Costa Rica Relocation Blog

Driving in Costa Rica can be treacherous on good days. Forget it if it is raining or dark. While I have become used to many things in my path every once in awhile I forget and almost hit a tree that is placed 4 feet off the curb or an electric pole that is a meter out from the side of the road. You must pay attention while driving here. You can’t take a lunch break and take your eyes off the road for even a moment.

On our way to school each day, we go over 3 manholes WITHOUT covers on one short street and dodge a half dozen poorly placed electric poles only to be dodging big trucks, buses and motorcycles at the same time.

For those that have driven in Mexico or other Latin American countries this I am told is not out of the ordinary, but if this is your first time to Costa Rica….BE CAREFUL!!!

We have lived here for 6 years now and I still have to stay on guard when driving here. If you know where the manholes are or if you can see them, you can dodge them. At night they aren’t visible and often cars fall into those holes and either get stuck or damage their front end.

Now that coupled with the motorcycles driving down the middle of 2 lanes are hard to get used to.  My defensive driving instructor back home would be very proud of the driving skills that I have acquired while living in Costa Rica.  Driving in Costa Rica takes defensive driving to a whole new level.

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Filed under: Living in Costa Rica

You cannot work in Costa Rica unless you have a work permit or the proper type of residency that allows you to do so. You cannot work while living in the country with a Tourist Visa, Rentista Status or Pensionado status. You are actually forbidden to do so by the Costa Rican government. You cannot take the job that a Costa Rican can do. This is the law!!!

Work permits are difficult to impossible to get unless a company is willing to sponsor you. The only companies that do this are large, financially established, well-known by the Costa Rican government. The only people that are approved for permits with these companies are executives for the most part.

If you are living in Costa Rica legally, you can start your own business but you CANNOT work it this business.

There is only one type of visa that allows you to work and live in Costa Rica and that is Permanent Resident Investor Status which gives you all of the rights that a Costa Rican citizen has. This comes with one exception and that is becoming politically involved. You are not permitted to vote in any Costa Rica election but you can work.

You cannot move to Costa Rica and start working. Well you can but if you do, you can get into some serious trouble and will be deported loosing anything that you have bought or business you have established while living in the country.

This has happened to too many Expats to list. Foreigners, usually from North America, come down and buy property or a business and begin working without getting the right paperwork taken care of ie., residency visa. They are caught by immigration, usually because they have upset a Costa Rican in some way. The Costa Rican turns them into immigration and they are kicked out of the country and not allowed to return for 10 years.

You do not want this to happen to you.

If you would like more information on how you can get the right type of residency, please email us.

I want you to know that you can’t just fly in and start working, You CANNOT work in Costa Rica!!!!

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Filed under: Business in Costa Rica, Living in Costa Rica, Moving to Costa Rica, Working in Costa Rica

The Gringo never even saw it coming
The legal right to steal: A valid power of attorney
By Garland M. Baker
Special to A.M. Costa Rica

A U.S. citizen returned to Costa Rica in February 2003 to find his lawyers living in his Pacific coast villa. They had taken all his possessions and burned them to complete the takeover.

A criminal court case ensued, and the lawyers won. They got away with transferring millions of dollars in real estate to different companies to cover their tracks of plunder.

The shysters had so much audacity they offered the U.S. citizen a mere pittance to drop his case during the proceedings because they said they had buyers for his property and if he did not accept he would get nothing in the end.

They were correct. He did not accept the absurd offer and now has nothing to show for his investment in Costa Rica.

How is this possible? How did the lawyers win?

This scenario was possible because The U.S. citizen made the same mistake many newcomers and old-timers make. They let lawyers put strangers on all the company paperwork that holds their property.

In many cases, people come to Costa Rica and buy a company from a legal professional where the attorney assigns his or her office staff to the important board of director positions. The law office’s gardener could be the president, the maid is the secretary, and the messenger is the treasurer. Any one of them or all of them could hold a full power of attorney.

People do this for a variety of reasons. Here are two that top the list: The legal professional talks them into this kind of arrangement because it expedites their work or they have ulterior motives. Or the client is trying to hide assets from their home country’s tax authorities, wife, judges, or for other reasons.

The lawyers won because the law gave them the right to transfer the property using the full power of attorney they had in the company holding the property.

Most companies formed in Costa Rica give full power of attorney to the president and sometimes to the secretary and the treasurer. Usually the power is not restricted in any way and is for use individually versus jointly with someone else.

Articles 1253, 1254, 1255 and 1256 of Costa Rica’s Civil Code regulate powers of attorney. Mandate is another word used for a power of attorney, defined as a document giving an official instruction or command.

In the case of the U.S. citizen, his property was in a company that he bought from one attorney who used his office staff as the officers. Later, the man picked up the company from the attorney and gave it to another who put his office staff in control.

