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TRANSPARENCY AND FINAL BENEFICIARIES REGISTRY

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What is the transparency and final beneficiaries registry?

Created as a mechanism to provide the Government with more tools to fight tax fraud, Decree No. 41040-H created the “Regulation of the Transparency and Final Beneficiaries Registry”. This Registry will be elaborated by means of the information that, in a mandatory way, must be provided by certain subjects, cataloged by Law as obliged, about who their shareholders and final beneficiaries are, as long as their participation within the corporation is substantive.

The final or effective beneficiary is a natural person who exerts a substantive influence or control, directly or indirectly, on the corporation or legal structure so that he or she has the majority of the voting rights of the shareholders or partners, has the right to designate or cease most of the administrative, management or supervisory bodies; or who has the control status of that company by virtue of its bylaws.

Who is obliged to Register?

Under this Regulation, corporations (commercial companies), other legal structures (any integration or association whose organization is carried out on a legal basis), third-party resource managers in favor of their clients, non-profit organizations and all private trusts, including those that are elaborated by financial entities.

The final objective of the Registry is to control the use of these figures that could be used to hide the true economic capacity of the person that is behind the corporation, thus avoiding the management, control and collection of taxes.

How is this Registry built?

The information must be provided annually (from April 1st to the 30th), with an extraordinary period of 15 business days to provide the information, each time a change is made in the shareholding composition or final beneficiaries, in where their share within the entity is equal to or greater than 15% of the total capital.

This Registry should have entered into force in March of this year, however, the Ministry of Finance granted a six-month extension to provide the data, moving the date to September 2019, being for the first and only time staggered for months, according to the last digit of the legal ID, in this way, as an example, a corporation whose legal ID ends in 0 and 1, will have to complete the information in the Registry as of September, the legal IDs ending in 2 and 3, they must do so in October and so on in groups of two, concluding in January 2020 with those entities whose legal ID number ends in 8 and 9.

The information provided by the legal structures will have the character of an affidavit and will necessarily be provided by the legal representative of the corporation, defined by the Regulation (legal representative for corporations and legal structures, the trustee in the case of trusts, legal representative or agent for third-party resource management and the president or representative, in the case of non-profit organizations).

How is the control of obliged subjects carried out?

The control can be direct or indirect:

  • Direct: When the natural person owns enough shares or participations to control the corporation or the national legal structure.
  • Indirect: The control over the legal entity that, in turn, has participation in the national legal entity or corporation.

If the shareholding belongs to a foreign legal entity, in case it is impossible to identify the final beneficiary, provided there are no grounds for suspicion, it will be presumed that the final beneficiary is the administrator (natural person exercising legal representation of the corporation domiciled abroad, according to the Regulation).

Additionally, the respective official documents that are generated in the foreign country and that demonstrate the impossibility of identifying the final beneficiaries, whether certifications issued in transparency records located in the country of origin, certification of statutes or any other document must be attached valid, by means of which it is stated that there is no information on who the final beneficiaries are, or that the share capital consists of bearer securities.

Obligations to third parties?

With the entry into force of the Registry, a new obligation is established for Notaries Public to consign in any document that involves a corporation or legal structure obliged to inform about its shareholders and final beneficiaries, when said obligors have not complied with the provision of information to the registry.

That is, before issuing any document on an obligated subject, the Notaries must verify the list of subjects who have not complied with the provision of information established by the Law and that the Central Bank will create for this purpose, in order to record in the documents to be issued, that the obligated subject is within the list of defaulters, being able to access this list through their digital signature and, to verify the status of Notary, the Registry will confirm the information in real time before the National Directorate of Notaries .

In addition, the National Registry will not register or issue any document related to the subjects bound by the Law that are on the list of defaulters.

What happens if I don't provide the information?

In addition to what was mentioned above, in case of default, there will be a penalty of 2% of the gross income in the tax statement of the corporation of the previous immediate fiscal period, with a minimum of 3 and with a maximum of 100 base salaries ( ¢1,300,000.00 and a maximum of almost ¢ 5,000,000.00); also, the obliging non-compliant subject will appear on the public list of omissions.

