Required Disclosure of Corporate Shareholders

Several changes have been implemented by government entities in an effort to combat money laundering and other illegal business practices, and to locate foreign assets of US citizens living abroad. It doesn't matter if you are from Canada or Europe, if you own a corporation, you are required to comply.

Most recently, the Costa Rica Department of Revenue and the Institute for Drug Control published regulations (DGT-ICD-R-14-2019) in the official government newspaper La Gaceta on April 3, 2018 (Alance # 78 Gaceta N. 66). This law requires the mandatory disclosure of the shareholders and or beneficial owners of any corporate entities registered in Costa Rica.

The filing obligation was originally set for March of 2019, so this should not be a surprise. The tax department extended that deadline to September of 2019 so that they could publish the corresponding regulations and procedures for compliance and get the word out to the public. Unfortunately this law came into effect before many expats have come back to their winter residences in sunny Costa Rica.  Even though you may not have heard of it, you are still required to comply with the law.

The objective of this law is to identify all the shares of each legal entity registered in Costa Rica and then disclose the direct shareholders or the beneficial owners of those shares. Costa Rica has implemented this law to comply with the recommendations of the OECD (Organization for Economic Cooperation and Development). This international organization promotes global tax transparency and exchange of information among members.

In order to comply Costa Rica passed a law which mandated the creation of this shareholder registry, the law to Combat Tax Fraud or Ley para mejorar la lucha contra el fraude fiscal (Ley N° 9416 del 14 de diciembre de 2016).

This law applies to all corporations in Costa Rica. The legal representative of the corporation has the legal obligation to file the declaration disclosing shareholders and beneficial owners in a database created and managed by the Central Bank called the Transparency and Final Beneficiaries Registry.

The following are a list of who is responsible for completing the required registration.

• The President of the company for Costa Rican S.A. corporations (Sociedades Anónimas).
• The Manager or Assistant Manager for Limited Liability Companies (Limitadas or Sociedad de Responsabilidad  Limitada) 
• The Administrator for General Partnerships (Sociedad en nombre colectivo).
• The Manager for Limited Partnerships (Sociedad en comandita)
• The legal representative with power of attorney for Branches of Foreign Corporations in Costa Rica
• The Manager for Individual company with limited liability (Empresas Individuales de Responsabilidad Limitada)  

The good news is the forms can be completed online through the web portal of the Central Bank know as Central Directo.  That website is https://www.centraldirecto.fi.cr.

The bad news is the form must be completed in Spanish and requires a Digital Signature Card (Firma Digital).
    
The digital signature card is issued by the Costa Rica Central Bank either directly or through the following authorized banks in Liberia.

Banco Nacional de Costa Rica

Banco Bac San José   

Banco Popular y Desarrollo Comunal

or in San Jose through the above or:   

• Banco de Costa Rica
• Banco Central de Costa Rica
• Banco BCT
• Banco Lafise
• Banco Davivienda
• Banco Promérica
• Banco Scotiabank
• Coopealianza
• Coopenae
• Instituto Nacional de Seguros – INS

Only the authorized representative of the corporation can apply and they must have a residency card or be a citizen of Costa Rica. You must make an appointment by phone and at the time we checked in early September, Banco Nacional was giving appointments for November and Banco Popular had spots available in October, which would be too late if you are required to comply by the end of September or in October 2019. And note, the process to get the card is entirely in Spanish.

The order of filing is determined by the last digit number of your corporate entity as follows:

• Ending in 0 and 1 September 2019
• Ending in 2 and 3 October 2019
• Ending in 4 and 5 November 2019
• Ending in 6 and 7 December 2019
• Ending in 8 and 9 January of 2020

After this, all are required to file an ordinary declaration in the month of April 2020 and each subsequent year, or within 15 days any time there is a change made to the shareholder structure or benefits, as written in the shareholder books. Failure to comply, can result in a substantial fine.   

Luckily for those who are unable or ineligible to get a Digital Signature, there is another option.

Article 3 of the regulations allows that in addition to the legal representative you can designate one sole Limited Power of Attorney to do the registration.  The Power of Attorney must be to a physical person with specific authorization to to do the filing. The Notary Public would file the Power of Attorney with the Notaries digital signature card, allowing the power of attorney holder to complete the declaration.

The catch to the above being that the Power of Attorney needs to be granted in the presence of a Notary Public in a public deed (escritura publica), in other words, you need to be present in the country to grant the power of attorney. It is possible that this could be done through your local consulate, however we are unable to confirm this.

It is advisable to contact whoever setup the corporation initially, and discuss your options. Do not delay.