The new group devised and executed the transfer of the U.S. citizen’s properties without his permission. The motive was money. Millions.

Someone other than the U.S. citizen was in control of his assets. He never had control over them, even though he was always under the impression, he was in control. He had no stock certificates or company books or any other documents to show he was involved in the firm.

The professionals the U.S. citizen trusted took advantage of him. They turned out to be nothing but sharks.

A.M. Costa Rica not going to name anyone in this case because the lawyers would certainly sue even though the case is fully documented in the courts.

As property values skyrocket in Costa Rica, corruption has spiraled out of control as well. The glitter of gold is changing this once simple paradise.

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Filed under: The Dark Side

According to the ICE (Instituto Costarricense de Electricidad) one more digit will be added on March 20 to all phone numbers (both commercial, residential plus mobile phones) to leave space for future expansion.

The new numbers will look like this:

• Residential and Commercial: add numnber 2 at the beginning
  • Now: xxx-xxxx
  • After March 20: 2xxx-xxxx
• Mobile Phones
  • Now: 3xx-xxxx or 8xx-xxxx
  • After March 20: 83xx-xxxx or 88xx-xxxx

The change will be done at 00 hours and there will be no disruption of services. However keep in mind:

• To update all marketing, paper, signs, contact cards.
• To update your contact information on the Internet / web sites
• To update the phone numbers in you cellphone / palm, etc

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Filed under: Business in Costa Rica, Living in Costa Rica

IRS Winning friends among local bank officials!
The sign of things to come: Banco Cuscatlan now requires citizens or resident aliens of the United States to fill out a W9 form for personal accounts at the firm’s banks in Costa Rica.

Why?  Because Citigroup bought Grupo Cuscatlan from Corporación UBC Internacional S.A. for $1.51 billion in cash and stock. Grupo Cuscatlan has operations in El Salvador, Guatemala, Costa Rica, Honduras and Panamá.

Most United States citizens are familiar with a W9 form.  It is an Internal Revenue Service form used to obtain a person’s taxpayer identification number.   In the case of individuals, the identification is the Social Security number.

The purpose of the form is to acquire information from taxpayers for the United States government’s tax collection efforts.  A web version of the form that can be filled out online and printed can be found HERE!

The bank is also requiring account holders to sign a form that states the following:

“The undersigned hereby authorizes Banco Cuscatlan de Costa Rica, S.A. to report, on an annual basis, the information on the account holder and his or her account(s) and any interest earned on such product(s) or account(s) held in Banco Cuscatlan de Costa Rica S.A. to the United States Internal Revenue Service and to withhold any United States tax.”

This is just another scary story of the transparency phantom stalking bank information.

Recently, an expat sold his home in Costa Rica.  He almost put the proceeds of the sale in his Cuscatlan personal account.  There is no capital gains tax in Costa Rica but there is in the United States.  In theory, the bank could withhold money and send it to the United States government as backup withholding to cover taxes due.

If United States expats do not fill out the form, their personal accounts can be closed and/or the bank can withhold as much as 30 percent of any moneys in the accounts.  The deadline for compliance is the end of this January.

Many expats believe their money in Costa Rica is safe from their home country’s tax authorities.  Some countries do not required the payment of taxes on holdings or gains from investments in Costa Rica.  The United States does.  No matter where a United States citizen goes, he or she owes taxes on the money he or she makes on investments.

Many expats from the United States try to hide their gains here by using companies to hold assets.

Some go as far as to use Costa Ricans to hold their stock to hide their profits.  Those that do
have no control over their assets, and some take a beating from white-collar thieves.

This kind of reporting to the United States is just the start.   Cuscatlan is just taking the lead because it is a United States banking institution. GE Consumer Finance purchased 49.99 peercent of BAC San José in May 2005, and since that purchase, the bank has scrutinize accounts very closely.  The bank continues to close many questionable accounts held by expats before the purchase.

HSBC recently purchased Banex.  HSBC Bank USA has close ties with the Costa Rican subsidiary and probably will be requiring the same forms as Cuscatlan very soon.

All these facts mean the accounts once used by expats to hide money in Costa Rica are almost gone.  Most banks, even the ones not mentioned here now, require any new customer to fill out a form or sign an agreement that permits the bank to give information about the account and the account holders to any authority, including the U. S. Internal Revenue Service.

The best practice when living and investing in Costa Rica is to be on the up and up with all ones business dealings.  This includes paying one’s taxes to Costa Rica and the home country.  It makes for a better nights sleep.

By Garland M. Baker
Special to A.M. Costa Rica

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Filed under: Banking in Costa Rica, Leaving Costa Rica, Living in Costa Rica, Money in Costa Rica, Moving to Costa Rica, The Dark Side, Working in Costa Rica