The debt will be considered as part of the liabilities that the estate asset must cancel BEFORE being able to be distributed among the heirs.  The executor must consider among the credits to be paid, the sums that have been demonstrated either within the process or in a collection process that has been “attracted” by the universal process.

A privileged creditor (with a mortgage or chattel mortgage) must serve the estate of its collection process, but due to the nature of this privileged position, he will not be delayed by the evolution of the estate process.

If you have questions do not hesitate to send them to ablanco@arturoblancolaw.com

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Thus, the parents share a degree with the husband or common law spouse of the deceased person and the children of this. By law then, these three distinct heirs share a degree of equality. In the case of the spouse or cohabitant, he/she has limitations corresponding to the amount he can receive depending on the community property within the probate. But, as a rule, he/she is one of the co-heirs.

In some cases, while the estate is being processed, one of the parents of the deceased may die. If this happens, their inheritance position could then be expanded to include other people such as the deceased’s siblings, who will inherit within the estate of their brother via this situation.

It is, however, feasible for the Parents to assign their hereditary rights to the children of the deceased, in order not to dilute the assets of the inheritance or to simplify the processing of a process.

Any questions please send them to ablanco@arturoblancolaw.com

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This is mandatory even though there is an eventual representation by the parents (in exercise of Parental Authority), as there may be cases in which the parents can also turn into co-heirs together with their minor child.  Here, you have a case where there is eventually a conflict of interests in which the interest of the child must be protected.

Estate proceedings that have minors or incompetent individuals must be processed before a civil court as an additional guarantee of objectivity in favor and protection of them.  The courts will oversee, evaluating the requests for the sale of goods in advance, or the distribution between heirs where the protection of the needs of minors is not considered.

The position of a minor in this sense, can be seen in a similar way to that of a creditor of the succession, where he has a rank of privilege and special protection. This will remain until they turn 18 (the legal majority), at which time they are free to make their own decisions with legal value.

The incompetent duly declared, find themselves in a similar situation.  The characteristic of the situation of vulnerability in their mental capacities grants them also the need to protect them.  To this end, it is the Attorney General’s Office, which assumes a role of reviewing the interests protected by these adults but with diminished capacities.

It is the task of the Executor during the process, to ensure the protection of the rights and eventual needs of these people.

If you have any questions please write me at ablanco@arturoblancolaw.com

The post Estate proceedings and successions: Protecting the Minors and the Incompetent appeared first on Arturo Blanco.

“Legal entities that have not carried out lucrative or substantive activities in the fiscal year must submit the Income Tax Form D-101, which establishes in article 20 of the Income Tax Law, No. 7092 and its reforms. For this purpose, they must include the information on assets, liabilities and equity in accordance with the International Financial Reporting Standards (IFRS) and resolution DGT-R-029-2018 (…)” 

According to the aforementioned, it is necessary to maintain the proper support documentation of the following:

• Assets: fixed assets, investments, bank accounts, among others.
• Liabilities: bank debts, loans, among others.
• Equity: shareholder’s equity, additional paid in capital, revaluations, among others.

This specific compliance obligation indicated above, should be satisfied annually, within two months and fifteen calendar days following the end of the fiscal year (due date for fiscal year of 2020 would be March 15^th of 2021). All data must be duly confirmed even if there was no variation within the year.

Even though this task is to be done by an accountant, at Arturo Blanco – Jurex Law we offer comprehensive assistance & advisory to carry out all these new compliance formalities.

It is important to mention that the information (annual accounting and the tax filing) will be prepared based on the information given by the Company.

Do not hesitate to contact us directly in case of having any potential doubts.

Kind regards,

Arturo Blanco esq.

The post The Costa Rican Tax Authorities published Resolution No. DGT-R-075-2019, related to the obligation of “inactive companies & entities” appeared first on Arturo Blanco.

The influx of tourism into Costa Rica was (and will probably be even after the COVID 19 stage), a source of income both for hotels as well as short term stay properties or Airbnb. It has been estimated that in 2018, 524000 tourists opted to stay at an Airbnb property over a traditional lodging.   These makes the short-term lease properties an option, that many local owners and investors have turned into to support their local investments or even make a good income from.

However -as it normally happens upon blue oceans- the Costa Rican Government has approved regulations to cash-in as a partner of this investments.  In November 19, 2019, the “Framework Law for the Regularization of Non-Traditional Accommodation and its Intermediation through Digital Platforms” was enacted and published in Gazette No. 220.

Clearly it defines the short-term rental properties use as follows:

ARTICLE 3- Definitions

“For the purposes of this law, the following are understood as follows:

(…)

c) Non-traditional accommodation: type of tourism consisting of the provision of tourist services for the rental of homes, apartments, villas, chalets, bungalows, rooms or any other similar construction, which conform to a homogeneous and independent whole, for periods not exceeding one year, nor less than twenty-four hours.”

The law approves the operation of such activities even within neighborhoods if:

“Non-traditional lodgings, regulated by this law, may operate their commercial activity in areas classified as residential, provided that they do not alter, disturb or negatively affect the environment to which the property where the activity is carried out is circumscribed.”

So, it adds a new vision to zoning regulations.

