Engage In Costa Rica

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About Costa Rica

Capital City

San José

Population

As of March 2024, the estimated population of Costa Rica is 5.2 million.

Currency

The currency in Costa Rica is the Costa Rican Colón (CRC). The currency symbol is ₡‎.

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Overview

Located in Central America, Costa Rica is a gem that stands out amidst its turbulent neighboring countries. Renowned for its breathtaking landscapes, rich biodiversity, and commitment to environmental preservation, Costa Rica has earned its reputation as an ecotourism heaven and a true tropical paradise. With its mild subtropical climate, the country offers a serene and pleasant atmosphere year-round, making it an ideal destination for those seeking a relaxed getaway. The nation is defined by its diverse geography, with four majestic mountain ranges stretching from north to south, separating the country into various regions. In the heart of Costa Rica lies the capital city of San Jose, nestled within a highland valley. The country’s Pacific side boasts two expansive peninsulas, the Nicoya and the Osa, making for a coastal wonderland with pristine beaches and exceptional surf spots. Costa Rica’s commitment to democracy and stability is evident through its well-established governmental institutions, independent judiciary, and high literacy rates. This remarkable nation’s dedication to peace, human rights, and environmental preservation has not only attracted international recognition. Still, it has also made Costa Rica a role model for sustainable development and a true sanctuary for travelers seeking both natural beauty and cultural enrichment.

Employment Relationship

Permanent Employment

Employment contracts concluded for an indefinite term are considered permanent employment. If employment continues after a contract signed for a fixed duration expires and is not renewed, it is considered permanent employment. Indefinite term contracts can be terminated without a just cause by giving prior notice. Permanent employees who are dismissed unjustly are entitled to severance pay.

Fixed-Term or Specific-Purpose Contracts

Employment contracts can be made for a fixed-term or the duration of specific projects. The Labor Code stipulates that fixed-term contracts may be concluded for a period of up to 1 year. In the case of work that requires special technical training, the duration is extended up to 5 years. The law also provides that if any contract signed for a fixed duration expires and is not renewed while the employment relationship continues, employment will be considered permanent. Through the payment of specific damages, both parties can terminate fixed-term contracts without just cause before the expiry of their term or the conclusion of the work.

Temporary Employment Contratcs

Employers can hire employees for occasional, seasonal, and piece work. Intermediaries can be used to hire temporary employees for contracts lasting up to 5 years. Temporary contracts not exceeding 90 days can be made verbally.

Probationary Period

With only implied guidance, the de facto probationary period in Costa Rica lasts 3 months. Employees employed for less than 3 months with the same employer can be dismissed without a notice period or payment in lieu of notice. In addition, such employees are not eligible for a severance payment. The probationary period for domestic workers also lasts 3 months.

Working Hours

In Costa Rica, the labor law indicates that regular working hours are 8 hours per day, 6 hours for night shifts, and 7 hours for mixed shifts. The standard workweek is 48 hours. However, in jobs that are not unhealthy or dangerous, an ordinary day shift of up to 10 hours and a mixed shift of up to 8 hours may be stipulated, provided that the weekly work does not exceed 48 hours. The daily work time limit for persons above 15 years and below 18 years of age is set at 7 hours (42 hours a week). The working hours for persons above 12 years and below 15 years of age cannot exceed 5 hours a day. Telecommuting (or working outside of the office) is legally permissible in Costa Rica. No contract for teleworking may contravene the provisions of the Labor Code of August 27, 1943, with regard to working hours.

Holidays / PTO

Statutory Holidays

New Year’s Day - January 1 • Juan Santamaria Day - April 11 • Holy Thursday - Variable • Good Friday - Variable • Labor Day - May 1 • Guanacaste Day - July 25 • Virgin of Los Angeles Day - August 2 • Mother’s Day - August 15 • Independence Day - September 15 • National Culture’s Day - December 12 • Christmas - December 25

Paid Annual Leave

Employees receive paid annual leave of at least 2 weeks after 50 weeks of service, or 1 leave day per month if they have worked for less than 1 year. Employees are paid their regular wages during annual leave. If there is a good reason for which an employee cannot enjoy their annual leave, they can accumulate the leave allowance up to 3 times and agree to take payment in lieu of leave. Annual leave can be divided into a maximum of 2 parts. Part-time employees are also entitled to annual leave. 

Sick Leave

There is no provision for sick leave in Costa Rica. In case of occupational illness, employees who have paid social security contributions for 6 months in the 12 months prior to the start of sickness are entitled to receive 50% of their salary for the first 3 days of sickness. The Social Security Institute pays the other 50%. From the fourth day, employees receive 60% of their salary for 45 days of sickness with funding from the Social Security Institute. The employee must submit a medical certificate to the Social Security Institute to receive payment. After 45 days, employees whose salary is less than CRC 100 (Costa Rican colones) per day receive 100% of their remuneration, and employees with a salary higher than CRC 100 per day are eligible to receive 67% of their salary. This benefit is paid for a maximum of 2 years. After 2 years, an assessment of permanent disability is made and payment of temporary disability benefits is suspended.  When an employee is not entitled to the benefits, but has contributed up to 2 installments and becomes disabled due to illness, they will receive financial assistance for up to a maximum period of 12 weeks.

Maternity Leave

Costa Rica's Labor Code provides 4 months of paid maternity leave to pregnant employees: 1 month before and 3 months after childbirth. To benefit from this leave, an employee must submit a medical certificate stating that the delivery will probably occur within 5 weeks from the certificate's date of issue.  The benefit amount for the entire duration of maternity leave is equal to the employee's salary. Benefits are funded equally by the employer and Costa Rica's Social Security Fund. An employee who adopts a minor is also entitled to 3 months' paid leave immediately following the arrival of the child. 

