Costa Rica Country Facts

We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in your country of choice and employment contracts.

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Expanding into Costa Rica generally comes with challenges, however, partnering with us and using Employer of Record (EOR) eliminates the frustrations you could encounter.

The Types of Work Visas and Work Permits in Costa Rica

Everyone staying for longer than three months requires a Residence Permit. For stays less than three months, foreigners can either be visa-exempt or apply for one of the national visas, for example, tourist, business, research, transit, conference, etc., at a local embassy in the country of residence. Exceptions may apply due to international agreements.

For longer than three months, people require ‘permission to stay’, as follows:

Permanent Residence Permit: This allows foreigners permanent employment. Holders do not need prior authorization for employment. It takes between three to five years to qualify for permanent residency. People who have had a temporary residence permit for three years can apply.

Special Category Work Permit / Work Visa: These permits come under the Special Category Residency for immigration and allow holders to stay and work in a legal entity, providing they are compliant with the Ministry of Labour and Social Security conditions. This includes the following sectors:

  • Employed by a legal entity/company in a specific occupation.
  • Professional and technical visitors.
  • Intra-company personnel transferred.
  • Self-employed in agriculture, service sector, and construction or a recognized company.
  • Temporary workers and seasonal workers.
  • Maintenance and post-sales managers.

These permits also have subcategories such as Business Visa and Family Visa. Applicants should first consider the recommendation from the Ministry of Labour before applying.

Provisional Visa: This is applied for at a local consulate or embassy abroad, and it registers all applicants with the immigration authority. Applicants must stipulate which Temporary Residence Permit they intend to apply for and that they intend to stay for longer than 90 days. This entry visa gives people 60 days to apply for a restricted visa.

How to Apply for the Different Types of Work Visa / Work Permits

Understanding the Process:

It’s crucial to understand the application process, which varies based on whether applicants aim to work as a digital nomad, invest in Costa Rica, retire, start a business, or seek employment.

Requirement for Residence Permit:

Everyone wishing to stay in the country for more than three months requires a Residence Permit, i.e., permission to live in the country.

The application process for the Temporary Residence Permits (e.g., Rentista, Inversionista, Pensionado, and Special Category for Work Permits) is generally similar, although the required documentation varies depending on the specific permit being applied for.

Starting the Application:

To initiate the application, foreigners should be in Costa Rica legally.

They must have obtained a Provisional Visa (if required) from the local embassy or consulate in their country of residence and be registered with them.

Special Category Permit for Residency:

This permit for foreign workers allowing paid employment is managed jointly by the employer and the employee.

The application is available at the immigration department, where it is also submitted.

Applicants must have an employer willing to hire foreigners and offer them a job.

Both the employer and employee must demonstrate that the job could not be fulfilled by a local Costa Rican or workers with Permanent Residence Permits. Employees might need higher qualifications or be in an occupation where there’s a shortage.

Documentation is required from both the employer and employee. Some of the documents are the same as those submitted for the entry visa and Temporary Residence Permit – all must be notarized and translated. Additional documents are also needed for dependents.

An application letter should be submitted with the form, detailing the reasons for applying for the work permit. This letter should include personal details such as passport number, date of birth, occupation, nationality, and date of arrival in the country.

Overview of Taxes in Costa Rica

Employment Income Tax: After the zero band up to CRC 863,000 (€1,400, US$1,480), there are four more bands with rates of 10% to 25%.

Self-employment Income Tax: There is a zero band up to CRC 3,836,000 (€6,230, US$6,580), followed by four further bands of rates from 10% to 25%. Note: The tax-free allowance of CRC 3,723,000 (€6,050, US$6,386) is spread over exempt brackets of income.

Value Added Tax (VAT): The headline rate is 13% on sale or transfer of physical or intangible goods, with reduced rates of 1%, 2% and 4% applying to such as health and education services and basic foodstuffs.

Selective Consumption Tax: Can be applied at up to 100% on goods that are considered non-essential.

