Other than these two taxes, is there anything else that needs to be done annually to keep Costa Rican S.A.s and S.R.L.s up-to-date?
I never paid the Timbre de Educación y Cultura in March. What's the easiest way to pay that?
<hr><table border="0" cellpadding="2" cellspacing="2" width="605"><tbody><tr><td colspan="2" rowspan="1" align="center" valign="top">[SIZE=+3]Tax tips for expats who want a comfortable holiday[/SIZE]
</td> </tr> <tr> <td valign="top" width="300">
Here is the help one needs for this year's tax season. Most expats hold their Costa Rican assets in a company. Whether it be a sociedad anónima or asociedad de responsabilidad limitada — also known as an S.R.L. or in Gringo speak an L.L.C. — expats have tax obligations like Costa Ricans. However, most expats use inactive companies to hold the assets, and tax obligations are different for active and inactive companies.
Active companies are those that perform some commercial activity and receive revenue. These companies must file Costa Rica tax form D-101 by Monday, Dec. 15. Any taxes due also must be paid by this date.
Inactive companies are those that may only hold assets and only exist for that purpose. The asset could be properties or vehicles. These companies do not need to file any form or pay any tax by the filing date mentioned above. This is a great relief for most expats because they only have inactive companies and not active ones. However, it is very important to check to see if a company is considered active or inactive by the tax department, Dirección General de Tributación.
Here is how to check: 1.) go to the "Sistema de Identificación de Contribuyentes," the taxpayer identification system, 2.) in the section at the bottom of the Web page called "Consulta de Personas Jurídicas" type in the company's cedula number or company identification number. Do not use dashes. Just type the string of numbers with no spaces and/or the company's razón social, the company name, and 3.) then click buscar, "find" button under the box.
The Web page will then return the following information under the box: 1,) sin obligaciónes, meaning the company is inactive and has no tax obligations, 2.) con obligaciónes, meaning the company does have tax obligations, or 3.) no hay registros en el rango solicitado, meaning there are no records on file for the company.
If the company being checked is sin obligaciónes, it is inactive. If that information is correct, and the company only holds assets and is truly inactive, one can go back to having morning coffee. Everything is the way it should be and nothing needs to be done. No tax form needs to be filed, and no taxes are due until March when the pesky education and culture taxes, Timbre de Educación y Cultura, needs to be filed and paid.
If the result is con obligaciónes, and one is running a commercial enterprise, the person in charge has to get those tax forms filed and to pay the tax before the deadline. Sometimes the tax people make a mistake, and a company is con obligaciónes when it should not be. If this happens, the responsible party needs to file form D-140, Declaración de Desinscripción del Registro de Contribuyentes. a "declaration to unregister as a taxpayer," with the tax department to put it in an inactive status.
Finally, if the company is not registered at all because the No hay registros en el rango solicitado message appears, the company is not properly registered with the tax department. One should register the company using form D-406, Solicitud de Legalización de Libros, solicitation to legalize books.
There was a time the tax people wanted all companies to file tax forms but no more. The tax department actually legalized all company books for all companies until last year, now they will not even accept accounting books, only legal books for registration. Today, it is very important not to file a tax form for an inactive company because by doing so the company is automatically made active and con obligaciónes.
</td> <td valign="top">
The fact that the Dirección General de Tributación will no longer legalize accounting books is somewhat in contradiction to the Costa Rican Commercial Code Article 251, which states that corporate entities must have legal accounting books. Most expats know that Costa Rica is a land of contradictions and that multiple interpretations exist of the law and rules, so one just needs to go with the flow.
All companies should have an annual meeting according to the commercial code where a balance sheet is presented and discussed among shareholders. In practice, for inactive companies, the meeting event usually does not take place physically. A minute act is written into the shareholders' book that one did take place somewhere and the shareholders sign the book from time to time. If these minutes do not exist, most legal books are blank for inactive companies, they should be consolidated into one entry where the shareholders approve the current state of affairs of the entity including its balance sheet.
Expats working in Costa Rica who make an income and who are not on a company payroll should register with the tax department as individuals, file and pay taxes. The Dec. 15 tax deadline also applies to them. However, many expats are in Costa Rica working illegally and do not register or pay the taxes they should pay. In essences, they are working illegally and are evading taxes as well. In the past, few have been caught because the cross checking system has not been very good. This will significantly change for the 2009 tax year, and expats who are not paying their due will surely be increasing their exposure to being caught and charged with hefty fines.
To enjoy the Christmas holidays, get the tax obligations out of the way early. There are only seven filing days to Dec. 15. Usually, the banks that take tax forms (Some do and some do not) have long lines during the last days. This year those would be Friday, Saturday and of course Monday of next week, the final day. Some banks get into squabbles with the tax authority and decide not to receive the forms. The best advice is to try one bank and then another until one is found that will take the D-101 income tax form.
Remember, inactive companies do not need to file. All expats should take the time to check out their companies to see if they are properly registered.
<small>Garland M. Baker is a 36-year resident and naturalized citizen of Costa Rica who provides multidisciplinary professional services to the international community. Reach him at info@crexpertise.com. Baker has undertaken the research leading to these series of articles in conjunction with A.M. Costa Rica. Find the collection at http://crexpertise.info, a complimentary reprint is available at the end of each article. Copyright 2004-2008, use without permission prohibited.</small></td></tr></tbody></table>
I never paid the Timbre de Educación y Cultura in March. What's the easiest way to pay that?