Paternity Leave

Costa Rica grants 2 days of paid paternity leave per week to biological fathers for the first 4 weeks after the birth of their child. In case of death of the mother during childbirth, the remaining maternity leave is transferred to the father. 

Termination of Employment

Notice Period

The notice must be provided in writing, but if the contract is made verbally, notice can be given verbally in the presence of 2 witnesses. The duration of notice is as follows: 3 to 6 months of service – 1 week 6 to 12 months of service – 15 days More than 1 year of service – 1 month.  

Severance Benefits

Depending on employment tenure, employees hired for an indefinite term who are involuntarily dismissed for causes other than disciplinary breach may receive severance benefits ranging from 7 days’ salary to 20 days’ salary per year worked. The maximum severance benefit is limited to 8 years of employment. Fixed-term employees are also entitled to severance benefits if their contract is terminated unjustly before the term's expiry. For contracts of less than 6 months duration, the benefit is 7 days’ salary. For contracts of more than 6 months duration, the benefit is 22 days’ salary.

Social Security

Pension

There is a compulsory insurance scheme for employees in the private and government sectors in Costa Rica. The legal age for retirement is 65 years with pension eligibility if at least 240 contributions have been paid. If not 240, but at least 180 installments have been paid, employees become eligible for a partial pension proportionate to the number of contributions paid relative to 240. There are two types of pensions: Basic Pension and Mandatory Individual Account. The Basic Pension is calculated based on the average of the best 300 monthly salaries of the employee. An annual bonus equal to one month’s salary is also paid in the first year. There are provisions for early retirement with a reduced pension. Mandatory pension is a supplementary pension that depends on the total amount of contributions made by the insured and employer in a pension fund of their choice. The benefit is paid as long as the fund lasts. There is a non-contributory pension scheme for Costa Ricans above 65 years of age or disabled people under 65 who are not registered with the contributory pensions scheme and are in a state of extreme poverty. The amount of monthly pension is CRC 82,000 (Costa Rican colones). The contributions for social insurance are paid by employers, employees, and the government. 

Dependents/Survivors Benefit

A mandatory social insurance scheme provides benefits to survivors after the death of the insured employee. The benefit applies if the deceased was a pensioner for old age or disability, made at least 180 contributions, and contributed for at least 12 months in the 24 months before death. Their spouse, children, parents, grandparents, and siblings are eligible for benefits. If the deceased employee had paid at least 12 monthly contributions but was not eligible for a pension, their survivors are entitled to indemnity payment equal to 1 month's salary for each month of contribution. The pensions from the Mandatory Complementary Pension Scheme (ROPC) are also transferred to the survivors in the same manner as the basic pension regime.  Monthly benefits are paid to survivors by the employer for a maximum of 10 years (though premiums are paid to the National Insurance Institute) in case of death due to occupational risk.  

Invalidity Benefit

The social insurance scheme in Costa Rica provides insurance benefits for disability to employees who have lost at least 2/3rd of their ability to perform their profession and have contributed at least 180 monthly contributions. There are two types of pensions: basic and mandatory. The Basic Pension is calculated based on the average of the employee's best 300 monthly salaries and the number of contributions made. Mandatory Pension is a supplementary pension that depends on the total amount of contributions made by the insured and the employer. Pension is paid as long as the fund lasts. There is a non-contributory pension scheme for disabled nationals of Costa Rica who are under 65 years of age, not registered with the contributory pensions scheme, and in a state of extreme poverty. The amount of monthly pension is CRC 82,000 (Costa Rican colones). Benefits are paid by the employer (through premiums paid to the National Insurance Institute) for disability caused due to occupational risks, depending on the type and degree of disability.

Taxation of Compensation and Benefits

Personal Income Tax

All natural persons domiciled in Costa Rica are considered taxpayers per the tax code, regardless of nationality. The fiscal year in Costa Rica runs from January 1 to December 31. Individuals who stay in Costa Rica for 183 days in a fiscal year are considered domiciled residents. Income earned outside Costa Rica is not taxable. Income from employment is subject to tax at a progressive rate from 10% to 25%. Income from business or a profession is also taxed at a progressive rate from 10% to 25%.

Immigration

Types of Visas

The following are the categories of visas issued in Costa Rica: Artists visa – granted to persons interested in putting on an entertainment show in Costa Rica Consular visa – issued from the Consulates of Costa Rica for 30 days Provisional consular visa – issued to persons who wish to obtain temporary or permanent residence in Costa Rica to grant them entry for applications processing Tourist visa – issued to persons visiting Costa Rica for tourism purposes Transit Visa – issued to persons traveling to another country via Costa Rica Consultant or exceptional visa – issued from any other Consulate of Costa Rica than the country of origin of the person entering Costa Rica Multiple entry visa – granted to persons who wish to enter Costa Rica multiple times in a period of 1 to 5 years Foreign nationals may apply to the immigration sub-category of Stay (Estancia) for Remote Workers and Service Providers if they provide paid services remotely.

Work Permit

Foreign nationals who wish to work in Costa Rica must obtain a work permit from the General Directorate of Migration and Foreigners. The permit allows them to work for a specific company or employer. Employers must apply for a work permit on behalf of foreign employees. The application must include an employment contract indicating tasks to be performed, the contract's duration, and salary. The work permit is valid for 3 years. After that, employees may apply for a residence permit. Foreigners who have a residence permit can work without a work permit.

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