Corporate Income Tax (CIT): The standard rate is 30% for companies with gross income over CRC 112,170,000 (€177.500, US$192,417). Tax rates, including concessions for SMEs and companies in the agriculture sector, are assessed and updated for each fiscal year.

Capital Gains Tax (CGT): 15% on companies and individuals, reduced to 2.25% in certain circumstances.

Withholding Tax (WHT): Applies at various rates from 5.5% to 30% on such as royalties, dividends and technical services.

Customs Duties and Import Tariffs: As applied by the Customs Law and complying with the Central American Uniformed Customs Code.

Other taxes: These include Property Tax 0.25%; Real Estate Transfer Tax 1.5%; Stamp Duties; Franchise Tax withheld at 25%.

Employment Income Tax in Costa Rica

Figures are in Costa Rican colόn (CRC) with euro and US dollar equivalents.

Personal income tax for employed individuals.

Income | Tax on Excess
Up to CRC 863,000 (€1,400, US$1,480) | 0%
CRC 863,000 to CRC 1,267,000 (€1,900, US$2,173) | 10%
CRC 1,267,000 to CRC 2,233,000 (€3,605, US$3,813) | 15%
CRC 2,233,000 to CRC 4,455,000 (€7,225, US$7,642) | 20%
Excess above CRC 4,455,000 | 25%

Personal income tax for self-employed individuals.

Income | Tax on Excess
Up to CRC 3,836,000 (€6,230, US$6,580) | 0%
CRC 3,836,000 to CRC 5,729,000 (€9,302, US$9,827) | 10%
CRC 5,729,000 to CRC 9,555,000 (€15,516, US$16,390) | 15%
CRC 9,555,000 to CRC 19,150,000 (€31,100, US$32,850) | 20%
Excess above CRC 19,150,000 | 25%

Individual Tax Rules in Costa Rica

  • The tax year is generally the calendar year, although alternative fiscal years can be requested
  • Spouses file separate returns, and any child credit can be claimed by only one of them
  • Individuals whose entire income comes via payroll do not need to file tax returns
  • Returns are filed by the self-employed and those who earn fees, royalties or rental income, for example
  • Self-employed pay their tax by instalments based on the previous three years’ income, with the balance paid 10 weeks after the end of their tax year
  • Employment income includes cost-of-living expenses, travel and car allowances, for example
  • Under the Income Tax Law, tax residents are those who reside in Costa Rica for more than 183 days, continuously or in periods and including arrivals or departures
  • Income earned from abroad that is unrelated to Costa Rica’s economic structure is not taxable

Taxable income includes all remuneration – salaries, commissions, fees, royalties and benefits in kind

Setting up a subsidiary in a new territory is an option for international companies expanding their global profile outside of their own borders. Setting up a legal entity as a subsidiary in Costa Rica is the usual move for companies intending to run their own payroll in the country.

Costa Rica’s liberal attitude to international trade attracts considerable Foreign Direct Investment, drawn by its diverse and developing economy. The nation’s eco-aware emphasis on ‘Green’ initiatives has made renewable energy a growth area, alongside investment in making Costa Rica a leading regional hub for e-commerce and business and technology support services.

Opening a subsidiary is often the next ‘big step’ for foreign companies, and in Costa Rica they usually take the form of a limited company operating under the Commercial Code as a Sociedad de Responsabilidad Limitada, or SRL. However, this can be a risky, expensive and time-consuming business venture. Although not a legal requirement in Costa Rica, setting up a subsidiary protects the parent company from any of its liabilities.

The incorporation process is complicated and companies undertaking the procedure themselves must cope with strict set-up procedures. In addition, there will be issues involving hiring employees, running payroll and complying with tax laws and employment legislation. Coping with this long list will cost time and risks diverting your focus on building your business in a new territory.