<hr><table border="0" cellpadding="2" cellspacing="2" width="605"><tbody><tr><td colspan="2" rowspan="1" align="center" valign="top">[SIZE=+3]Tax tips for expats who want a comfortable holiday[/SIZE]
</td> </tr> <tr> <td valign="top" width="300">
By Garland M. Baker
Special to A.M. Costa Rica
Special to A.M. Costa Rica
Here is the help one needs for this year's tax season. Most expats hold their Costa Rican assets in a company. Whether it be a sociedad anónima or asociedad de responsabilidad limitada — also known as an S.R.L. or in Gringo speak an L.L.C. — expats have tax obligations like Costa Ricans. However, most expats use inactive companies to hold the assets, and tax obligations are different for active and inactive companies.
Active companies are those that perform some commercial activity and receive revenue. These companies must file Costa Rica tax form D-101 by Monday, Dec. 15. Any taxes due also must be paid by this date.
Inactive companies are those that may only hold assets and only exist for that purpose. The asset could be properties or vehicles. These companies do not need to file any form or pay any tax by the filing date mentioned above. This is a great relief for most expats because they only have inactive companies and not active ones. However, it is very important to check to see if a company is considered active or inactive by the tax department, Dirección General de Tributación.
Here is how to check: 1.) go to the "Sistema de Identificación de Contribuyentes," the taxpayer identification system, 2.) in the section at the bottom of the Web page called "Consulta de Personas Jurídicas" type in the company's cedula number or company identification number. Do not use dashes. Just type the string of numbers with no spaces and/or the company's razón social, the company name, and 3.) then click buscar, "find" button under the box.
The Web page will then return the following information under the box: 1,) sin obligaciónes, meaning the company is inactive and has no tax obligations, 2.) con obligaciónes, meaning the company does have tax obligations, or 3.) no hay registros en el rango solicitado, meaning there are no records on file for the company.
If the company being checked is sin obligaciónes, it is inactive. If that information is correct, and the company only holds assets and is truly inactive, one can go back to having morning coffee. Everything is the way it should be and nothing needs to be done. No tax form needs to be filed, and no taxes are due until March when the pesky education and culture taxes, Timbre de Educación y Cultura, needs to be filed and paid.
If the result is con obligaciónes, and one is running a commercial enterprise, the person in charge has to get those tax forms filed and to pay the tax before the deadline. Sometimes the tax people make a mistake, and a company is con obligaciónes when it should not be. If this happens, the responsible party needs to file form D-140, Declaración de Desinscripción del Registro de Contribuyentes. a "declaration to unregister as a taxpayer," with the tax department to put it in an inactive status.
Finally, if the company is not registered at all because the No hay registros en el rango solicitado message appears, the company is not properly registered with the tax department. One should register the company using form D-406, Solicitud de Legalización de Libros, solicitation to legalize books.
There was a time the tax people wanted all companies to file tax forms but no more. The tax department actually legalized all company books for all companies until last year, now they will not even accept accounting books, only legal books for registration. Today, it is very important not to file a tax form for an inactive company because by doing so the company is automatically made active and con obligaciónes.
</td> <td valign="top">
The fact that the Dirección General de Tributación will no longer legalize accounting books is somewhat in contradiction to the Costa Rican Commercial Code Article 251, which states that corporate entities must have legal accounting books. Most expats know that Costa Rica is a land of contradictions and that multiple interpretations exist of the law and rules, so one just needs to go with the flow.
All companies should have an annual meeting according to the commercial code where a balance sheet is presented and discussed among shareholders. In practice, for inactive companies, the meeting event usually does not take place physically. A minute act is written into the shareholders' book that one did take place somewhere and the shareholders sign the book from time to time. If these minutes do not exist, most legal books are blank for inactive companies, they should be consolidated into one entry where the shareholders approve the current state of affairs of the entity including its balance sheet.
Expats working in Costa Rica who make an income and who are not on a company payroll should register with the tax department as individuals, file and pay taxes. The Dec. 15 tax deadline also applies to them. However, many expats are in Costa Rica working illegally and do not register or pay the taxes they should pay. In essences, they are working illegally and are evading taxes as well. In the past, few have been caught because the cross checking system has not been very good. This will significantly change for the 2009 tax year, and expats who are not paying their due will surely be increasing their exposure to being caught and charged with hefty fines.
To enjoy the Christmas holidays, get the tax obligations out of the way early. There are only seven filing days to Dec. 15. Usually, the banks that take tax forms (Some do and some do not) have long lines during the last days. This year those would be Friday, Saturday and of course Monday of next week, the final day. Some banks get into squabbles with the tax authority and decide not to receive the forms. The best advice is to try one bank and then another until one is found that will take the D-101 income tax form.
Remember, inactive companies do not need to file. All expats should take the time to check out their companies to see if they are properly registered.
<small>Garland M. Baker is a 36-year resident and naturalized citizen of Costa Rica who provides multidisciplinary professional services to the international community. Reach him at info@crexpertise.com. Baker has undertaken the research leading to these series of articles in conjunction with A.M. Costa Rica. Find the collection at http://crexpertise.info, a complimentary reprint is available at the end of each article. Copyright 2004-2008, use without permission prohibited.</small></td></tr></tbody></table>
