Resident associations are better off with formal setup

 

By: Garland M. Baker B.

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Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Plenty of expats are paying into an informal committee to maintain the security of their gated community or to keep up the subdivision roads and common areas.

These ad hoc community associations stumble over the smallest of details like opening a bank account because they do not have a formal structure. They generally rely on the good will of a few residents to keep the guards paid, the grass trimmed and the potholes fixed.

One expat expressed concern about the informal nature of his association when he called last week. He wanted to know some alternatives for his residential area.

Here's some good news amid the bad about taxes

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

A lot is happening on the tax front in Costa Rica. The news is not so good for locals and expats alike. All is not lost. There are a couple of facts related to taxes that are actually good news.

Most have already read about the proposed doubling of the tax on transferring real estate and the creation of a capital gains tax. One item that is particularly frightening for expats is the proposed 15 percent levy on money entering the country.

If the government does not want retired people to come here, they should place signs at the airports that state, “We welcome tourists. Please spend a lot of money in Costa Rica. People considering retirement, be forewarned you will be taxed to death.”

Scarier, the tax police desire even more power to catch tax dodgers. One of many things they want is the ability to ask doctors, dentists, lawyers and any other professionals about private client data. 

Windows 10 gives Microsoft control over privacy

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Expats retire to Costa Rica to get away from the hustle and bustle of life. The problem: Retirees usually bring a computer, tablet, and a smartphone along with them, so they can stay in contact with loved ones back home.  Most do not realize these devices are like sticking Orwellian big brothers in the goods they pack. 

Windows 10 was released last Thursday. The software is Microsoft’s latest version of its most popular operating system. In the first 72 hours after its introduction, 67 million computers received upgrades. That is 258 installs per second.

An expat living in Costa Rica, an expert in computers and Windows, related in an interview that upgrading from an older version of the operating system to Windows 10 is almost a breeze. He recommended making a good backup before starting the upgrade process.

The system is faster, more efficient and easier to understand. It is also designed from the bottom up to spy on its users. Here are some examples and instructions on how to turn off the prying eyes. 

Missing corporate books can lead to a freeze of assets

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Anyone with a company in Costa Rica is required to have legal books. The problem with them is they are easy to lose or misplace.  It is virtually impossible to do business or maintain a company without the books. If there are assets in a company with no books and no representation, they are locked up and unreachable. Even to legitimate owners.

It can be a big headache to replace them, especially if for some reason no legal representative exist in the company.

Attorney Allan Garro of Garro Law, found a catch 22 in the process to obtain new books and went to bat to clear up the confusion with the tax department and public registry.  He succeeded, and it is now possible to so.

Expats frequently are confused by insurance maze

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Many expats are trying to do right and want to cover their domestic and maintenance employees with benefits and insurance as mandated by the law. Many feel the system in Costa Rica is too complex to understand. In fact, it is for most foreigners and locals alike.

Costa Rican workers find the system complicated too. Others cannot cover themselves because it is overly expensive for them to do so.

Expats can be blindsided by injuries to employees

By: Garland M. Baker B.

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Having workers compensation for all employees is the law in Costa Rica. 

The top labor court of the country, the Sala II, and the constitutional court, the Sala IV, have ordered people to pay medical expenses, even lifetime allowances, to hurt workers when they are not individually covered by insurance.

People with domestic workers are among those who skirt the law.

Many do not understand their options to cover employees properly.

Here is a list of the different worker's compensation insurance options available from the Instituto Nacional de Seguros, better known in Costa Rica as INS.

Creating payroll is hard but the alternative is disaster

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Putting a worker on a new legal payroll as required by law is a pain. Not making an employee legal is asking for trouble. 

Recently, a young foreign couple moved to Costa Rica from Europe and needed a domestic worker for their family. They wanted the worker they hired to have all the benefits provided by the country. They decided to set up a legal payroll with the government.

To do so required making applications with the Caja Costarricense de Seguro Social, known to most as the Caja, and the Instituto Nacional de Seguros de Costa Rica or INS.

They were shocked at the paperwork to set up a simple payroll for one person. Here are the steps for the first part of the process, set up with the Caja:

Company operators may get a second chance

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

The legislature is cooking up a new tax law on companies. Of course, they are. The country does not want to lose any tax revenue. 

The Sala IV’s ruling of Jan. 28 found articles 1, 3 and 5 of Law 9024 unconstitutional. This sent a serious shock to the officials in charge of the government’s coffers. Many company operators just stopped paying the tax after the decision. These articles were the heart of the legislation.

Article 1, created the tax.  Article 3, set the tax amount and divided the payment into two types, one for active and another for inactive companies. Inactive entities pay 50 percent less than active ones. Article 5, set the sanctions and fines for not paying the tax.

