Did they really simplify the residency processes for Investors?

On February 23, 2023, Executive Decree No. 43926-MGP-H-TUR was finally published in the National Newspaper La Gaceta, to define the new regulations on investor residency to implement the provisions contained in Law No. 9996, “Law for the Attraction of Investors, Rentistas, and Retiree Residents”.

It is important to remember that Law No. 9996 established incentives to attract foreign investors, rentistas, and retirees and in this way contribute to and promote the necessary economic reactivation of Costa Rica in the post-Covid-19 pandemic period.

In this article, we are going to focus on considerations about the other changes implemented in the regulations under study, which have an unexpected impact on the requirements for Temporary Residency of those foreigners who have bought or want to buy properties in Costa Rica.

First, the regulations confirm that the new minimum investment amount required is US$150,000 (before the reform it was US$200,000), which is one of the benefits of the new regulations. Regarding the type of investments allowed to qualify as investors, they remain the same: real estate or registrable property, shares, securities, projects of national interest or productive projects, venture capital fund, sustainable infrastructure projects.

However, the main reform, which is explicitly established, is for those investments in real estate or registrable property, since the new regulations on the investor residency establish the obligation to have them recorded by the investor in his/her personal capacity, being no longer accepted those registered in the name of legal entities. In this sense, Immigration Authorities will not be allowing residency applications as an Investor in real estate in which the person proves the investment through demonstrating that he/she is the legal representative and owner of the equity of the company under which the acquired property was recorded. Now the regulations require that, if the basis of the investment is a property, it must be registered in the name of the applicant as a natural person.

In the event that the residency application is based on the cause of the investor for the purchase of “shares” of a company, it must be explicitly demonstrated, through suitable documents issued by a Notary Public and a Certified Public Accountant, that the shareholding acquired by the applicant has a real value of at least US$150,000 established in the regulation, as well as the obligation to be (the company) registered and active as a taxpayer before the General Directorate of the Tax Administration.

For all of the above, these regulations undoubtedly bring many challenges for all people who already had or have recently bought a property in the name of a company, which, according to our experience, represents the majority of foreigners, considering the advantages that the acquisition of a property through a Costa Rican company entails (or entailed), including in terms of the separation of the assets and the management of the property.

We will have to wait to see how these regulations develop. What is clear, is that there is quite strong opposition from various industries and chambers, which will seek, either through unconstitutionality actions or other legal mechanisms, to find a less conditioning adaptation for foreigners who wish to come and invest in our Country. At the moment, all those residency applications submitted before February 23, 2023, should not have any problem in being resolved in accordance with what was established in the past, since they should not be negatively affected by a subsequent regulation.

At Blue Zone Legal, we remain at your disposal for more information and advice about alternative options. Contact us at: info@bluezonelegal.com.

We invite you to subscribe to our newsletter below on this same page to receive updates on the news regulations on investor residency and other topics of interest.