How to Become a Legal Resident of Costa Rica

People find Costa Rica attractive and want to live in the country for a myriad of reasons: good year-round weather, tired of the rat race and hustle-bustle, a new start in life, inexpensive living and retirement, tax benefits, the country’s low-cost health care system, to start a business or invest, to learn Spanish, separation or divorce, to enjoy the country’s large expatriate community and even to find companionship to name a few. Whatever your motives may be for wanting to move to Costa Rica, there are a number of ways to remain in the country on a long-term basis. Tourists from North America and many countries in Europe may remain legally in the country for three months without having to apply for legal residency. You may own property, start a business or make investments with no more than a tourist visa.

We know many Americans, Canadians and other foreigners who started businesses as tourists. If you plan to reside in Costa Rica full-time, however, one of Costa Rica’s residency programs will appeal to you. Several residency categories permit you to retain your current citizenship and obtain long-term legal status in Costa Rica. They are pensionado, rentista, and inversionista (resident investor). Which program you choose depends on your needs and financial position. Becoming a legal resident will by no means affect your U.S. or Canadian citizenship.

In March of 1992 a change in the pensionado law eliminated many tax privileges retirees had enjoyed since the program started in 1964.

Under the old system foreigners with official pensionado or rentista (permanent retiree) status, were required to live in the country four months a year. They were entitled to the following perks: residency without immigration hassles, all the privileges of Costa Rican citizens, except the right to vote and work for hire, the right to import duty-free one of each of the major appliances such as refrigerator, stove, microwave, television, washer and dryer, and many unlimited personal household goods.

Pensionados could import a new car every five years duty-free, provided it was worth less than $16,000.00. In 1992, low taxes on imported cars and duty-free household goods were eliminated. Since then, all pensionados have to pay taxes on their automobiles and household goods the same as ordinary Costa Rican citizens do. Said benefits were really taken away because everyone saw that they were unconstitutionally giving something to foreigners that Costa Ricans couldn’t have themselves. Incentives will always be used to attract people to less attractive countries, but Costa Rica doesn’t have that problem.

The rest of the pensionado’s privileges remain pretty much intact, the most notable of which is legal residency so you can stay in the country legally. So, we suggest you consider these facts before deciding if it is advantageous for you to become a pensionado.

Despite this law, Costa Rica is still an attractive retirement haven since the country offers so much. People continue to flock to Costa Rica because of its high quality of life, peaceful atmosphere, political stability, excellent climate, friendly people who like foreigners, excellent business environment and natural beauty. In fact, Costa Rica has more American residents per capita than any other country in the world. They can’t all be wrong! The Costa Rican government has reduced taxes on some cars and other imported goods, making them affordable for most Costa Ricans as well as foreign residents. This eliminates the need for the tax- exoneration program. If it is absolutely necessary to have an automobile, you can bring a car from the States. You can also go to Golfito, the free port in southern Costa Rica, and buy a stove, refrigerator or other appliance without paying high import duties.

Now let’s look at the requirements and specific documents that you will need to present to the Costa Rican government if you choose to apply for the pensionado or rentista categories.

A Pensionado is someone who lives on a pension (a U.S. Social Security check or permanent retirement program). A husband and wife cannot combine their pensions but the wife can live under the husband’s pensionado status or visa versa. The individual applying can combine pensions to achieve the total required. If the recipient of the pension dies, the spouse can retain pensionado status if the pension is inherited. Some paper work, naturally, is involved. Here are the requirements for this category:

Pensionado
1. A lifetime income of at least $600 a month generated outside of Costa Rica. Social Security recipients need a certification that can be done at the U.S. Embassy in Costa Rica.

2. A signed letter confirming that you will receive this money in Costa Rica. This is not needed if issued by the U.S. Embassy.

3. A letter from a C.P.A. stating that you will receive at least $600 for life, if the pension comes from a company’s pension plan.

4. If the money comes from a private company, two letters from bank officials showing that your company is financially sound and that the pension plan has been in existence for at least 20 years.

5. A detailed account of your company’s pension plan or a yearly corporate report..

As a pensionado you are obligated to exchange $7,200 ($600 per month) a year for colones at a government bank. You need proof of this to update your file. If you can’t prove that you converted enough money during the year, you can lose your status. You also have to renew your pensionado I.D. card every two years ($100) and reside in the country for at least four months yearly (not necessarily consecutively). As a pensionado you can own and operate your own business but not labour. As a pensionado you don’t have to pay taxes on your income from outside Costa Rica. After two years you may change to permanent residency status.

Rentista is a residency category designed for those who are not retired or receive no government pension. To qualify for rentista status, you must have an income of $12,000 a year ($1,000 per month) coming from an investment or annuity outside of the country. As a rentista a good way to do this is to buy a certificate of deposit for $60,000 from a Costa Rican bank that yields a monthly income to you of at least $1000 (from the capital).

As a rentista you must prove that this investment will be stable for at least five years. At the end of five years, you have to prove your source of income again or change to permanent residency after two years. Furthermore, every year as a rentista you have to prove that you changed $12,000 into colones and show your passport to prove you were in the country at least four months (not consecutively).