In case of any doubt or advice regarding this issue, or any other issue related to corporations or corporate law, do not hesitate to contact us, our experts will assist you. https://erplawyers.com/en/contact-us/

Mobility and Cycling Safety Law

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The past April 2nd, La Gaceta Official Gazette published the Law on Mobility and Cycling Safety, with which the integrated mobility and cyclist’s safety are considered of public interest. Through legislative decree 9960, it seeks to encourage the use of bicycles as a means of transport for work or recreation. This law is part of government efforts to improve road circulation and, also, reduce the emission of pollutants from vehicles.

With this new law, the government also seeks to encourage private companies and local councils to promote the use of bicycles as a means of transportation at a national level.

 

What benefits brings this new law?

Some of the measures established by the new law include the opening of tax incentives for companies that develop infrastructure for bicycles or acquire them for the use of their employees or officials, specifically through the deduction of these expenses in their income statements, provided that said companies are up to date in the payment of their tax obligations and with the Costa Rican Social Security Fund.

Also, at a local level, the law provides to the councils the possibility to promote the existence of public bicycle rental systems that respond to the user’s needs in the area, which could be subject to concession agreements.

 

Is there a State obligation to facilitate the use of bicycles?

On the other hand, the law declares cyclist activity of public interest and forces the Ministry of Public Works and Transport (MOPT) to work on local plans for integrated mobility and cyclist safety. It also establishes that each local government should organize annual activities to learn about possible interventions and projects for the benefit of cyclists, for which technical studies should be considered if they are related to the objectives of the law.

Similarly, it is also required that any new road infrastructure work must keep into account this new law, to improve road conditions; through bicycle lanes, shared lanes, independent sections, pedestrian crossings, speed reduction cushions, transit deviators and parking spaces, among others. It is established that public parking spaces must save a bicycle space for every ten car spaces and that the fee to be charged will be for periods of 15 minutes and not per hour.

 

What protection is provided to the cyclist while on the road?

From now on, to overtake a cyclist on the road, a minimum distance of 1.5 meters must be respected between the vehicle and the bicycle; to perform the maneuver, speed must be decreased, the opposite lane must be invaded partially or completely, as it is done with any other vehicle, always respecting the vertical and horizontal signalling and also when no vehicles are coming from the opposite direction, including pedestrians or cyclists.

Also, the cyclist will have the right to ride along the middle of the lane, like any other vehicle, in order to guarantee its safety. Similarly, cyclists are forbidden from driving on high-speed roads where the minimum speed is equal to or greater than 80 km/h and there aren’t bicycle lanes, in order to safeguard their integrity.

Undoubtedly, we all should follow the new cyclist’s rules on the road, since this new law is seeking greater safety for cyclists, considering their vulnerability on the road.

 

If you have any questions about this new law or any other legal aspect, do not hesitate to contact us!

Loss and suspension of parental authority

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Parental authority is an irrevocable, temporary, relative and non-tradable family power, where only a competent Judicial Authority or the death of the holder of such power can terminate it. This authority is exerted by the parents of the minor, which includes, in addition to the legal representation and administration of property, the right and duty to custody and guard, therefore we can say that parental authority is a product of the family situation.

 

Can I lose parental authority?

Parental authority, like everything, is exposed to abuses by its holders (parents), which leads to the suspension of said representation. The parental authority ends with:

The marriage or acquired majority of age;

– The death of those who exercise it,

– A judicial declaration of abandonment;

– A violation, dishonest abuse, corruption or serious or very serious injury by those who exercise it.

Likewise, the parental authority may be suspended or modified, in the opinion of the corresponding Authority, and always in the best interest of the minor, due to:

– The habitual drunkenness, the improper use of drugs, the habit of gambling (games of chance) in a way that harms the family patrimony, depraved behaviours or the proven vagrancy of the parents;

– The excessive hardness in the treatment that parents give their children;

– The refusal of parents to feed their children, forcing them to beg or allowing them to roam the streets;

– The crime committed by one of the parents against the other, or against one of their children or a sentence to prison for any punishable act;

– The incapacity or absence judicially declared; or,

– Any other form of notorious bad behaviour of the parents, abuse of power, failure to comply with family duties, or judicially declared abandonment of the children.

