Back in 2003, an article in A.M. Costa Rica described a "Catch-22" for owners of Costa Rican corporations. The tax authority was using a new form (D-175) as a "sting operation" to get thousands of unregistered companies on the books.
The dilemma for property owners was real: "damned if you do, damned if you don’t."
- If you filed the form, you were on the tax authority's radar for future taxes and filings.
- If you didn't file, you risked a relatively small fine (~$185) and being blocked at the National Registry, but with weak enforcement, there was a good chance you'd never get caught.
Fast-forward to today, June 18, 2025. That "Catch-22" is officially over. The choice is gone. The systems are now automated, the penalties are severe, and the "don't file" option has become a catastrophic mistake for any property owner.
Why the Old 'Catch-22' is Obsolete
The fundamental premise of the old dilemma was based on the government's inability to effectively cross-reference information. That inability no longer exists. Today, the National Registry (where your company is listed), the Central Bank (which manages the owner registry), and the Tax Authority (Tributación Directa) are all digitally interconnected.
The government isn't trying to find the 200,000+ companies that weren't on the tax rolls in 2003. They already know about every single one. The mission has shifted from discovery to enforcement, and the consequences have been given serious teeth.
The New Reality: "Damned if You Don't" is the Only Scenario
Choosing not to comply in 2025 isn't a calculated risk; it's a guarantee of crippling financial and legal problems. The probability of getting caught is now 100% the moment you try to do anything with your property.
Here’s what non-compliance looks like today:
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Massive Fines: The old 76,500 colon fine is a relic. Today's fines are tied to a "base salary" and are substantial. The penalty for failing to declare the company's ultimate beneficial owners (UBO) starts at a minimum of three base salaries—that’s ~₡1,386,600 (or about $2,700 USD). The fine for not filing the annual asset declaration is ~₡231,100 (or about $450 USD).
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The Inescapable Registry Block: This is the government's ultimate enforcement tool. If you are not up-to-date on your annual filings—specifically the annual corporation tax and the UBO declaration—the National Registry will block your company. This means you CANNOT:
- Sell, transfer, or mortgage your property.
- Grant or change a power of attorney.
- Make any changes to the company's board of directors.
- Obtain a valid certificate of good standing (personería jurídica).
Your asset is effectively frozen, completely untouchable until you pay all back taxes, fines, and interest, and complete all overdue filings.
The Modern "Benefit of Filing": The Ability to Transact
The 2003 article noted that a benefit of getting legal was having proper books. Today, the benefit is far more fundamental: the ability to use and control your own asset.
Compliance is no longer about just getting a "better night's sleep." It is the non-negotiable prerequisite for maintaining your property rights. A fully compliant company is a liquid asset; a non-compliant one is a liability frozen in bureaucratic ice.
The "powerful new tax police" hinted at in 2003 is now a reality, but it isn't a person knocking on your door. It's an automated, cross-referencing digital system that flags non-compliance instantly.
Your Only Move: Comply and Verify
The wisest move is no longer just a suggestion to be a good guest in the country; it is a critical necessity for asset protection.
- Acknowledge the "Big Three": Every inactive corporation has three annual obligations: the Annual Corporation Tax (due Jan. 31), the UBO Declaration (due in April), and the Inactive Asset Declaration D-195 (due in April).
- Contact a Professional: Assume nothing. Immediately contact your Costa Rican lawyer or accountant and ask for written confirmation that all three of these obligations are current.
- Legitimize Your Assets: If you have fallen behind, work with a professional to rectify the situation immediately. The fines and interest only grow larger with time.
The Catch-22 is a fascinating piece of history, but its logic no longer applies. In 2025, the only catch is for those who fail to recognize that the game has fundamentally, and permanently, changed.
This article is an update to a topic first explored by Garland M. Baker B. in A.M. Costa Rica on November 27, 2003. The information provided is for informational purposes and does not constitute legal or financial advice. Consult a qualified Costa Rican professional for your specific situation. ©2004-2025 Costa Rica Expertise. Free use permitted with attribution (CC BY 4.0). 1031127 ZZ!
