Every legal structure should respond to a specific need. While we often associate corporations with active business operations, Costa Rica offers a highly useful legal entity: the inactive corporation.
What is an inactive corporation?
It is a company that, although legally established and registered, does not engage in commercial activities. Far from being useless, it can be an extremely valuable legal tool.
What are its benefits?
-
Asset protection
One of the main advantages of having an inactive corporation is the ability to register assets under its name, creating a clear separation between personal wealth and the company’s assets. This can be crucial in the face of lawsuits, debts, or inheritance processes. -
Legal vehicle for acquiring assets
An inactive corporation allows for the orderly and legally backed acquisition of property, vehicles, or other assets. It also simplifies the transfer of these assets through shares or quotas, optimizing inheritance procedures. -
Easy reactivation
If you decide to start a business in the future, you won’t have to start from scratch. Reactivating an already formed company requires less time, fewer procedures, and faster access to operations. -
Image of professionalism and stability
Even without being active, an inactive company can project a serious image to banks, government agencies, or potential strategic partners. It lays a solid foundation for future business relationships.
What about taxes?
Although an inactive corporation does not generate income, its legal structure allows it—once reactivated—to access stronger tax benefits than those available to sole proprietors. These may include deductions for operational expenses, formal hiring of staff, issuing invoices, access to special tax regimes, and independent accounting that simplifies tax compliance and improves business decision-making.
Once active, the corporation can benefit from tax deductions for rent, professional services, travel expenses, asset depreciation, and more—advantages not as flexible for individual businesses.
Step-by-step: How to establish an inactive corporation
It’s a relatively straightforward process, though some legal steps must be followed:
-
Drafting the articles of incorporation before a notary (S.A. or S.R.L.).
-
Registration with the National Registry.
-
Obtaining a corporate ID number.
-
Fulfilling annual obligations, such as:
-
Filing Form D-195 on the ATV platform.
-
Paying the corporate tax.
-
Submitting the Transparency and Final Beneficiaries Registry (RTBF).
-
Maintaining legal books.
-
Complying with these formalities ensures the company is ready and in good standing whenever you choose to activate it.
Having an inactive corporation is not just a viable option—it’s a smart strategy for protection, planning, and preparing for future growth.
Contact us and we’ll be happy to guide you through the entire incorporation and legal compliance process, tailored to your personal or business needs.
