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Tech Business in Costa Rica

With the price of doing business in Silicon Valley, and across the US, it is becoming more attractive to set up operations else where to reduce the cost. If you want to stretch your budget

With the price of doing business in Silicon Valley, and across the US, it is becoming more attractive to set up operations else where to reduce the cost. If you want to stretch your budget and be able to hire more staff to give a start up a boost, then you should consider moving your company overseas.

Costa Rica offers a number of benefits to start ups in the tech business.

Cost of Rental.
While office rentals in Sillicon Valley range between $2.20 and $4.5 USD per square foot of space, in Costa Rica you can find a wide range of rental options for your business with prices between .85 cents and $2.45 dollars per square foot. Therefore, while a 5,000 square foot office can cost you $22,500 per month in San Jose California, in San Jose Costa Rica can cost you $12,250 USD per month. That cost difference means yearly savings of $123,000 per year which is money you can allocate to other areas of your business.

Cost and Availability of labor.
In San José California, the average salary for a Software Engineer is $124,555 USD per year. This salary is reflective of the cost of living for an engineer in that area. With lower cost of living in San José Costa Rica, the salaries for engineers are lower too as they do not require to make that much income to have a good standard of living. A software engineer in Costa Rica makes $26,700 USD per year.
Even if you must bring staff from abroad, the cost of salaries will not be reach the six figures. Costa Rican immigration laws makes it very accessible to bring foreign workers to work in any industry, particularly tech due to growing demands, and thus is possible for you to bring developers and engineers from anywhere around the world. For your business, it will be more cost effective to bring engineers from India to Costa Rica than to bring them to live in Palo Alto. Even with a salary of $40,000 USD per year which is much less than the average in Silicon Valley, an engineer from Latin America or Asia will have an above average standard of living in Costa Rica, and enough savings in the bank.
While you will be able to bring foreign engineers and staff to work in your tech company in Costa Rica, you will also have available a pool of local professionals. The ITCR (Costa Rica Tech) graduates professionals qualified enough to work for companies such as Intel and Amazon in Costa Rica. In addition, Texas Tech is in the midst of opening a location in Escazú in the Central Valley which will make more qualified professionals available.

Cost of Equipment and Supplies.
By registering your business as a free trade zone company, you are exempt from paying importation taxes and sales taxes in equipment and materials. Anything that you need to purchase for your business will be exempt from taxes which lowers your cost of operations.

Cost of Services.
Your business does not only depend on your business but also on a range of other services and suppliers such as attorneys, accountants, technicians, marketers, human resources consultants, so on and so forth. These service providers will be accessible at a lower cost as well.

Tax Benefits.
The Costa Rican government has made it cheaper for companies to export services. If you are in the tech business, your clients are worldwide, and under Costa Rican law that is considered an export, and for such companies there is no income tax. There are special free trade zones that allows you to locate your company there as long as you export something out of Costa Rica. By being registered as free trade zone exporter, you have access to tax benefits from income tax to importation and sales tax for products and equipment that you purchase for your business.  Registering your business in a free trade zone will allow you a number of benefits.

With the current immigration regulations, you will be allowed to obtain legal residency for you and any of your team members. You will be able to hire any engineer from around the globe and bring them to Costa Rica.

Legal Structures.
You will be required to incorporate a company in Costa Rica such as Limited Liability Company or a corporation dedicated to the development of your product or services. From this company you will be able to run your operations in Costa Rica have access to the tax benefits of the free trade zone. You can record the profits of your company in back in the country where the company is headquartered, whether it is in the United States, Europe or any other country. It is certainly possible for you to domicile the headquarters in a more tax friendly country such as Singapore, Panama, or Malta, but to run your operations in the low-cost environment that Costa Rican provides.
The legal system is sufficiently robust to protect your business interest and those of your investors. Costa Rica has rigorous record keeping guidelines to secure those interest. Currently, there are a lot of arbitration courts which makes it very accessible to companies and or shareholders to resolve any disputes.

Trademarks and Patents.
Costa Rica is member of the World Intellectual Property Organization, under which it has adopted numerous agreements with the intent to protect intellectual property. The government has made a lot of progress as part of the commitment it has made with WIPO with the purpose to bring foreign investment.
There is a centralized registry system where all patents, trademarks and copyrights are recorded with the corresponding information of the owner, whether it is a company or an individual.

Cost of Living.
While there are benefits for your company to operate in Costa Rica, there are also benefits for you and your team of developers and support staff. Companies in, Silicon Valley depend on the ability to bring engineers and staff to work for them in California. People from all over the US and the rest of the world relocate to Silicon Valley to be part of the tech force, but Silicon Valley is one of the most expensive place in the US to do business and to live.
You can relocate your teams to Costa Rica who will be able to enjoy a lower cost of living compared to Silicon Valley. While not everything is cheaper such as automobiles and clothing, the overall cost of living is lover than major industrialized cities and countries.
While on average, three-bedroom apartment in San Jose California is $2.62 USD per square foot in San Jose Costa Rica it is $1.19 USD. This means that a 1,300 sq.ft. apartment in San Jose California is $3,415 USD in San Jose Costa Rica will be $1,547.

Quality of Life.
While you want to make a successful company, you can also do it with a flare while living in a beautiful country. With endless beaches, breathtaking landscapes and all the amenities of the modern world, doing business Costa Rican will not only be more cost effective for you but will also enhance your quality of life as well as your staff. A little larger than the Netherlands, Costa Rica is a small country with a diverse population and where immigrants make roughly 10% of the population. Over the past two decades, life in Costa Rica has changed and growth has reached both the Central Valley and the rural parts of the country offering a variety of options of places to live and to visit.
Costa Rica relies primarily on renewal energy and is one of the only countries in the world with no standing army.
Costa Rican culture lends itself for a secure and peaceful life, with a life expectancy is 79.6 years and literacy rate is 97%, and with a health care ranking of 36 just above the United States at 37, Costa Rica ranks number 30 in the best countries to be born, where the United Kingdom is 27 and Japan is 25.
While being a developing country with a small population of 4.8 million and an estimated GDP of 90.157 billion for 2018, Costa Rica offers a lot of benefits for any entrepreneur and for any immigrant who would like to set up a business in Costa Rica.

Costa Rica has welcomed companies such as Amazon, Intel, Hewlett Packard, Microsoft and IBM, the advantages of setting up shop in Costa Rica are not exclusive to large companies. You can relocate your start up to Costa Rica and enjoy the same benefits.



Attorney and Entrepreneur with more than 15 years experience in: immigration law in the US and Latin American countries including Argentina, Chile, Colombia, Brazil, Costa Rica and Panama. In addition, Rafael has extensive experience in Business Law, Estate Planning, and Real Estate. Lastly, Rafael has developed experience in people management, talent development and business development.

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