The subject of the law is deemed as:

“Providers of non-traditional accommodation services: any natural or legal person who, in his name, in a habitual and lucrative manner, is engaged in the provision of accommodation services to tourists, whether domestic or foreign, for periods not exceeding one year, or less than twenty-four hours, in homes, apartments, villas, chalets, bungalows, rooms or any other similar construction that fits a homogeneous and independent whole. They are marketed individually and directly or through their own brokerage platforms or platforms between the non-traditional hosting service provider and the end user”

Obligations for the owner of the rental business

What are the legal obligations of this newly regimented activity?  Within the same law the Costa Rican government has mandated the following obligations, in order to become an “approved short term rental”:

1. Become visible: Register as a provider of the non-traditional lodging service before the Costa Rican Tourism Institute (ICT).  This process is deemed as a “simplified digital registration” made available for that purposes of the Costa Rican Tourism Institute.
2. Register with the Directorate-General for Taxation as a taxpayer, for the applicable taxes established by law.
3. Upon approval, issue the digital invoice broken down with the services provided, in accordance with the agreed or agreed prices.

Applicable taxes to the rental activity:

The applicable taxes to this activity are:

• VAT which is currently 13%. You can consult the VAT tax regulations at: https://www.hacienda.go.cr/contenido/13358-declaracion-de-inscripcion-modificacion-de-datos-desinscripcion-en-atv
• Income tax: which will depend on the bracket your income places you.

Compliance with the law and the obligation to register

The same law that has been enacted call for different kind of administrative and legal penalties when there is an Airbnb (or similar) operation not complying with the local regulations. The non-compliance with the law is defined when:

• The non-traditional lodging service provider is not registered.  
• There is the use of a commercial name that implies this is a hotel, misleads the activity or services provided.

Starting November 2019, the law grants a 12-month period to register and comply with the local regulation, so it is important to process your registration for your short-term rental property, within the period, if you currently have this activity.

At my firm, we can guide you both in the local registration process as well as in the compliance of the process itself. Contact us today by mail, or call us at: (506) 2283-2020, and we´ll gladly give you the assistance that you need.

The post Have a short-term rental property business in Costa Rica? This information is for you appeared first on Arturo Blanco.

Via a ruling from the General Director of the tax office (Tributacion Directa) dated March 30th 2020, new rules apply to the obligation for companies to update on a yearly basis their corporate ownership structure. The rule that mandated an annual declaration be filed every February has been changed to September each year.

The ruling also clarifies that the new system will PRELOAD last year’s declaration (period 2019), allowing it to be a simpler process of mere confirmation of last year’s data. It is important to remember that any owner who has transferred shares or changed the original structure, must declare this change within the following 15 days of the transfer.

Verify the status of your company

The Tax Office has also published a list of non-compliant companies, disclosing at least 81,000 entities did not comply with the original deadline.

Fines are already in effect as of April 1, 2020 and as a single opportunity, for this month of April, those who declare -and pay – will have a 50% reduction in the fine.

Starting May, the fine would range from $2400.00 to $78000.00 USD. In addition, no registration document may be entered for the company in arrears of this obligation.

Take advantage of this opportunity to comply with this procedure.  We stand ready to clarify your doubts in the mail: ablanco@arturoblancolaw.com

The post A change in the date of the 2020 Declaration before the end beneficiaries of corporations appeared first on Arturo Blanco.

The first thing to understand is that a collection process (or execution) arises when there is a default or non-payment of a debt that is based on a document recognized by law as a collection title.  Born on the lack of timely payment, the law allows the creditor to go file for the repayment of the debt in default.

In order for a “debt” to be collected, it must

• Be based on a determined amount
• Collectability. Debt must be overdue (no pending deadline). This is either because the agreed date has come to an end, or because one of the agreed payments was not made, causing the transaction to enter in arrears.
• It is supported by a document that has the recognized rank of an executive title or collection document. This last issue should be carefully analyzed. Any debt to be collected, must be based on one of the following documents. These are considered evidence of the debt by law and give the creditor the right to seek garnish and eventually withdraw the debtor’s auction assets.

Documents with the status of collection documents

1. Testimony or certification of an unrecorded public deed. It is a document granted before a notary, which may have been enrolled or by default was not enrolled, but that it supports and recognizes the existence of a debt.
2. Certification of a public deed duly registered in the National Register.
3. The private document recognized judicially as well as when called under confession and the debtor accepts that it supports sums of money not fully paid.
4. A final court judgment establishing an obligation to pay a sum of money.
5. The chattel mortgage or mortgage.
6. All other documents that by special laws, have collection force, such as certifications issued by public accountants or public entities bodies whose balances are certified (such as is the case of the Costa Rican Social Security).

Each of these titles recognized by law, gives the creditor the right to seek a garnishment order against the debtor’s assets.

Defense regarding the judicial collection process

Usual defense under law call for:

1. The falsity of the basic document of collection.
2. The lack of enforceability of the obligation, as it is not expired within the agreed period, or because there is an agreement of parties.
3. Evidence of proven payment (in writing).
4. The period of validity of the title has lapsed, since any debt has a maximum period to demand its collection prior to the statute of limitations.

Having said the above with regards to the typical defenses, it is also possible for the debtor to request a conciliation with the creditor. This is an opportunity to reach an agreement within the collection process.  Also, the debtor may argue the partial lapsing of the interests for the period exceeding one year before he was served.

The task of the defense attorney in a judicial collection process

It is important to analyze with each client, its particular relationship with the creditor. This goes beyond the signed document now under collection.  Examining the reality of the credit relationship may provide legal arguments when responding to any lawsuit. This analysis may point out defects that may affect the validity of the collection title or the opportunity of the collection process filed.

Getting your money back today becomes more necessary than ever.  Do not hesitate to contact us, and we will gladly give you the best legal advice on this important topic.

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