As can be seen, the suspension of parental authority is originated as a result of non-compliance or misuse by the holders, in relation to their rights and duties towards the minor. There is also a possibility to retrieve parental authority, as long as the grounds that led to its suspension disappear.

It is important to know the consequences of the suspension of parental authority, since, as the same word indicates, the authority of the holder over the minor is temporarily lost; In addition, he loses the right to represent him and to administer his assets during the time in which said right is suspended.

 

If you require legal advice in the ​​family law area, ERP Lawyers & Associates offers an interdisciplinary team of lawyers with extensive experience in this area. Contact us and receive personalized legal advice.

New Law approved for Equal Gender Pay

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With the favorable vote of 46 legislators, file N° 20389, Law for the Promotion of Women Social Equality, was approved in second debate, and it establishes that women will enjoy equal pay, both in the private and the public sector.

The law mandates that this right be applied for job positions of equal value whether it is about different positions of equal value, such as in the same job or in similar functions under the same manager.

In addition, it contains the exception of paid domestic workers who work for several employers, not being considered arbitrary objective differences in remunerations that are based, among other reasons, on skills, qualifications, suitability, responsibility or productivity.

 

Politicians express their support to the new bill

“A man and a woman for an equal job should earn the same, because in this country poverty has a woman’s face, because in many cases they are not hired for the simple fact of being a woman,” said the legislator of the political party PAC (in Spanish) Paola Vega Rodríguez.

On the other hand, Frente Amplio’s deputy José María Villalta Flores-Estrada was satisfied with the approval of this initiative, which is the first one that comes out of the Special Commission for Women.

“It is embodied in the Constitution as part of social guarantees. It’s uncommon in Costa Rica that for equal work one gets an equal salary, “he said.

The bill creates the Equal Pay Commission between women and men in the public and private sector. This Commission must meet at least twice a year and will be responsible for managing and ensuring that the National Institute of Statistics and Census (INEC in Spanish) incorporates the indicator of equal pay in the corresponding studies and that it delves into the variables that influence the money income of people (by sex, sector, area, age, hours worked, annuities) to identify in its complexity the behavior of salary differences by sex.

The legislator of the Social Christian Unity Party (PUSC in Spanish), Shirley Díaz Mejía indicated that this is a fundamental leap in the equalization between women and men, “it’s key to close gaps”.

 

If you have doubts or look for advice regarding this issue or any other issue related labor law, do not hesitate to contact us and one of our experts will gladly assist you. Get in touch!

 

Due Diligence Process for the purchase of properties

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Undoubtedly, the purchase of properties is one of the most important decisions we people make, from a financial, personal and family point of view.

For the purpose of avoiding a bad investment or setback and ensuring that the property that is going to be purchased meets the purpose for which it is wanted and does not have contingencies, it is essential to carry out the so-called Due Diligence Process.

This is, in general terms, an investigation process on the property, in order to discover possible hidden risks that may harm the interests of the buyer.

In that sense, we will mention the main aspects that should be considered when carrying out the process:

 

Review of:

Reason

Property title

It is fundamental since it will determine if the seller is duly legitimized.

Property Transfer HistoryIt is very important because it will help us detect any irregularity in previous transfers that could affect the possession of the property.
Review of annotations It is essential to determine what are the effects on the property.
Liens ReviewWe do not necessarily have to discard a property when it presents liens. The study of these will indicate if the matter can be resolved or not.
Cadastral Plan ReviewIt will confirm the size of the property. When the plan is very old it is recommended to hire an expert to conduct an investigation to confirm the measurements. Likewise, a Certification of the Cadastral Zone, issued by the Registry of Real Property of the National Registry, can be requested.
Certification of Municipal Taxes 

The property is responsible for municipal debts, so they must always be kept up to date.