As a pensionado rentista you can own and operate a business but not labour. The disadvantage to being a rentista is tying up your funds for over two years. Like pensionado dependants are allowed. In brief, to qualify for pensionado rentista status you need:

1. An income of $1,000 per month for the next five years in Costa Rica.
2. Documentation that attests to the company or bank’s solvency, if the income is from a foreign source.
Inversionista is another resident status for people who are not retired and want to invest in Costa Rica. If you have a lot of money to invest, this might be the best route to go. The government will grant residency under this category if you invest at least $50,000 in high priority projects like tourism, $100,000 in reforestation or $200,000 in any other business. No dependents can be included under this category.

The paperwork and requirements are similar to the other residency programs, but there are a few basic differences. Under this program you must reside in Costa Rica at least six months of every year (do not have to be consecutive) and live as a temporary resident for two years. After the initial two-year period you are eligible to become a permanent resident.

If you plan to start a project, additional paperwork—such as a feasibility study and bank references—may be needed. If you are going to get involved in tourism, you will need permission from the Costa Rican Tourism Institute (I.T.C.). When investing in an established company, you will have to show the company’s books. Since every circumstance is different, contact the Residents Association (ARCR) administration for a good lawyer to answer your questions.

The following other documents are required for pensionado, rentista, inversionista (resident investor) and all other types of residency in Costa Rica:
1. Police Certificate - from your local area stating that you have no record. (This document is good for only six months, so make sure it is current.) Required for applicant, spouse, and any children age 18 to 25.
2. Birth Certificate - Required for applicant, spouse and all dependent children (up to 18 years old or up to 25 if a university student - proof of enrollment is required).
3. Marriage Certificate - if applicable. Proof of divorce is not needed.
4. Income Certificate - for Pensionados and Rentistas (required only for the applicant). Please see the previous sections for specific details.
Note: all the above documents usually must be authenticated by any of the Costa Rican consulates in your home country (see the list for the nearest one in this chapter). The charge is $40 per document. The people at the consulate must affix stamps worth the amount to collect the money. If the documents don’t have the required stamps, you cannot buy them in Costa Rica. Talk to the ARCR before procesing documents.

Translation of Documents: Don’t forget that all of these required documents must be translated from English into Spanish by an official translator. Translations from other languages to Spanish have to be either done by the Costa Rican consulate (no one else) in the country where the document was issued or in Costa Rica by an official translator for the specific language to Spanish. The Costa Rican government does not accept translation of the original language to English.

The formal application should have the following information: your mother’s maiden name, full name, nationality, passport number, dependent’s names, date of entry into Costa Rica, origin and amount of income, address in country of origin or Costa Rica, authentication by a notary public and corresponding stamps.

5. Certified copy of your entire passport. (Not stamped by consulate),
6. Photos : Twelve passport size photos—6 front views and 6 profiles.
If you meet the prerequisites for any of the residency categories and have gathered all the required documents, you are ready to apply for your chosen status.
Next, have the ARCR Administration or an attorney present your papers to the proper agency which will process them in four months or so.
If you want to avoid the many inconveniences of Costa Rica’s giant “bureaucrazy” and save time and money in the long run, we suggest you join the ARCR.
The 1500 member ARCR association has been reorganized and revitalized and now offers services to all legal residents in Costa Rica, not just the pensionados.
A provisional membership, which entitles you to all information and services, costs $100 yearly. Members with legal Costa Rica residency pay dues of $50 per year. Spouses and dependents of members may join for $10 per year as Associate members. ARCR offices are located at Casa Canada two blocks south of Centro Colón on the corner of Avenida 4 and Calle 40. They will assist you when you need help applying for pensionado or rentista status for $735 for the primary applicant, inversionista or representante status for $1000 for the primary applicant. These prices are a good deal since many lawyers charge up to $2,000 and take much longer. Dependents documents cost $365 for a spouse and $155 per child.

The ARCR association can also help in buying and selling cars, getting a Costa Rican driver’s license (see chapter 8 for details), assisting with English to Spanish translations of any required documents or papers and making sure your annual papers are up-to-date. The association can also notarize all your important documents, help with the renewal of your I.D. card or cédula and help you obtain medical coverage with the Costa Rican Social Security System and the new supplemental coverage they (the ARCR) now offer (see the section on medical care for details). Should you desire additional information, contact:

ARCR Administration
Apartado 1191-1007 Centro Colón
San José, Costa Rica
Call: 011-(506) 233-8068 or 221-2053 inside Costa Rica and 011-(506) 233-8068 outside the country. Fax 011-(506) 255-0061.
E-Mail: arcr@casacanada.net
Website: www.casacanada.net/arcr

Address in the U.S. for your convenience:
ARCR
SJO 170, P.O. Box 025723
Miami, Florida 33132
The Association of Residents just opened a new office in Guanacaste. The office is located 600 meters West of Langostina Farms near Playa Coco, just 15 minutes from the city of Liberia and 10 minutes from the Guanacaste airport. Their mailing address is P.O. Box 128-5019 GTE, Costa Rica. To contact them call: Tel: 011-(506) 667-0151, Fax: 011-(506) 667-0297, E-mail: hahnlaur@racsa.co.cr.

The Costa Rican Tourism Institute now has a toll-free number to call from abroad for answers to all your questions about Costa Rica. Call 1-800-343-6332 or Fax:011-(506) 255-4997.