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Costa Rica: Types of Company

Foreign Corporation

Foreign corporations can operate in Costa Rica either through a branch or a subsidiary. A branch must register under article 226 of the Commercial Code by presentation to the companies registry of a shareholders' resolution whose authenticity has been verified by the Costa Rican consul in the foreign corporation's domicile.

No such procedure applies when a foreign parent wishes to incorporate a subsidiary (ie as a stock corporation, see above). Subsidiaries receive more favorable tax treatment than branches, which suffer withholding tax on all remittances to their parent.

If a foreign company uses the re-domiciliation procedure rather than creating a new local subsidiary, it will remain subject to the laws of its original domicile as regards its articles, although Costa Rican law will apply in various respects, including of course taxation.



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