Land Use Certification 

If there are no constructions. It will indicate if this real estate can fulfill the purpose for which it is intended on acquisition. For example: that a condominium can be built or that a business can be established, etc.

List of Utilities and payment vouchers

It is important to confirm that the property is always delivered without debts, or that you have knowledge of these and that they are accepted in the sale.

Well Inventory

When there are wells it will be important to confirm that the permits are up to date.

Visit to the Property

A visit to the property will always be fundamental. Any number of concerns can arise or be ruled out of it.

Regulatory Plan ReviewSame reason as the Land Use Certification.
Identification of possible environmental contingenciesIt is important to verify that the property is not affected by environmental issues that impede or limit its exploitation.
Confirmation that property is not affected by special laws

It is important to verify that the property is not affected by special laws that prevent or limit its exploitation.

It is important to clarify that each case has its particularities, so this list is not exhaustive. When all the information is available, we proceed with the preparation of a formal and sustained report, by means of which the business of buying and selling the property will be recommended or not.

At ERP Lawyers we will always recommend carrying out the process in order to guarantee the investment, or at least assume the risks in an informed manner. Under no circumstances is it advisable to proceed with the business without such investigation.

If you need any assitance with real state purchases, get in touch with our team!

Employers have the power to dismiss remote workers due to abandonment of duties

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The continuous advance of digital technologies has pushed profound changes in all areas of modern society. These changes have occurred in the form, means and places where work can be done, since the increase shown by the country in connection, access and availability of terminal equipment such as smartphones, tablets, laptops and other devices. Those have allowed new working schemes supported by the use of digital technologies that are present in all public and private organizations, and independent workers.

Within this framework comes the figure of remote working, whereby seeks to support the processes of organizational modernization, the increase in productivity, the improvement in the quality of services, the reduction of costs, social inclusion, the balance between work and personal life, urban mobility and protection of the environment; however, figure that today in Costa Rica is not regularized – currently in Congress there is a bill (19,355) to regulate timely control of remote work, but it is in process.

Despite the above, employers have the faculty to dismiss teleworkers due to abandonment of duties or to be absent without any justification, during their working hours by means of this modality of telecommuting; this was determined by the Second Chamber of the Supreme Court in its resolution 539-2018, which was made public this Thursday by the Judiciary.

 

How did the employer justified the dismissal?

The labor process was initiated by the worker, who worked as an IT manger for a private company and was dismissed in 2014 because, although he was exercising his functions while working remotely, he was absent during working hours.

The plaintiff was in a position of trust with a flexible schedule, position in which an availability was required 24 hours a day. The worker argued that when he was not out of the country, he performed his functions under telecommuting, for which he used the company’s technological systems.

For that reason, he went to the Labor Court of Heredia, which gave him the right and sentenced the company to pay the labor means of dismissal, forewarning and damages. Subsequently, the Labor Court ratified the sentence; However, the defense of the employer raised the case to the Second Chamber and considered it pertinent that the evidence of the absences be assessed, which were recorded in the computer system entry records.       

“The Chamber Officials concluded that the entry to the platform was essential to comply with the job obligations performed by the plaintiff and in the reports it was evidenced that, during the months of December 2013 to January 2014, he did not connect within several days and in some cases the registration only determined a period that could add up to a couple of hours, but not a full day.” says the Court’s statement. For that reason, they gave the reason to the employer and justified the dismissal.

“Although the plaintiff was under the modality of telecommuting, this does not prevent the employer from exercising the power of direction proper to his position and due sanctions concerning a serious fault committed by the remote worker.” said the ruling.

The modality of telecommuting must not mean in any way a lack of control by the employer or an authorization for the worker to stop fulfilling the obligations for which he was hired. In this sense, we recommend establishing the conditions or parameters on how remote working is executed in your company, through policies that regulate it.

 

If you have doubts or look for advice regarding this issue or any other issue related to labor law, do not hesitate to contact us and one of our experts will gladly assist you. Get in touch!

