Employment & Social Security

The Social Security system set up in Costa Rica in the late 1940s created an almost unheard of set of benefits and long term payments rarely seen at that time in Central American countries. Since then, the program has been steadily maintained and is now one of the cornerstones of the Costa Rican workforce.

If you are looking into locating a current or new business in Costa Rica, you should be aware of the kinds of contributions a business is expected to make to the Costa Rican Social Security fund. Contributions made by an employer are typically mandated to be 4.5 percent of the entire payroll of the company. Individual employees are also typically required to contribute 2.5 percent of their gross salary to the social security fund.

Self-employed workers also have to contribute to the fund, as do foreigners that work in Costa Rica. Self-employed workers will typically have to contribute 4.75 percent to 7.25 percent of their earnings to the fund. The government also kicks 0.25 percent of the covered earnings of companies in Costa Rica into the fund as well.

Though foreigners working on a temporary basis in Costa Rica typically leave Costa Rica to go back to their home country without ever taking in benefits from the social security fund, they are still compelled to contribute over the course of their employment in Costa Rica.

Additionally, workplace insurance is required of Costa Rican businesses of at least a minimum level and most organizations supplement that coverage with additional optional coverage. Businesses must contribute 3.25 percent of their payroll to this system, with some of it being allocated to a severance pay system that is required in Costa Rica. Individual employees chip in 1 percent of their gross salary as well as some additional money to cover insurance management fees. The government does not contribute to the insurance aspect of social security.

As a party interested in either moving a current business to Costa Rica or setting up an organization within the country, you should attempt to estimate what your costs might be for a particular workforce size so that you can include that amount in your overall business model. These regulations are applied differently and Meléndez & Bonilla can advise you on the liability you might have for your particular situation and what costs you might have to pay.

Though every situation is different, Meléndez & Bonilla brings 15 years of experience with a wide variety of clients that has left the organization with an expert understanding of the Costa Rican business atmosphere and taxation structure. Adding that experience to your business team as a trusted, local voice can help you avoid surprises down the line and plan more accurately for the long-term health of your business.

We invite you to contact us directly through the Contact Us link on this web site so that we can give you personal attention on your business and provide you with a full range of services designed to complement your business activities in Costa Rica. Doing your homework is the best way to prepare for business success and Meléndez & Bonilla can be right there, helping you every step of the way.