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Am I Able to Work in Costa Rica?

Regularly, people make the mistake of generalizing an idea, a concept, or a rule. It is very important to understand that everyone has a different set of circumstances, and thus, any rule or situation may

Regularly, people make the mistake of generalizing an idea, a concept, or a rule. It is very important to understand that everyone has a different set of circumstances, and thus, any rule or situation may affect different people in a different manner.

This is true to residencies in Costa Rica. A regular question that expats asks themselves in Costa Rica is if they can work while holding a residency. There are some residencies that are restricted, meaning that it is not possible to work if you hold one of these residencies. There are other categories of residency that allow people to work. So, people may think they are not authorized to work while they are not, and some other people may think they cannot work when they actually can.

The first step is to understand that there are numerous types on immigration categories, and not all of them are residencies.

Is the spectrum of Costa Rican Immigration Law you can find the following categories:

  • Residents
    • Permanent Residents
      • Parents of Costa Ricans
      • Temporary Residents with three years of being residents
    • Temporary Residents
      • Pensionados*
      • Investors*
      • Rentistas*
      • People married with Costa Ricans
      • Specialized Workers (self employed, or employed by a company)
  • Non Residents
    • Tourist Visas*
    • Estancias
      • Travel Agents
      • People representing foreign companies
      • Reporters and journalists
      • Patients for medical treatment
    • People in Transit*
    • People working for international transportation companies
    • Special Categories
      • Transborder workers (People working along the borders in Panama and Nicaragua.
      • Temporary Workers
      • Specific Workers for a company and people with own business
      • Students* and teachers
      • Artists, athletes, and support personnel.
      • Refugees
      • Asylees
      • Victims of trafficking
      • Workers for projects of national interest.

People holding status from any of the categories listed above and that have a star right next to it are not legally authorized to work. But we need to understand why, as it also explains in which instances some of may be authorized to work.

For the purposes of this article, we are going to focus on the Pensionado, Rentista and Investor which we are going to refer to as the PRI categories.

Now, let’s review the intention of the legislation which is to protect the local work force. Thus, it allows certain categories of foreign people to live in the country but not to participate in the labor market.

The PIRs are income or investment based. From this perspective, the legislation reckoned: I will let you live here if you demonstrate having income or capital to live here. In the cases of rentistas and pensionados, they need to demonstrate an income. Pensionados must demonstrate an income of $1,000 USD through pension, and for rentistas they must demonstrate an income of $2,500 USD through a variety of sources.

Investors, while they are not required to demonstrate an income, must demonstrate capital investment in the country, and the logic of the legislation is; if you have capital to invest in the country, you must also have capital to pay for your living expenses.

For the PRIs the notion is that the foreign national does not need to get a job to live in Costa Rica, and therefore does not make it accessible to get a job.

What if I do not want to get a job but I have my own business?

Well, that is an option. People who are not able to go get a job in a company can certainly be self-employed. There are many expats who live in Costa Rica and work remotely providing services abroad. That is perfectly fine.

Many times, people wonder if they can provide services in Costa Rica or work for their own company in Costa Rica. The answer is it depends.

There are two categories for self-employed people. The problem is that since last year the Labor Department has not been approving these categories due to the high unemployment rate in Costa Rica. Over the past several years we were able to obtain residencies for self-employed people (not the PRIs), but it has become a challenge since mid-2019.

For people who are in the PRIs, while they can get residency the challenge lies on the type of work they do. If they provide services and it is primarily remote work, such as online from home, they will have more flexibility. People who intend to do a brick and mortar busines and work in it, it will not be possible. People in this category will be for example a chef, or someone having retail store.

If you have your own job and work doing business consulting, then you are not really taking anybody’s job, but being the chef of a restaurant is the type of job the CR Government expects you to hire some one to do.

There are attorneys that may tell you different. What I can tell you is that the law sets the PRIs as restricted categories and thus you are not allowed to work. But in my case, I personally take the intention of the legislation when the laws were enacted, which is to protect jobs for Costa Ricans. The way that I see it is if you are self-employed, then you are not taking anybody’s job away.

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rvalverde@outlierlegal.com

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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10 COMMENTS
  • Pablo Elguera February 5, 2021

    Hello! I’m working as a Teacher in a music school. In stead of perciving a salary each month, I deliver my invoices to the school for my classes.

    Can I try to get the working permit for “Teacher” in my condition? What would I have to ask to the school manager to give me, besides the letter?

    Thanks very much

    • Marianela Sánchez February 10, 2021

      Hi Pablo! Thanks for reaching us. That will be possible if your employer is registered before the government and immigration authorities to ask for this type of visa.

      The employer is responsible for sponsoring the work permit for the foreign employee, which means that the employer must produce the qualifying documents for the application process such as a work contract, tax documents, business permits and licenses, etc. The employee must only produce the biographical documents such as a birth certificate, a background check, fingerprints, photos, etc. Every foreigner who wishes to work in Costa Rica must carry a work permit, with the exception of foreigners with a residence card (DIMEX) or foreigners with current refugee status.

      A key factor to keep in mind is that the employee must possess a special or advanced skill. This skill is exceptional and readily available in the job market.

  • Mark April 27, 2021

    Thanks for the helpful info. My understanding is that it is also acceptable if you are working for a company based in the US doing services outside of Costa Rica. In that situation, my employer would not be subject to Costa Rican requirements, and I would only pay US taxes on that income. I’m aware of the potential digital nomad residency program, but until that happens, how could I prove to a potential employer that this scenario does not pose a legal risk to them?

    • Stacey Jennings April 27, 2021

      It would be possible to have one of our lawyers write up a letter stating that is the case.

      • Mark April 30, 2021

        Great, how would I go about using your services for that?

  • Joan Louise Davidson April 30, 2021

    I have a similar situation as Mark. I currently work from home in the US doing services outside of Costa Rica. I would qualify for the digital nomad but that has yet to be approved. My employer is requesting some form of documentation stating it is legal for me to work remote for them and they would not have any legal risk. Is it possible to have one of your lawyers write up a letter? If so I would be interested. Thank you

  • Mattia May 1, 2021

    Hello and thanks for this information! If I apply for temporary residency as a self-employed person (I work 100% online, all customers in Europe or the U.S., I am not a nomad :-)), do I need to show a certificate of income from a CPA? Also, I understand one needs to show evidence of skills, but I am self-taught, what is the way to show the skills? I have already a tax ID and a corporation (S.A.).

    • Stacey Jennings May 4, 2021

      Non-resident (short period):

      If you come as a freelancer, you will not subject to VAT or Income tax as long as the services/goods you provide, or sell are enjoyed outside of Costa Rica for shorter periods than 183 days within a fiscal year.
      Long-period stay:

      Bylaws of Income Tax Law, Article 5.1. defines that you will become a taxpayer of the Income Tax if you stay in Costa Rica for 183 days or more within a fiscal year. All exits of the country add to this timeline unless they exceed 30 calendar days.

      Even though this cannot be translated to a risk for the company, it could be for you whom will need to be especially cautious with his time in Costa Rica, ensuring he will not exceed the 183 days in the country by making departures with a larger extension than 30 calendar days each time he does not want to compute days “inside” the Costa Rican territory.

      If for any reason you exceed this period, you will need to obtain a “Certificate of tax residence” with Hacienda which will help you to declare taxes and avoid double taxation between Costa Rica and your tax residence country.

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