 

Reactivation of dissolved companies

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In order to provide a new and last opportunity for reactivation of those companies dissolved due to lateor lack of payment of the tax on legal persons (2012-2015), Bill Number 20749 entitled “REFORM” OF TRANSITORY II OF LAW N ° 9428, TAX TO LEGAL PERSONS, OF MARCH 21, 2017,” was presented and processed before the Legislative Assembly; which is currently in the fifth position on the agenda of the Committee on Financial Affairs. Once approved by at least one deputy of the commission, the bill would be sent to the Full Congress.

 

The bill establishes a series of terms, among which it indicates that:

“… To the mercantile companies, the subsidiaries of a foreign company or its representative and the individual companies of limited liability, that within the effective date of this law and until December 15, 2018 have paid the sums owed by Law No. 9024, Tax on Legal Persons, of December 23, 2011, may make the payment of the periods due from the years 2012 to 2015, according to the aforementioned rule, without therefore having to pay interest or fines.

The legal entities that have been dissolved and that have paid the sums owed no later than December 15, 2018 may submit to the National Registry a request to cease their dissolution, leaving said legal entities in the same legal condition in which they were found before they were dissolved, with the retroactive effects that this entails. They will have till January 15, 2019 to submit the request to the National Registry, after the amounts owed are paid … “, if it was to get approved and sent to the whole congress for discussion, it would obviously be with different dates and updated to those indicated above.

If this project is approved, an amnesty would be offered again regarding the interest and fines accumulated for the tax.

After the cancellation of the debt, the interested companies may request for termination of dissolution before the National Public Registry “… leaving said legal entities in the same legal condition in which they were before their dissolution, with the retroactive effects that this entails.”

The cessation of dissolution will be made at the request of the partners of the company that hold at least fifty-one percent (51%) of the shares, who must appear before a notary in public deed, prior publication of an edict in the official gazette ‘The Gazette’ on behalf of the applicant. Subsequently, the request will be subject to registration qualification.

Last but not least, if the dissolution of the mercantile companies, the individual limited liability companies or the branch of a foreign company, and the respective payment of the registration seat, the Judicial Collection Department of the General Directorate of The Treasury is empowered to continue the collection procedures or establish these against the last officially registered partners, who will be jointly and severally liable for the payment of this tax.

 

If you need any help or just seek for advise, feel free to get in touch, we are here to help!  http://erplawyers.com/en/contact-us/

 

Same-sex couples are now able to apply for a housing bonus

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In the month of December 2018, our president, Carlos Alvarado Quesada, signed a series of decrees and guidelines to guarantee the LGTBIQ (Same sex couples) population the equality and parity of their rights.

The decrees are already known, such as the recognition of gender identity in the identity document for the trans population (self-perceived gender), the inclusion of biphobia (hatred and rejection towards bisexual persons) on the day of homolesbotransphobia, as well as the declaration of public interest of the hormone protocol.

Starting on Monday, February 4th, same-sex couples with limited resources may apply for a housing bond and credit programs from the National Housing Financial System, since the guideline was published in the Official Gazette. This decree instructs state institutions to provide social assistance to anyone who requests it, without making any distinction about whether it is a heterosexual couple or a same-sex couple.

In addition, the document requires the State to recognize, under certain conditions, as “family nucleus” that which is made up of two men or two women.

In order to opt for these benefits, couples must have shared food, bed and sexual cohabitation for at least three uninterrupted years. In the same sense, the relationship must be evident, patent, notorious, not simultaneous and faithful.

These regulations come hand in hand with the ruling of the Inter-American Court of Human Rights and the Constitutional Chamber, which ordered the Legislative Assembly to regulate equal marriage, this within a period of 18 months, which began on November 26th, 2018.

In case of not doing it in the contemplated term, the marriage between same-sex couples will be totally valid, and there would be no sanctions for the Notaries that perform these acts.