Or … you could take a faster route into the Costa Rican economy, with no need to open a subsidiary. Bradford Jacobs has the expertise to deal with these potential issues and delays. Our Professional Employer Organisation (PEO) specialists and Employer of Record (EOR) consultants will point you in the right direction – from recruiting the staff to managing every legal aspect of compliance. Instead of waiting weeks or months, you can be up-and-running in days … while employees are always under your day-to-day control.

How to set up a Costa Rica Subsidiary

As applies to a foreign parent company opening a limited liability subsidiary.

  • Verify and reserve unique company name with the Registrar of Companies
  • Request company’s Corporate Identification Number from the Mercantile Section of the Registrar of Companies and file the company incorporation charter (an M&AA) with the Mercantile Section
  • File Form D-140 with the General Tax Administration of the Ministry of Finance to register company, and register as a taxpayer with the Tax Contributor Registry (Registro de Contribuyentes)
  • Register with the Costa Rican Social Security (Caja Costarricense de Seguro Social, CCSS) authority
  • Register for employee risk insurance with the National Insurance Institute (Instituto de Seguro Nacional, INS) and to cover those whose residency status does not qualify for the CCSS
  • Publish company’s formation in La Gaceta, Costa Rica’s official legal publication
  • Pay all related fees to the Banco de Costa Rica’s relevant local branch

The company must have a minimum of two quota holders (as in shareholders) at the time of incorporation and the SRL’s capital is divided into quotas. Quote holders are liable only to the limit of their contribution. Each quota must be a minimum of 100 colόnes (€0.16, US$0.17) and cannot be in a foreign currency.

What are the Benefits of setting up a Subsidiary in Costa Rica?

The subsidiary operates in Costa Rica as an independent legal entity from the parent company, which is generally protected from responsibility for any debts or liabilities, including legal issues. Quota holders, are liable only to the extent of their contribution to the subsidiary.

Through its subsidiary the parent company has the chance to test the market by pursuing different business opportunities and entering into agreements with other registered companies in Costa Rica. Also, the subsidiary has greater credibility with clients and suppliers, compared with branches.

However, taking the step of setting up a subsidiary is still a long way from finding the most efficient and financially sensible route to setting up operations in Costa Rica.

Bradford Jacobs will find the perfect fit and brightest talent for your company in Costa Rica through our in-country Professional Employer Organisation (PEO) specialists. Employees can be working at their desk in days … not weeks, or even longer. All concerns regarding employment laws and compliance will be removed by our Employer of Record (EOR) teams. We handle the hassle … while you have day-to-day operational control over your workforce.

Subsidiary Regulations in Costa Rica

As applying to a private limited company which incorporates under the Commercial Code.

Registration and Documentation:

  • The unique name for the subsidiary must be reserved and lodged with the Registrar of Companies
  • Obtain the Corporate Identification Number from the Registry’s Mercantile Section and file the Incorporation Charter (an M&AA)
  • Register with the INS to cover employee risk insurance, and also for those employees whose residency status does not permit registering with the CCSS
  • In order to deduct and remit employees’ social insurance contributions, the subsidiary must be registered with the CCSS
  • Publish details of the company’s formation in Costa Rica’s official legal publication, La Gaceta

Accounts and Taxation:

  • Register the company as a taxpayer by filing Form D-140 with the General Tax Administration of the Ministry of Finance
  • Register company as a taxpayer with the Tax Contributor Registry (Registro de Contribuyentes)
  • The subsidiary will be liable for Corporate Tax on its profits earned in Costa Rica
  • File annual tax returns, which are signed by the company’s legal representative. An audit is not generally required

Management:

  • The company must have a minimum of two quota holders (as in shareholders) at the time of incorporation and the SRL’s capital is divided into quotas. Quote holders are liable only to the limit of their contribution
  • Each quota must have a minimum value of 100 colόnes (€0.16, US$0.17)
  • Quotas can be transferred to another individual only with the consent of all the other quota holders
  • A minimum of one manager is required to oversee its business and be the legal representative with the authorities
  • The company must appoint a resident legal agent if none of the managers are domiciled in Costa Rica

International companies entering the Costa Rica market will find a country where the attractions of the economy are matched by a spectacular and diverse landscape. In Central America, Costa Rica has the Pacific Ocean to the west, the Caribbean to the east and borders with Nicaragua in the north and Panama in the south. Costa Rica’s Caribbean coastline stretches for 185 miles, its Pacific coast for 630 miles and at its narrowest point, Costa Rica is just 75 miles wide.

