What is the Registration of Transparency and Final Beneficiaries (RTBF) declaration and why should it be issued?

What is the Registration of Transparency and Final Beneficiaries (Ultimate beneficiary owners U.B.O)?

As determined by the Costa Rican Ministry of Finance and as regulated in chapter II of the Act to Improve the Fight against Tax Fraud, number 9416, The Transparency and Beneficial Ownership Registry corresponds to the compliance obligation of the legal representatives of legal entities incorporated in Costa Rica, to provide the composition of the capital stock of the companies and the identification of their beneficial owners, in order to ensure the identification not only of the individuals who exercise control of the corporations, but also of the owners and those who obtain economic benefits from them.

What is the deadline for filing the Registration of Transparency and Final Beneficiaries Statement?

Legal entities, directly through their legal representatives, have a period until July 30th of each year to file the ordinary U.B.O declaration and thus avoid the imposition of a penalty. Any company that is incorporated has a maximum period of one month from the date of registration of the company in the National Registry to make the respective declaration.

Who is legally responsible for implementing the U.B.O declaration?

a) For legal entities, the legal representative.

b) For trusts, the trustee or the person having a similar function.

c) For administrators of third party resources, the legal representative, or whoever exercises the powers of representation with administration faculties.

d) For non-profit organizations, the person exercising the powers of representation with powers of administration.

In the circumstance that the legal representative does not have a digital signature authorized by the Banco Central because they do not have resident immigration status in Costa Rica, they may grant a general or special power of attorney for the filing of the declaration before the RTBF. Such attorney-in-fact, when filling out the declaration on behalf of a legal entity, declares under oath that the information provided therein is true and assumes the legal responsibility in case it is not true.

How do I fill out and where do I file the U.B.O declaration?

The affidavit must be completed and signed digitally from the Banco Central online platform and must include the following information, among others: details of the equity interest, total number of shares, portfolio, distribution, unit per value, currency, number of voting rights, identification and geographical data.

What are the implications of not filing the U.B.O declaration?

In Pursuant to articles 13 of the Law to Improve the Fight against Tax Fraud number 9416 and 84 bis of the Code of Tax Rules and Procedures number: 4755, Whoever does not file the declaration may be subject to a pecuniary sanction imposed by the General Directorate of Taxation corresponding to 2% of the gross income of the legal entity or legal structure in the profit tax period prior to that in which the infraction occurred, with a minimum of three base salaries and a maximum of one hundred base salaries.

In addition, a list of non-compliant companies is sent to the National Registry in order to prevent the issuance of certifications of legal entities and the registration of documents while they maintain such status. Furthermore, it is important to mention that Notaries Public have the duty to include in any document they issue in relation to a company, if it has not submitted the U.B.O declaration.

In what cases can the tax authority audit a reporting legal entity in relation to the information contained in the U.B.O declaration?

According to Order number MH-DGT-RES-031-2023, issued by the General Directorate of Taxation, the “Selection criteria for the use of the information contained in the Transparency and Beneficial Ownership Registry in the preparation of risk management plans of the Tax Administration” were established in order to evaluate and diagnose, through technical processes, the risk of irregular behavior of a group of taxpayers so that tax fraud or formal or material tax noncompliance may be detected.

The criteria defined according to the interest of the DGT are:

a) When a regulated entity omits to file the U.B.O declaration.

b) When a legal entity has a registered trade name, duly registered in the Public Registry, but does not have a lucrative activity registered before the General Directorate of Taxation.

c) When any legal entity reported in the U.B.O declaration as a participant, has registered assets that evidence alleged cases of “Increased net worth” or reflect a “High net worth”.

d) When a legal entity of the foreign corporation category with a national legal identity card (identifier number 3-012 assigned by the National Registry) does not file the U.B.O, but is up to date with the tax on legal entities (Act 9428).

e) When in a legal entity any of its partners is domiciled in a non-cooperative jurisdiction or in a jurisdiction with little or no fiscal and financial transparency.

f) When a legal entity has as partners legal entities or legal structures domiciled abroad with a substantive participation (15% or more of the capital stock) but which have not identified their entire corporate structure (in accordance with the impossibility established in the Regulations of the Registration of Transparency and Final Beneficiaries).

g) When a legal entity does not establish any beneficial owner by substantive participation (through direct or indirect control), but this must be determined by substantive influence (having control by other means over a legal entity: majority of shareholders’ voting rights, right to appoint or dismiss the majority of administrative, management or supervisory bodies, and having supervisory status under the articles of association).

h) When a taxpayer identifies among its partners national interposed legal entities up to a fifth level or higher and the latter are not taxpayers.

i) When a regulated entity identifies among its participants, interposed legal entities with substantive participation, domiciled in a non-cooperating country or in a country with little or no fiscal and financial transparency and whose final beneficiary is a Costa Rican or a foreign resident or a resident foreigner.

j) When a natural person has participation in twenty or more legal entities.

k) When a regulated entity declares among its participants a national natural entity that is deceased, or a national legal entity that is dissolved or a trust that has been terminated, at the time of having made the U.B.O declaration.

l) When in more than one legal entity, there is a participation of a natural person who, accumulating his participations through several interposed legal entities, manages to reach a substantive participation.

m) When a trust declares within its parties a trustee of the national legal type, which in its RTBF declaration as an obligated subject indicates that it has no economic activity.

Therefore, it is suggested that you consult with your trusted advisor to verify if the legal entity you represent when executing the respective U.B.O declaration is performing it properly and if you should implement any corrective action in order to avoid potential risks of being audited.

If you have any concerns regarding the submission of the U.B.O declaration (RTBF) or if you need assistance in filing the respective declaration in the next period to avoid possible penalties, please contact us, we will be glad to assist you

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