PEO in Costa Rica - A New Road to Expansion | INS Global
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PEO in Costa Rica

Hire Globally, Pay Locally, Expand Effortlessly

INS Global is the ideal global partner to help you make a quick, safe entry into Costa Rica and move past red tape and hassles in full legal compliance. INS Global offers PEO (Professional Employer Organization) and EOR (Employer of Record) services in over 80 countries for companies that want to expand overseas.

With a PEO or an EOR, you can transfer or hire employees overseas without having to set up a legal presence in the new country. A PEO not only assists with recruitment but also takes care of your HR and payroll needs, allowing you to progress quickly and error-free.

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PEO in Costa Rica - Summary

What Are the Advantages of Partnering with a PEO?

Regulatory Assurance

A PEO has specialists who will help you avoid making any errors and ensure that your company and employees comply with every aspect of local labor laws

Reduced Setup Time and Costs

With traditional company incorporation, it’s unlikely you’ll be up and running for several months or even a year. A PEO can save you thousands of dollars and let you operate within just a few days

A More Efficient System for HR Needs

Let a PEO handle all aspects of recruitment, payroll, and HR so that you can fully focus on planning your company goals and achieving market growth

Rapid Market Access

All you need to do is pay a single monthly fee to your PEO partner, and then you can enter your target market in a fraction of the time it would take otherwise

Minimize Your Company Structure

Rather than handling different teams and departments for HR services, you can have all your needs met quickly and safely with just one point of contact

PEO or Company Incorporation: Why Choose a PEO?

Branching out into new markets with a company is not a simple process. Even the smallest mistakes can lead to paying high penalties and fees. By partnering with a PEO or EOR, you eliminate high levels of risk and be assured of full legal security.

A PEO:
  • Cuts down on setup time
  • Requires less oversight and management
  • Decreases overhead costs
  • Gives you total legal confidence
testimonial from Manuel Ramos

Testimonial

Manuel Ramos

TERAO ASIA

Managing Director

We think INS Global is a good solution about starting in a market like China. Understanding the market doesn’t mean you need to set up a company immediately. 

5/5

How INS Global's PEO Operates in Costa Rica

  1. We meet with you and create a plan tailored to your specific needs
  2. Our PEO provides the necessary legal structure through which you can bring your staff into Costa Rica
  3. We take care of everything related to hiring and HR services for your employees
  4. Your staff can continue operating on schedule, and your company can advance quickly toward your global expansion goals

What’s The Difference Between PEO And EOR?

A PEO and an EOR are often mentioned together. Still, they are not identical in how they function and the services provided. To choose the best option to partner with, you should understand their similarities and differences. 

  • A PEO is a third-party company that provides HR services to employees of other companies. An EOR offers this while also being able to legally hire and take responsibility for the employees of other companies.
  • In a PEO agreement, the contract is between the PEO provider and the client company; in an EOR agreement. The contract may be directed by the client company but is officially made between the provider and the employee.
  •  

INS Global offers both PEO and global EOR services in Costa Rica so that you can have the best possible services available.

Labor Law in Costa Rica

Employment Contracts in Costa Rica

Written employment contracts should be in Spanish and include all details of the employee’s rights, benefits, and compensation.

Salary and compensation must be in Costo Rican colón and not in any foreign currency. Verbal contracts are permitted for temporary work for a maximum duration of 90 days.

Probation periods usually last three months.

Work Hours and Overtime in Costa Rica

The maximum number of work hours per week is 48. Night hours are counted from 7 p.m. to 5 a.m. and cannot exceed 6 hours a day or 36 hours a week. A mixed shift that includes both day and night hours is counted as night work if the work past 7 p.m. is more than three hours. The maximum amount for mixed shifts and nighttime work is 42 hours a week.

Overtime is paid at 50% more than the average hourly wage and cannot be more than four hours daily.

All employees are entitled to receive a Christmas bonus equal to one month’s salary and must be paid this amount between December 1-20th.

Holidays and Annual Leave

There are 9 days of national holiday in Costa Rica. Employees who must work on holidays receive double their regular wages.

Annual paid vacation days are 15 days for employees who have worked a minimum of 50 weeks with their employer. Employees are allowed to split their vacation time into two segments; unused leave can only be carried over to the next year if the employee’s work prevented them from taking time off.

Sick Leave in Costa Rica

Employees who have made social security payments up to the month before their illness are eligible for 365 days of sick leave. The first three days of sick leave are compensated at 100% of the standard salary; 50% is paid by the employer and 50% by the state. From the fourth day of sick leave, the employee will be compensated by the state with 60% of their salary.

Maternity and Paternity Leave in Costa Rica

Expectant mothers receive one month of leave before birth and three months after. They receive 100% of their salary, half of which is paid by their employer and the other half by the state.

As of 2022, fathers receive 2 days of paternity leave each week for the first four weeks after birth. The new laws also allow mothers to take one hour of paid time off to breastfeed.

Adoptive fathers and mothers jointly receive three months of paid leave after placement of the adoptive child. The payment follows the same regulations as paid maternity leave.

Tax Law and Social Security Contributions in Cost Rica

As of 2022, corporate tax for companies with a gross annual income of more than CRC112,070,000 is 30%. Companies with a lower gross annual income than that amount are taxed less.

Personal income tax ranges from 10-25% for annual income amounts above  3.8 million colón.

Both employees and employers are required to pay toward social security contributions. Employees pay around 10.5%, while employers pay 26.5-34.5%.

The standard rate for VAT in Costa Rica is 13%.

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FAQs

No, it is necessary to use a local entity abroad to comply with each country labor law.

Foreign companies can either set up a local entity in each country or use the services a local PEO (Professional Employment Organization) to hire the staff on-site directly.

The employer of record is the legal entity liable for the staff employed in a specific country. In practice, a foreign company can either open a subsidiary to become the employer of record of its abroad employees or use a PEO to act as the employer of record.

Liabilities may vary from country to country and include all the staff management responsibilities: labor contract issues, payroll management, and tax compliance, social security management, expenses claim declaration, hiring and termination
procedures, etc.

In general, 1-month is necessary to have an employee based out abroad using an existing PEO as the employe of record. When incorporating a new subsidiary to be the employer of record, the delay varies from 4-12 months.