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Hacienda Introduces New Form for Inactive Entities

Tax Filing Countdown: Hacienda Introduces New Form That Must Be Submitted By May 31 for Inactive Entities.

The owners of so-called inactive companies, commonly used to purchase properties in Costa Rica, must complete a new declaration introduced by the Ministerio de Hacienda, the Costa Rican tax authority, by May 31, 2023.

The new requirement applies to holders of Inactive Legal Entities, who will have to detail properties owned in Costa Rica and abroad as well as the balances in bank accounts, assets, and other holdings, such as vehicles, cattle, art or jewelry.

There’s also one added difficulty to complying: The form, which will be called the D-195, won’t be released until April 24 by Hacienda, leaving just five weeks for users to understand and complete the first time filing.

Both Costa Ricans and foreigners regularly use legal entities to purchase properties and cars which do not entail a lucrative activity. For each company, they will be obligated to fill out the new D-195 form, which was described by the Ministry as “summarized and simple.”

The form template published in the official gazette shows about 30 fields, some with detailed multiple-selection queries that lead you to choose one or several options. Among the requirements, the taxpayer must inform why the legal company does not have lucrative activity, details of registered assets, expenses and debts; and the identification of the physical or legal person that provides the financial resources to meet its commitments.

“The team at CCA will be assisting our clients with this new requirement. It’s important to reach out to your legal representatives ahead of the deadline, in order to assure that the information required will be available for this first time filing”, according to Federico Jenkins, cofounder of CCA Abogados, a boutique law firm with offices in Avenida Escazú and the Flamingo Marina.

The electronic form will be published at 8 am. m. on April 24, and the deadline to submit information for the fiscal periods of 2020, 2021 and 2022 will be May 31. For the past couple of years, some representatives have used the D-101 income tax form to fulfill the requirement. However, guidelines published by Hacienda indicate that the new form will have to be submitted for prior years by companies that have not completed the process with the past format.

“Around one out of three inactive entities registered in Costa Rica have not been submitting the information during the prior years, which means many will be forced to play catch up now to fill out the details”, according to Mariamalia Guillen, attorney, CPA and cofounder of CCA Abogados.

Hacienda estimates that 167,000 inactive entities are obligated to submit the informative filing yet only 53,000 have complied by using the general form available in the past.

Inactive legal persons are those legally constituted and registered in the National Registry or other competent state entities, which do not report economic activity before the General Directorate of Taxation.






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