 The Registro Nacional reports delinquencies rose to almost 60 percent in 2015 from around 40 percent in 2014 for active companies. Inactive companies rose to a whopping estimated 78 percent from last year’s 58 percent.

Condo ownership could harbor unexpected pitfalls

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Gated communities in Costa Rica are double-edged swords.  They usually give residents more security, but take away individual rights at the same time.  Ley 7933, Ley Reguladora de la Propiedad en Condominio, or the law to regulate condominium property, is to blame.

The problem: The voting rights of condominium associations. Article 27 of the law dictates 100 percent membership approval to change any article of incorporation or bylaw. This fact clearly violates the democratic principle that establishes the interest of the majority outweighs the minority. Years back, the Sala IV, Costa Rica’s constitutional court, upheld this inequity in the law, stating it was proportional and reasonable.

The owners in condominiums make up the homeowner's association. Elected officials from within the group lead it. This group can tweak little things of common interest to the whole group, but cannot change anything of consequence. In some cases, developers hang on to many votes and sway the voting even on the little matters.

Costa Rican law requires three legal books for this association: 

Companies are still on the hook for illegal tax

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Many Ticos and expats believe the law that assesses a yearly tax on companies in Costa Rica is dead because of a recent Sala IV ruling that found parts of it unconstitutional. Some people are still years behind in their payments and are not a bit worried.

They should be. The law is still alive. The Registro Nacional still is entitled to dissolve any company with three consecutive periods in arrears. The agency has the power to assess any past due amounts against any assets of the company.

Cloud accounting a boon for expats and snowbirds

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Times are changing. Cloud accounting is here and here to stay. It is scalable, cost-effective, and easy to use. This is great news for expats, tourists, and locals alike. 

Cloud accounting means freedom. Freedom to roam the world while monitoring one’s financial matters and business endeavors. It is nothing more than using software and services in the cloud via the Internet. 

Software as a Service—commonly referred to as SaaS—can be the key to keeping up with Costa Rica’s fast changing tax regulations. Especially useful for those expats trying to manage a Costa Rican business from some other part of the world. 

Many expats renting their second homes and short-term rentals here are not collecting and remitting sales taxes as required by law.  Ticos working in San José with vacation homes in other parts of the country are culprits too. Others do not pay income taxes if they make a profit in a business venture.  

Some are willing tax evaders, many others just find keeping up too difficult because they find accounting tedious. 

Pacific beach zoning plan was long time in coming

By: Garland M. Baker B.

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Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Once upon a time, long ago, there were zoning plans up and down the coast of Guanacaste for the Zona Maritimo Terrestre. This area is known to most as Costa Rica’s ZMT or the maritime zone.  Most plans originated in the 80s. There have been some modifications to them throughout the years, but not many.

The maritime zone contains two parts: The first 50 meters inland measured from high tide is the public zone and the next 150 meters concession property. The total of the two areas or 200 meters is public land and considered owned by all Costa Ricans. There are some exceptions where the land is titled or part of a special government program, like the area in Papagayo, Guanacaste.

Costa Rica mean rich coast for a reason. It is beautiful and vital to tourism. However, 11 cantons have been without viable zoning for years. Government officials say new zoning is just around the corner. They have been saying this for years. Most people believe it is all just talk and political rhetoric and nothing more than a fairy tale. 

A wise expat will prepare for a graceful exit

By: Garland M. Baker B.

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In a poem by Robert W. Service, Sam McGee, a gold prospector in the Canadian Yukon, asked his buddy to cremate him upon his death. He died soon after the request, and his friend anguished over the burden of his promise.

Asking a friend or loved one to take care of one’s funeral arrangements is one way of planning. Why put the burden on someone else? 

While making her own pre-arrangements, Kathy Riggle, an expat living in Pérez Zeledón, discovered many obstacles and problems one can encounter when an American, Canadian, or other foreigner passes away without prior preparation.

New rules expedite transfers of money

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Anyone living in Costa Rica who moves money in and out of the country needs to know about wire transfers and the terms that surround them. Those that do not will end up waiting for their money because it will get lost or returned. Usually, this is because incorrect information is on a wire transfer form.

Recently, an expat had money he was waiting for returned to the United States because it did not have an IBAN number. Because he is North American, he did not have a clue what an IBAN number was or where to get it for his bank in Costa Rica. He only knew about ABA and SWIFT codes.

There may be ways to lessen impact of luxury tax

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Law 8683 taxes are due Jan. 15. Many expats and foreigners having a property with a house on it in Costa Rica are confused about this tax. Some pay it when they should not be doing so. Most people refer to this assessment as the luxury tax.

It applies to homes of more than 128 million colons or approximately 239,000 U.S. dollars at the current exchange rate. The kick-in-the-pants is that if a house qualifies for the tax, the computation of value adds the land and the construction it sits on as well as other factors into the equation. Adding everything up makes it costly.