing for any treatment you receive.
Actually getting a business started is relatively painless; a trip to a lawyer can see the name formally registered, plus it must also be listed for taxation, although deductions may apply later. Permits are also readily available from the ministry of health and the local municipality.
The biggest challenge faced by expat entrepreneurs is employing staff once that business grows. The same restrictions that prevent some expats from working mean that no more than 10 percent of any business can employ international workers. So when things start to grow, you’ll need to hire Costa Rican people in order to keep the business going.
Although Costa Rican taxes are low and friendly, expats may find their overseas income is taxable by their home governments. This will vary depending on where you come from, so research this thoroughly.
Costa Rica is a beautiful nation that offers rich opportunities for budding businesses. Costa Rica is nicknamed the ‘friendly nation’, and you won’t find many countries as business-friendly elsewhere in the world.