Paying People in Costa Rica

Paying People - Tax and Employment Law in Costa Rica

This month we take a look at some of the tax and employment law of one of the latest countries to be added to Ceridian’s International Payroll Services – Costa Rica, often referred to as the ‘Switzerland of Central America’ for its reputation of peace, political stability, and prosperity.

It is also home to the Headquarters of many Central America businesses.

Tax Registration

All companies must be legally and fiscally established before the Department of Direct Taxation – Dirección General de Tributación Directa in the Ministerio de Hacienda.

Social Security Registration

It is mandatory that all employers have labour insurance for all employees and it is mandatory that the employer act as the withholding agent for health insurance “seguro de salud” which is part of the Caja Costarricense de Seguro Social (CCSS) (Social Security Insurance Institute).

Monthly/Quarterly/Annual Tax Returns

Employer and employees file returns on an annual basis, although it is common to pay provisional taxes on a quarterly basis and apply any necessary adjustments at the end of the year.

Most Used Tax Forms

D-101 Declaración jurada del impuesto sobre la renta

This is the annual tax return form, and contains summarised information about:

1. Assets
2. Liabilities
3. Equity
4. Itemised Taxable and Non Taxable Revenues
5. Itemised Expenses (write offs)

D-150 Declaración anual de resumen de retenciones

This form is a summary of all the payments and respective retentions or withholdings that an individual or corporation had made during the fiscal year such as:

• Salary Income Tax.
• Payments to the members of the Board of Directors (Only for Sociedades Anonimas)
• Payments to foreign individuals or corporations not located in Costa Rica, for concepts such as franchises, interests, fees, movies, international broadcasting, transport, etc.
• Payment of dividends to the stockholders.

Some Useful Payment Tips

Minimum Salary

The National Wage Commission “_Comisión Nacional de Salarios_”, issues two executive decrees a year in January and July, that directly affects employees who are below the minimum salary and discretion to those above it. Working hours are regulated by the Ministry of Labour “_Ministerio de Trabajo_”.

Maternity Pay

Established and regulated by the CCSS, an employee must notify the employer of her pregnancy and estimated date of birth with a medical certificate. The employer must notify the CCSS and at the time of the maternity leave, the employer is responsible for 50% of the salary for 120 days (1 month before and 3 months after delivery), the other 50% is paid by the CCSS.

Ceridian provides payroll services in nearly 70 countries, including Costa Rica, helping international businesses stay compliant, gain more control and improve cost management. For more information, contact our International services team on 0800 0482 737.

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April 2012 — full archive »

• April's front page
• Budget 2012
• Pension Reform Solutions
• International Payroll
• Employment Law
• Engagement on a Shoestring
• Paying People in Costa Rica
• Health & Safety Update
• Simpler Income Tax for SMEs
• April’s HR Quiz

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