Costa
Rica Regulatory Environment
The
Costa Rican Labour Code is a sophisticated piece
of employment legislation regulating the terms
and conditions of work, and has apparently been
successful in creating harmonious work-place conditions.
Perhaps as a result, trade unions have achieved
very little penetration into Costa Rican business,
and strikes are rare.
The
extensive and expensive Costa Rican social security
system amounts to a tax on employment of between
30% and 50% of gross salary (see Direct
Corporate Taxation), but has perhaps also
assisted in creating good employment conditions.
Costa
Rica Work Permits
Individuals
normally enter Costa Rica on a tourist or business
permit and upon arrival file a petition to change
their immigration status to a work permit or temporary
resident permit category. For those who obtain
their work permit before they arrive in Costa
Rica, the procedure is much more complicated,
requiring a great deal more documentation.
No
one can work in Costa Rica without first obtaining
a work permit, which may take between 30 days
and 60 days to process. A work permit cannot be
applied for until a residence permit has been
granted. Work permits are valid for one year and
require annual renewal. A temporary residence
permit may take 3 to 6 months to process.
The
following individuals may obtain a temporary working
permit in Costa Rica: scientists, professionals,
teachers, technicians and specialized staff hired
by companies or institutions based in Costa Rica;
businessmen and board members of national and
international companies. The work permit does
not at the time of writing, however, allow for
any accompanying family members.
A
company which has more than 30 employees can apply
for a general work permit enabling it to bring
foreign technicians and executives to work in
the jurisdiction without the need to make an individual
application for each person it wishes to engage
.Such a permit is valid for one year and must
also be renewed annually.
The
labor code limits the percentage of foreigners
working in each corporation, specifying that at
least 90% must be indigenous and that 85% of salaries
paid by a company must go to Costa Rican nationals.
Moreover foreigners cannot occupy jobs for which
Costa Rica nationals are available unless special
permission is granted.
Residence
can be obtained in one of 2 ways:
- Under
Law No 6982 of 1984 (known as "the Retirement
Law") a foreigner may acquire residence in
Costa Rica if he can show a sufficient income
whether from investments or from a pension
and irrespective of whether the income is
sourced locally or abroad. Residence obtained
under this law allows an individual to work
in Costa Rica but does not allow him to work
in areas which would have the effect of displacing
indigenous workers. A resident under this
law is expected to reside in Costa Rica for
at least 4 months in each calendar year.
- Residence
permits obtained under Law 1155 of 1950 (known
as "the Residence Law 1950") carry no restrictions
on the sorts of economic activity that a resident
permit holder can engage in. However permits
under this law are granted on a very selective
basis and only to businessmen and professionals.
In
March, 2004, the immigration agency (Migracion)
said that the migratory situation in Costa Rica
was “out of control” and that they
would in future be restricting residency approvals
to the minimum. Migracion began to apply an
economic criterion, stating in some cases that
an applicant 'would not add any input to the
economy of Costa Rica or create employment for
Costa Ricans'.
In
August, 2006, a
new immigration law (the General Law of Immigration)
had been passed by Costa Rican lawmakers aiming
to crack down on illegal immigration from neighbouring
countries, particularly Nicaragua, by, among
other measures, imposing tough penalties on
businesses that employ, or individuals that
harbour, illegal immigrants.
The
law also set out new income and investment limits
for rentistas, but was ambiguous. Previously,
rentistas were obliged to show a minimum monthly
income of US$1,000 per month, or a lump sum
of US$60,000 in a foreign bank account. Under
the updated law, it seemed that both the primary
applicant and the spouse must pass the US$60,000
test, while an extra $30,000 would be required
for each dependent. However, it seemed that
two separate sections of the legislation contradict
each other and confusion reigned.
The
new Costa Rica Immigration Law (Ley General
de Migración y Extranjería) was
published in the official Costa Rica government
newspaper La Gaceta on September 1, 2009. The
law is effective as of March 1, 2010, but is
not retroactive - i.e. pesionados and rentistas
who applied for or been granted residency prior
to this date will fall under the old immigration
regime.
The
new law creates 5 residency types as follows:
Pensionado
Rentista
- Must
have proof of USD2,500 per month in income guaranteed
by a bank;
- Can
claim spouse and dependents under 25 years of
age or older with disabilities;
- Cannot
work as an employee;
- Can
own a company and receive income;
- Cannot
be absent from Costa Rica more than 2 consecutive
years.
Inversionista
- Must
invest USD200,000 in any Costa Rica business
or a specified amount of investment in certain
Costa Rica government approved sectors.
- Can
claim spouse and dependents under25 years of
age or older with disabilities.
- Can
claim income from investment projects
- Can
own a company and receive income.
- Cannot
be absent from Costa Rica more than 2 consecutive
years.
Representante
- Open
to directors, executives, representatives, managers
and technical employees of companies meeting
certain requirements;
- Income
must exceed Costa Rica minimum wage for specified
position by at least 25%;
- Can
own a company and receive income;
- Cannot
be absent from Costa Rica more than 2 consecutive
years.
Permanent
- Must
be related to a Costa Rica citizen through marriage
or having a child, or may apply after 3 years
in another residency;
- Can
claim spouse and dependents under25 years of
age or older with disabilities;
- Can
work as an employee;
- Can
own a company and receive income;
- Cannot
be absent from Costa Rica more than 4 consecutive
years;
It
is important to note that under the new residency
law, all residency types must participate in Costa
Rica's national social security and healthcare
insurance system, know as “Caja”.
Proof of participation and payments for the entire
term of residency are required for renewals.
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