The two coastlines have distinct differences, with the humid Caribbean featuring swamps and mangroves alongside sandy beaches, while the Pacific coast is marked by sheer, towering cliffs.

Costa Rica’s stunning landscape features tropical beaches, rain forests and mangroves, rivers running in torrents and waterfalls. Extinct volcanoes are also a feature from Costa Rica’s tumultuous geological history. Two mountain chains run virtually the length of the country, the Cordillera Volcánica and the Cordillera de Talamanca, the latter range including a UNESCO World Heritage site.

The biodiversity of Costa Rica and its wildlife, and the care taken to protect it, has seen the country emerge as a major draw for eco-tourism. Globally, Costa Rica is making effort to reverse deforestation. Costa Rica has diverse climates, with abundant rain from wet seasons on the Pacific coast and north-easterly trade winds bringing rain to the Caribbean side and creating lush vegetation.

Costa Rica’s population of over five million comprises 80% of European heritage, and the largest contingent of Spanish descent in Central America, with the majority living in the Valle Central where more than half the population reside.

Starting your business in Costa Rica

International companies intending to explore the potential of Central America’s Costa Rica by setting up a subsidiary must first decide which company type best suits their plans. It is not a legal requirement to establish a subsidiary, but it is advisable to protect the parent company from liabilities. The typical choice is to select a limited liability company, a Sociedad de Responsabilidad Limitada (SRL), operating under Costa Rica’s Commercial Code.

There is a long and complex procedure to follow … and it is only the first step in a string of requirements that also involves finding and recruiting staff and registering them with the tax and social insurance authorities. Also high on the ‘to do’ list are opening a bank account and deciding where to locate the business and where to find lines of support, such as distributors.

However, there is an alternative to opening a subsidiary and dealing with these complications. This is the point at which the wise move is to link with a Professional Employer Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs. We can take care of recruitment, onboarding, payroll … and much more. They are all dealt with while you focus on building your business in a new territory.

Companies that decide to go it alone must initially hire a lawyer to deal with some aspects of the process.

Incorporation procedures:

  • Verify and reserve unique company name with the Registrar of Companies
  • Request company’s Corporate Identification Number from the Mercantile Section of the Registrar of Companies
  • File the company incorporation charter (an M&AA) with the Mercantile Section
  • File Form D-140 with the General Tax Administration of the Ministry of Finance to register company as a taxpayer with the Tax Contributor Registry (Registro de Contribuyentes)
  • Register with the Costa Rican Social Security (Caja Costarricense de Seguro Social, CCSS) authority
  • Register for employee risk insurance with the National Insurance Institute (Instituto de Seguro Nacional, INS) and also to cover any employees whose residency status does not qualify for CCSS coverage
  • Publish company’s formation in La Gaceta, Costa Rica’s official legal publication
  • Pay all related fees to the Banco de Costa Rica’s relevant local branch

The company must have a minimum of two quota holders (as in shareholders) at the time of incorporation and the SRL’s capital is divided into quotas. Quote holders are liable only to the limit of their contribution.

Expanding your business into Costa Rica

The Republic of Costa Rica is arguably the most vibrant economy of Central America. Its welcoming attitude towards Foreign Direct Investment (FDI) is allied to a liberal outlook to the global economy underlined by trade agreements with the European Union, US, Canada, Mexico, China, Singapore and other countries in Central America and the Caribbean. Additionally, Qatar, Taiwan and South Korea are among Costa Rica’s partners in bilateral investment treaties.

