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Establishing and maintaining a Costa Rica payroll
Costa Rica, despite being only being around 50,000km2 in size and having a population of around 5 million, possesses one of the strongest economies in the region. This, among other reasons, makes it a great place for foreign business to expand.
One important element of expanding into Costa Rica is likely to be hiring locally, and this means setting up an in-country payroll. Establishing payroll in Costa Rica involves navigating a complex set of unique and frequently changing employment laws, which can be a lengthy and difficult process.
At Horizons, we specialize in helping organizations of all kinds expand internationally, including into Costa Rica. We will handle your payroll setup and ongoing management, whether or not you already have a registered in the country.
Why choose the Horizons payroll solution?
If you have an entity
If you have already established a legal entity for your business in Costa Rica, we can provide outsourced payroll solutions to help you build and manage your local payroll. In addition, we can manage all of you HR, contracts, and legal compliance work to ensure you are fully equipped to hire locally as rapidly as possible
This level of outsourcing is a good choice for any company that already has an entity in Costa Rica and could benefit from support from Costa Rica experts.
If you don’t have an entity
If you have not already officially registered an entity in Costa Rica, then you can outsource your payroll setup and management to Horizons, making use of our established Costa Rica subsidiary to act as employer of record.
This option is well suited to organizations looking for a quick, low-risk, and flexible route into Costa Rican hiring and expansion.
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Costa Rica payroll guide
What withholdings and taxes are required in Costa Rica?
Employees and employers in Costa Rica must both pay into the country’s social security system (known as the Caja). Employees must contribute around 9.5% of salary, while employers contribute around 34.5%.
The income tax rate in Costa Rica is set progressively, so employees pay more at higher income levels. The rates range from 0% to 25% of income.
Corporate tax in Costa Rica is 30% for most companies.
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Health and Maternity
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9.25%
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Basic Pension Scheme
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5.25%
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Banco Popular Employer Fee
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0.25%
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Family Assignations
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5.0%
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Social Aid (IMAS)
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0.5%
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INA
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1.5% |
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Contribution from Banco Popular Employer
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0.25%
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Labor Capitalization Fund
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3.00%
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Complementary Pension Fund
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0.5%
|
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National Insurance Institute (INS)
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1.0%
|
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Total Employment Cost
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26.5% |
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Medical & Maternity
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5.50%
|
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Disability, Old Age & Death Benefits
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4.0%
|
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Workmens Savings Banks
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1%
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Total Employee Cost
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10.5% |
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0-840,000 CRC
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0.0%
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840,000- 1,233,000 CRC
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10.0%
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1,233,001– 2,163,000 CRC
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15.0%
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2,163,001 – 4,325,000 CRC
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20.0%
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4,325,001 CRC and above
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25%
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Entitlements and terminations
In general, employees in Costa Rica are entitled to 30 days of notice prior to termination, and must also be given one day per week (paid) to look for another job.
When employees are terminated without proper cause, they are entitled to a severance payment. This payment varies from between seven days and 22 days of pay, depending on their length of service with the employer.
How to establish a Costa Rica payroll
An important part of the hiring and payroll process for many foreign organizations is setting up a Costa Rican entity to act as employer of record. This process can be lengthy and expensive, often taking weeks or even months to complete.
Alternatively, Horizons can simplify your entire employment and payroll process, helping you get up and running in Costa Rica in a matter of days. Our employer or record service means that you can even benefit from our solutions if you don’t have a registered entity in Costa Rica, using our Costa Rica subsidiary as employer of record for your workforce.
Manage payroll in Costa Rica
Whether it’s EOR service or just payroll management, Horizons’ employment experts can help you get started in 24h.
