Costa Rica Expertise LLC

By Garland M. Baker
Special to A.M. Costa Rica

Digging deeper into the three-letter rule to fire an employee in Costa Rica turned up something interesting. There is no three-letter rule. Giving two warning letters and then a final firing letter is only a custom in this country, not the law.

Actually, writing a letter to the employee is also a custom, not the law. The following analysis expands on the information written in the articles “Being too nice can backfire on any employer” and “Employers are getting pounded in labor court cases.”

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And an employer could be just a homeowner

By Garland M. Baker
Special to A.M. Costa Rica

Employers are suffering heavy losses in their labor court battles with employees. Judges are also clobbering employers with hefty awards to the employees to serve as a warning to bosses to stay out of court.

In one labor case, a court decree Friday surprised a retired couple. A judge ordered them to pay thousands of dollars to a guard service. The judge ruled that the proprietor of the service really was an employee and not an independent contractor. The homeowners have contracts between themselves and the guard firm to prove otherwise, but the judge discarded the documents as rubbish.

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Lack of knowledge leads to fears

By Garland M. Baker
Special to A.M. Costa Rica

Expats in Costa Rica who rent to others need to know the law and the important exceptions. Property owners also need to know that the law is not the same for all kinds of property. Many expats prefer not to rent to Costa Ricans because they fear the local rental law due to their lack of knowledge or language ability.

On the coast, expats rent very short term — daily, weekly, and occasionally monthly — to vacationers coming to the country. Usually, they collect their rental fees in their home country or online over the Internet. Some do not declare the money they collect here nor elsewhere. This scenario is a nice source of income for many and for those who do not report the income, tax-free money — at least tax-free until they are caught.

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By Garland M. Baker
Special to A.M. Costa Rica

Here is a yearly reminder. Education and culture taxes — Timbre de Educación y Cultura — are due next Monday, March 31.

Many people, including professionals, sluff off filing form D.110 and paying these taxes. However, paying them is required by Ley 5923, and every company in Costa Rica listed at the Registro Nacional is required to pay this tax. A company’s net capital amount determines the tax to be paid.

The tax amounted to quite a bit of money in 1976, the year the general assembly enacted the law. Today, the amount is almost insignificant and is a nuisance tax to most.

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By Garland M. Baker
Special to A.M. Costa Rica

Remember the days of skyrocketing real estate prices in Costa Rica? People thought then there was no end in sight — no limit on how high a piece of dirt could go. Real estate in the United States was crazy, too. Doomsayers here and there were friendless. No one would listen to their tales of a looming crises.

Everyone knows now that the doomsayers were correct. The bubble burst. Some of those who bought properties in Costa Rica are now hurting back home. As predicted, they cannot pay their obligations there or here. Adjustable rate mortgages were the devil's work fueling the subprime mess.

Many sellers carried back mortgages on real estate here so they could get the highest price possible from buyers. Smarter sellers made all cash deals. The smart ones knew many buyers were shopping overly hungry in a vast supermarket and ready to over spend.

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By Garland M. Baker
Special to A.M. Costa Rica

This is how to trap an expat into marriage, a big payoff or a lifetime of alimony payments. It is not just a woman’s guide, but as public service to men and even expat women to save them from themselves in Costa Rica.

Many men come here to play around with women. Many of them are married in their home country, and they come here because playful women are plentiful and they seriously believe their wives will not catch them. Others are here because no other women will have them. A smaller number of women are in the same categories, but the sex most affected is male.

In Costa Rica, the one-sided laws favoring women get men into trouble and they usually do not even know they are in trouble until it is way too late. “Some women swindle with domestic violence law” and “Judges are a girl's best friend when extortion's afoot,” cover some of the ramifications of living with a woman in Costa Rica.

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By Garland M. Baker
Special to A.M. Costa Rica

Trusts can save the day in many cases in Costa Rica and avoid lawsuits or arbitration. In cases where litigation has already started, using a trust is a great way to get out of court. Most large development projects in Costa Rica — and small ones too — use trusts as the financial vehicle of choice. Literally, the possible uses of a trust is only limited to the imagination of the creators.

Most people — especially expats — think of trusts as they do wills. They are legal documents full of mumbo jumbo to take care of beneficiaries after one's death. Trusts are much more than this here. They are dynamic legal instruments with many uses.

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By Garland M. Baker
Special to A.M. Costa Rica

The sign of things to come: Banco Cuscatlan now requires citizens or resident aliens of the United States to fill out a W9 form for personal accounts at the firm's banks in Costa Rica.

Why? Because Citigroup bought Grupo Cuscatlan from Corporación UBC Internacional S.A. for $1.51 billion in cash and stock. Grupo Cuscatlan has operations in El Salvador, Guatemala, Costa Rica, Honduras and Panamá.

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Beach house before destruction order.

Beach house is on its way down!

By Garland M. Baker
Special to A.M. Costa Rica

If they have property in the maritime zone, expats can look forward to a hard time this year from municipalities up and down the coasts. If that is not enough stress for 2008, the Ministerio de Ambiente y Energía will be in line to add more tension. Some expats may be losing their comfy beach houses if they are located in the wrong places.

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