- 1. Purchasing Real Estate in Costa Rica Constitutional
Protection: Costa Rican law makes no differences between its
citizens and foreign nationals regarding the rights of ownership.
This is guaranteed at the Constitutional Level at 2 levels: Article
19. - Foreigners will have the same individual and social duties
and rights as Costa Ricans, with the exceptions and limitations
that this Constitution and the laws establish. In Costa Rica there
are no limitations to properties with fee simple title, as is such
the case in this transaction. Article 45. - Property is inviolable;
no one may be deprived of his property except for legally proven
public interest upon prior compensation in accordance with the law.
In case of war or internal disorders, it is not necessary that such
compensation be made in advance. However, payment shall be made no
later than two years after the situation of emergency has
ended.
2. Due Diligence
- A complete title search and the chain of title-is required
prior to closing. This shall include, among other things, the
following:
- Complete title search at the National Registry
- A verification of the due title of the Seller to sell and
verification of all required corporate authorizations to sell
- Restrictions on the property such as public road restrictions,
water easements and utilities, amongothers
- Information about mortgages, liens and encumbrances
- All types of annotations the property may have, which may have
future repercussions on the title
- Property taxes and municipal taxes
- Verification of the survey plan and actual size of the
property
- Environmental permits, if applicable
3. Transfer Deed before a Notary Public Transfer of shares
Closing Process
- Synnex or the ultimate owner of Newco, the real estate company-
makes a capital contribution to buy the property.
- Synnex receives 100% of the shares for its capital
contribution.
- A public deed to transfer fee simple title is prepared between
current owner and Newco after due diligence is completed and
everything checks ok.
- Transfer deed is executed with required powers of attorney and
corporate resolutions, if needed.
- Transfer deed is filed at the title plant for registration with
required tax stamps affixed and transfer tax paid.
- Transfer deed is recorded by title plant and original deed,
duly processed and recorded, is returned to Newco.
Seller NewCo Ultimate Owner 4. Purchase Price: US$ 1,800,000.00
Stamp Taxes 0.83%: Transfer Tax 1.51%: Statutory Legal Fees 1.00%:
Total (**):US$ 59,940.00 (*) Amounts are approximate as they may
vary due to changes in exchange rates. (**) Statutory provision
states that buyer designates the notary public when it is a cash
transaction and all transfer related costs are split 50-50 between
seller and buyerUS$ 14,940.00 US$ 27,000.00 US$ 18,000.00 Statutory
Transfer Taxes and Fees(*) 5. The Free Zone Regime Status (FZR)
grants a set of incentives and benefits granted to companies making
certain new investments in the country Free Zone Regime Status
Definition Filing an Applications for the FZR
- Procomer is the Government Office in charge of the process,
that begins with the filing of a standard application form.
- Process ends with the execution of an Agreement previously
validated by the Office of the President.
- The Agreement would be executed between the Government, through
Procomer, and Newco 2, the Services Company to be
incorporated.
- Timing: Upon filing the applications and when all documents are
approved, approximately 2 months
6.
- The FZR status is granted only to companies that make new
investments in the country, pursuant to the following
parameters:
- An initial investment in fixed assets of at least US$15K for
companies to be established inside an approved Free Zone Industrial
Park (FZIP).
- A initial investment in fixed assets of at least US$2.0MM, for
companies to be established outside a FZIP.
- That the proposed activity itsexport related in nature and that
its products and services are exported to entities or individuals
domiciled abroad or provided to other beneficiaries of the Free
Zone Regime.In the latter case, the services must be directly
related to the production process of the beneficiaries of the Free
Zone Regime.
- In the case of companies that request an authorization to
operate outside a FZIP, a special authorization must be granted by
the Secretary of the Treasury.
Standard Requirments 7.
- The applications of companies seeking to be established outside
an FZIP:
- That the characteristics of the productive process or the
nature of the project prevent its development inside a FZIP.
- That the company has adequate capacity to be subject to the
mechanisms necessary to control the entry and exit of goods and
people in accordance with the General Customs Law, its Regulations,
and the relevant operational policies
Special Requirments 8.
-
- Comply with the requirements of PROCOMER and the tax and
customs authorities import and export and other related internal
controls and procedures.
-
- Establish accounting and operational systems to have a
permanent control of the entry, stay, and exit of goods and
materials
-
- Keep an updated inventory of the goods covered by the
Regime.
-
- Submit an annual operations report to PROCOMER.
-
- Provide and keep an escrow in favor of PROCOMER.
-
- Pay the fees for the use of the Regime on a timely basis.
-
- Comply with environmental, development, sanitation, and other
applicable regulations according to the type of activity of the
company and apply for the corresponding operations permits, as
required.
Obligations and Responsabilities 9.
-
- Comply with the minimum initial investment levels, planned
investment, employment, and other requirements set forth in the
granting agreement.
-
- File the Free Zone Customs Declarations.
-
- Keep and record in the books and records, the operations of the
company related to the goods which are tax exempted as granted by
the Secretary of the Treasury.
-
- Give a proper use to the vehicles and other transportation
equipment covered by the Regime
Obligations and Responsabilities (continued) 10.
- These are granted considering the activity and/or project:
- Exemption of all taxes and consular duties on imports of
merchandises and goods required for the operation.
- Exemption of all taxes and consular duties affecting the
imports of equipment , including the i mport of motor vehicles
required for the operation (management included).
- Exemption of all taxes and consular duties on imports of fuels,
oils and lubricants required for the operation of these
vehicles.
- Exemption of all taxes associated with the importation or
re-exportation of products and equipment.
- Exemption, for a term of ten years as of the date in which the
company begins operations, of taxes on capital and net assets, from
payment of property taxes and from payment of transfer tax on real
estate.
Incentives 11.
- Exemption from sales and excise taxes on purchases of goods and
services.
- Exemption fromwith-holding taxes
- Exemption from corporate income tax and income tax on the
payment of dividends
- Exemption on Municipal taxes for 10 years.
Incentives (continued) 12.
- The initial investment shall be made within the deadline that
is stipulated in the Agreement granting the FZS regime.
- The obligation to comply with a minimum amount of a new initial
investment in fixed assets does not depend on the obligation to
comply with the total investment amount by the beneficiary company
and which is stated in the Agreement even though the minimum new
initial investment shall be considered as part of the total
investment amount.
- The assets purchased before the date of submission of the
application and the used assets purchased in the country shall be
considered as part of the total investment level, but not the new
initial investment by the company.
Critical Deadlines