Costa Rica’s economy rebounded strongly in 2021, post-pandemic, to record Gross Domestic Product of €61.20 billion (US$64.28 billion) according to the World Bank, an increase of 7.8% over the previous 12 months. The services sector, including tourism, manufacturing and agriculture all improved.

Despite its comparatively restricted economic base, Costa Rica still has a diverse range of exports that feature microprocessors and medical equipment, general electronic components, rubber, coffee, fruits and vegetables, nuts and spices.

Squeezed between Pacific and Caribbean coastlines, Costa Rica is a land of economic opportunities. Incoming companies, though, must have a clear idea of where to locate to make the best of their business plans.

Advantages and Challenges when entering the Costa Rica Market

Some Advantages:

  • FDI attracted by increasing numbers of high-tech companies in microprocessors, pharmaceutics and medical equipment
  • Diverse international trade due to bilateral agreements with the EU and US among others
  • Rebounding tourism sector post-pandemic
  • Free Zone Regimes with tax breaks for both foreign and domestic companies
  • Consumer market more developed than neighbouring countries and the most prosperous of the Central American nations

Some Challenges:

  • Dealing with bureaucracy, tax administration and incorporation procedures
  • Weak infrastructure
  • Poor protection for intellectual property rights and delays in registering patents
  • The World Bank’s final ‘ease of doing business’ report in 2020 rated Costa Rica only 115th out of 175 countries

Articles 18 to 42 of Costa Rica’s Labour Code sets the terms and regulations for employment contracts drawn up between employers and employees. The Code allows verbal contracts for agriculture and husbandry jobs, domestic services and temporary work not exceeding 90 days. The contract has three copies, one for each party and one to be filed with the Ministry of Labour and Social Security within 15 days of employment starting.

Different types of Costa Rica Employment Contracts

Open-ended, indefinite employment contract:  The usual contract form, with a start date but no designated end date, which is terminated by mutual agreement or by due process. During the first three months of an indefinite contract either party can terminate without liability.

Fixed-term or temporary employment contract:  These cannot exceed one year and are allowed in specific circumstances, such as for a particular project or to temporarily replace an existing member of staff as per Articles 26 and 31 of the Code. If the employee continues with the same duties after one year the contract becomes indefinite, under Article 27.

Probation periods:  These are generally for three months.

Collective Bargaining Agreements (CBAs):  According to the Organisation for Economic Cooperation and Development (OECD), up to 10% of Costa Rica workers are covered by CBAs. The general limit for a CBA is 36 months, although this can be extended by mutual agreement.

Laws that regulate the Labour relationship

Employment legislation follows the Labour Code and the Political Constitution of Costa Rica. Supplementary legislation includes the following:

  • The Minimum Wages Law
  • Women’s Social Equality Law
  • National Pension System Law
  • The Worker Protection Act
  • The Law against Sexual Harassment in Employment
  • The Law on Forced Labour
  • The Social Security Fund Law
  • The Law on Protection of Personal Data

General requirements for Contracts

Employers must comply with general requirements when drawing up contracts for their employees, as detailed in specific Articles of the Labour Code.

Generally, contracts must be written and include full names and addresses of both parties including IDs. Details must include the type of contract, permanent or fixed-term, and describe working hours, salary and payment schedule. Contracts must be in Spanish in three copies, one for each party with another lodged with the Ministry of Labour and Social Security within 15 days of starting employment.

The Labour Code and supplementary legislation specifies guaranteed minimums for employees’ benefits and entitlements in various categories.

What are the Compensation Laws?