If you need any help or just seek for advise, feel free to get in touch, we are here to help!  http://erplawyers.com/en/contact-us/

 

Regulations for cards payment’s commissions

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Costa Rica proposes that the Central Bank and the Commission promote competition and set a single percentage in the fees paid by businesses for accepting credit or debit cards

The affiliation commissions in Costa Rica are, in their majority, superior to 4% without differentiating between credit and debit cards, while at an international level the affiliation commission is located at much lower rates.

The spread of credit and debit cards, as well as the increase in transactions with plastic, have generated a distortion in the economy affecting specially small businesses, which must pay a significant amount of their income to banks, translating into bigger prices and equally affecting consumers who must pay slightly more for each product.

The annual profits of the financial system for the collection of these commissions, according to Chamber of Commerce estimations, are approximately $175,000,000.00 (one hundred and seventy-five million dollars). On the other hand, countries such as the European Union have a regulation where a cap is set at exchange rates of 0.2% for debit cards and 0.3% for credit cards.

In Latin America, for example Mexico, the Central Bank periodically reviews the mechanism of determination and the level of exchange rates and, in addition, banks must make them public. Currently, the amount charged to businesses is 1.91% for credit cards and 1.15% for debit cards.

Bill number 21.177, which aims to empower the government to regulate the commissions charged by financial entities to businesses, was presented before the congress by several representatives.

What the proposal states

The proposal states that “… It should be a single percentage for all businesses and the commission for transactions with debit cards should be lower than the one charged for credit card transactions, which will be reviewed and published every 24 months by the issuing banks.”

Regarding the topic, María Isabel Cortés (director of the Costa Rican Banking Association)  said to Crhoy.com, that in the determination of commissions “… the volume of transactions of each trade greatly influences, given that there are significant fixed costs. Exchange allows issuers to have the incentive to widely distribute modern means of payment, especially debit cards that, because of their marginality, would not be possible to serve if there were no adequate exchange rates. ”

Cortés added that “..” The exchange rate must maintain a balance, if it was very low, it wouldn’t encourage the task of issuing cards and cardholder attention and if it was very high, it wouldn’t encourage the acceptance of the cards as a means of payment. ”

The objective of this law is to create the regulatory framework for the establishment of exchange and acquiring commissions for purchase transactions with credit and debit cards. It would also guarantee a more competitive environment and increase fiscal traceability, in benefit of businesses, consumers and the Public Treasury.

If you need any help or just seek for advise, feel free to get in touch, we are here to help!  http://erplawyers.com/en/contact-us/

Ministry of Finance extends the deadline for payment and declaration of solidarity tax

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The Ministry of Finance has decided to extend the deadline for payment and declaration of solidarity tax (Luxury Homes) to January 25.

On January 10th, the General Directorate of Taxation, of the Ministry of Finance, communicated through its official page that the deadline to declare and pay the solidarity tax, without a surcharge, for the strengthening of housing programs for the 2019 period, will be extended just this time until January 25 th of this year.

This is due to a delay in the publication of the sections in the official newspaper ‘La Gaceta’, for which an extension of ten calendar days is granted, which is valid from that same date.

This declaration is presented every three years and the payment of the tax is not deductible for purposes of income tax.

For that period all taxpayers must make the declaration to update the value of their properties.

This obligation must be fulfilled by all real estate owners for residential use, which are used in a regular, occasional or recreational manner, including both fixed and permanent installations, whose construction value is greater than one hundred and thirty-one million colones (¢131,000,000.00). The tax is paid on the value of the construction, plus the value of the land.

 

The new sections on which the calculation is generated are the following:

TractsValue       Rate   
Up to      ₡329.000.000          0,25%
From the excess of   ₡329.000.000 up to ₡659.000.0000,30%
₡659.000.000 up to ₡988.000.0000,35%
₡988.000.000 up to ₡1.318.000.0000,40%
₡1.318.000.000 up to ₡1.646.000.0000,45%
₡1.646.000.000 up to ₡1.978.000.0000,50%
₡1.978.000.000 0,55%

                                                                            

 

If you need any help or just seek for advise, feel free to get in touch, we are here to help!  http://erplawyers.com/en/contact-us/

ERP COSTA RICA LAWYERS