By: LatinAlliance
Inactive legal entities are those legally constituted and registered in the National Registry or any other competent state entities, which do not exercise economic activity before the General Directorate of Taxation.
Those who obtain only capital income subject to single and definitive withholdings are not considered inactive legal entities. However, in those cases, the legal entities must register their activity in the Single Tax Registry and keep their address, e-mail and other required information updated to avoid being considered inactive legal entities.
From 2023, the owners of inactive companies must complete their informative declaration, in which they are required to detail if they own jewelry, works of art, memberships in clubs, properties in Costa Rica or abroad; balances in bank accounts, debts and monthly amounts to be paid, or if they own commercial brands, turning such declaration into a cumbersome procedure.
With more information implementation, inactive legal entities are obliged to provide data on their assets, liabilities, and capital. This causes having to submit excessive information to a legal entity that does not generate any type of lucrative activity, causing expenses and risks of economic sanctions to the owners of inactive companies, whether they are families or companies.
The D-195 form becomes quite rigorous for the taxpayer.
Failure to file the D-195 document on time, or to comply with the order issued by the Tax Authorities, generates economic penalties for companies or families.