National Minimum Wage (NMW): The National Salary Council left the basic minimum wage in 2022 at €446 ($470) per month, which is set across industries and sectors but can vary according to skill levels and the nature of the work. The Ministry of Labour and Social Security assesses minimums for a variety of occupations every six months

Working Hours and Breaks: The Labour Code sets different limits according to shifts worked. Day shifts from 5am to 7pm – eight hours per day or 48 a week; night shifts 7pm till 5am – six hours per day or 36 a week;  mixed shifts including hours between noon and 10.30pm and between 1.30am and noon – seven hours per day or 42 each week. Employees are allowed a 45-minute lunch break and two further 15-minute breaks

Sick Leave and Benefits: For the first three days of incapacity the employer and the Costa Rican Social Security (CCSS) equally share paying 100% of the employee’s salary. From the fourth day the CCSS pays 60% of salary with the employer under no obligation to continue payments. The employee must supply a medical certificate to qualify for benefits

Paid Vacations: Employees are permitted two weeks’ paid vacation for every 50 weeks at work

Overtime: Working extra hours is permitted only in exceptional circumstances and cannot exceed four in a day. Overtime on regular shifts is reimbursed at 50% above normal hourly pay, and double extra pay for working on holidays

Probation Periods: These are usually for three months

Notice Periods: These depend on length of service. Between three and six months service – one week; between six months and one year – two weeks; more than one year – at least one month

Termination and Severance: Article 81 of the Labour Code stipulates the procedure for employers wanting to dismiss employees with just cause. If there is no obvious justified reason for dismissal, the employee must be compensated by severance pay (Cesantia). Severance is based on average daily pay over the previous six months, and averages 19.5 days’ pay per year of service up to eight years

Maternity / Paternity / Parental Leave: Employees receive one month pre-natal leave and three months after the birth. The employer and the CCSS equally share paying the employee 100% of their salary. In the case of multiple births an extra month of leave is allowed for each child. Paternity leave, paid 50-50 by the employer and CCSS, is two days per week for each of the four weeks following birth

13th Month Salary and Bonuses: Employers must pay their employees the mandatory 13th month salary Christmas bonus, the aquinaldo, within the first 20 days of December

Pensions: Costa Rica has a multi-tiered system, with basic coverage funded by mandatory contributions, plus voluntary payments into a personal pension scheme. Employees can retire at age 62 for men and 60 for women if they have made a minimum 300 months of contributions; a proportional pension is available after at least 180 months of contributions. The scheme is administered by the National Directorate of Pensions

Health Insurance:  Costa Rica’s public healthcare is free only for financially-needy citizens. Costa Rican employees as well as resident foreigners must register with the CCSS, which provides high quality comprehensive coverage ranging from consultations, check-ups, to major medical treatments, surgery and medicines. The level of contributions to the CCSS will depend on salary. Both local and foreign private health insurance plans are recognized by the health system. Individuals whose residency situation does not qualify for CCSS coverage can register with the (Instituto de Seguro Nacional, INS)

International companies moving into a new territory and needing to recruit staff there, inevitably find the process wrapped in red tape and bureaucracy. In Costa Rica, companies must comply with the Labour Code for all aspects of employment legislation, including drawing up contracts.

Locating top level candidates to join your company’s international expansion is just the first of a long list of issues to deal with, especially if trying to recruit staff in Costa Rica while still based in your home country. Once recruited and onboarded, employers face strictly-applied employment legislation that spells out their responsibilities and obligations in addition to the legal rights of their staff.

These demands add up to a considerable workload. There is a better option. This straightforward, fast and cost-effective alternative will have your new staff operational in a matter of days … and without having to unravel any red tape.

Bradford Jacobs has the essential expertise to provide the smoothest route for your journey into the Costa Rican economy. Our Professional Employer Organisation (PEO) networks have global reach to find the right staff. Then, through our Employer of Record (EOR) platforms we will have your new employees at their desks and screens in the shortest time. This guide highlights the essentials of recruitment and onboarding in Costa Rica. You can trust Bradford Jacobs to put the brightest talent in position for your company.

Recruiting in Costa Rica

Foreign companies entering Costa Rica’s employment market will be looking for candidates with university degrees and diplomas to fill roles in the ‘most in demand’ sectors. Experience is also a key factor when companies recruit, along with a second language and being tech-savvy.

Costa Rica’s Economic Research Institute highlights science, technology, engineering and mathematics (STEM) as a key recruitment sector along with web and software development, systems engineering and all skills related to Costa Rica’s drive to become a regional e-commerce and digital hub. The country’s developing role in healthcare and wellness, pharmaceutics and manufacturing medical equipment adds to the demands on recruitment.

According to the Manpower organisation, recruitment by incoming companies will be complicated by skills shortages both in ‘hard’ and ‘soft’ abilities and experience. They cite shortages affecting advanced and light manufacturing, services and life sciences, plus front office skills, analysis and being flexible to work demands.

Costa Rica’s technology university, Universidad Cenfotec, emphasises that Costa Rica’s education system must focus on satisfying recruiters’ demands to fill positions in biotechnology and robotics, Fintech, Internet of Things (IoT), AI, quantum computing, security technology and precision agriculture.

Employees’ pre-hire checks in Costa Rica

In general, there are no limitations on employers making background checks on prospective employees. However, under the terms of the Data Protection Law individuals are protected from the collection, processing and use of their personal information, and these restrictions apply to candidates during recruitment and interview. The individual must give explicit written consent, either in a letter or electronically, before the data can be collected. Under the law, personal information includes such as ethnic or racial origin, religious or political beliefs, biomedical or genetic information, gender or sexual orientation. The individual is not obliged to give any of this information and if the employer is found to have refused employment on grounds discovered in background checks, it may be considered discriminatory under the law.

Checks should be specifically related to the practical and educational requirements of the job. If it is subsequently proved the employee gave false information that affected their ability to carry out their role, the employer can terminate employment without liability.

  • Education: It is customary to verify the highest qualification with the relevant institution
  • Employment: Employers often check the previous seven years of the candidate’s work record and that they are free to be hired
  • Criminal records: These can be checked with the national authority, but the criminal record certificate can be issued only to the individual whose background is being checked. A felony conviction cannot be the only reason for refusing employment
  • Health checks: Employers can request applicants to undergo a medical check, but if they refuse this cannot be the only reason for not hiring. The same applies to drug and alcohol testing

Basic facts when recruiting in Costa Rica

Employers must comply with basic requirements of the Labour Code, which is overseen by the Ministry of Labour and Social Security, and includes regulations on drawing up employment contracts at the start of the onboarding process.

  • Employment contracts must be in writing, with comprehensive details of the agreement
  • The contract must include full names and addresses of both parties, including a form of verifiable ID
  • The contract must stipulate the type of contract, permanent and indefinite or temporary and fixed-term
  • Details of working hours and location must be given
  • Contracts must include salary and payment schedule
  • Contracts must be in Spanish, so foreigners are advised to obtain a notarized translation
  • Both parties must sign and have a copy each

Hierarchy: The hierarchical structure in Costa Rican businesses is not as pronounced as in other Central and Latin American countries. Discussions can be collaborative, but ultimately decisions will be made at the most senior level.

Introductions/Greetings: Men shake hands, often pat the arm with the other hand, and maintain eye contact. Where individuals are well acquainted, men and women may exchange a fleeting kiss to the cheek. Costa Ricans are not concerned about protecting personal space. Use correct titles where appropriate, and address as Señor and Señora.

Language: English is widely spoken, but foreigners should still speak plainly and precisely regarding their proposals. Learning and using some Spanish will help break the ice, but if the discussions are technical, it will be wise to book an interpreter.

Gift Giving: Customary in business, but do not buy over-expensive gifts. After receiving a gift, be sure to respond with a ‘thank you’ note as they are considered an important part of the protocol.

Business Cards: Exchanged at the start of the meeting, with one side printed in Spanish and handed over with that side uppermost. Be sure to include higher education qualifications.

Dress Code:  Smart attire is best, especially for initial or formal business meetings. Trousers, shirt, and tie are equally acceptable as the relationship progresses. Women’s attire can also be less formal, but normally would be suits, slacks, or dresses.

Punctuality: It’s important to be on time out of respect. Generally, Costa Ricans will also appear on schedule, but not always, so be prepared for a wait. Always confirm the meeting closer to the agreed time.

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