Entity vs EOR in Costa Rica: Which Is Right for Your Engineering Team?

What an Employer of Record does

An EOR is a company that legally employs people on your behalf. It signs the employment contract under Costa Rica’s Labor Code, registers the employee with the CCSS (the social security fund), runs payroll and administers mandatory benefits, while you direct the day-to-day work. In exchange it charges a fee per employee, per month — published prices for Costa Rica are typically around $400–$600.

What owning your entity means

With your own entity, your company incorporates a Costa Rican subsidiary — usually a Sociedad Anónima (S.A.) or a Sociedad de Responsabilidad Limitada (S.R.L.). Both allow 100% foreign ownership and limited liability. Your subsidiary is the employer: the contracts, the payroll and the IP all sit inside your company. You then need someone to run the legal, HR, payroll, accounting and compliance layer — in-house or with a partner.

Side-by-side comparison

The cost math

Salary and employer costs are the same under both models. The difference is how you pay for the infrastructure around them. An EOR fee scales with every hire: at $500 per employee per month, a 20-person team costs $120,000 a year in EOR fees alone. An entity has a one-time setup — typically $2,000–$5,000 in the first year for a standard S.A. or S.R.L. — plus the cost of running it, which does not grow one-for-one with headcount.

Costs you pay either way, on top of gross salary:

• CCSS employer charges: 26.83% (2026).
• Aguinaldo (mandatory 13th month): about 8.33%.
• Work-risk insurance (INS): around 1%.
• Not included: vacation, severance reserve and optional benefits such as private medical insurance.

Ending employment without just cause requires notice (up to one month, depending on tenure) and severance (cesantía) of up to about eight months of salary for long-tenured employees.

When an EOR makes sense

• You are hiring one to a few people.
• You are testing Costa Rica before committing.
• You need someone to start within days.
• The engagement is short-term.

When your own entity makes sense

• You are building a team you plan to keep and grow.
• Your code, data or models are core IP you want created inside your own company.
• You want the team under your brand and culture, not a provider’s.
• You may qualify for Free Trade Zone benefits.
• You want the option to run it yourself later without moving every employee.

How to set up an entity in Costa Rica

1. Choose the structure (S.A. or S.R.L.) and ownership.
2. A Costa Rican notary drafts the incorporation deed.
3. File with the National Registry — about 5–7 business days to get the cédula jurídica (corporate ID).
4. Register with Hacienda (tax authority) for income tax and VAT.
5. File the beneficial-ownership declaration (RTBF) with the Central Bank.
6. Open a bank account and register with the CCSS as an employer before the first payroll.

Typical total: 3–6 weeks. Ongoing obligations include the annual corporate tax, the annual income-tax return (even with no revenue), monthly VAT if you sell locally, and keeping corporate books and the RTBF up to date.

The Free Trade Zone option

Costa Rica’s Free Zone regime also covers service companies. For a services company inside the Greater Metropolitan Area, the income-tax benefit is 0% for years 1–8 and 15% for years 9–12, plus exemptions on imports, local purchases and remittances, among others. Typical requirements: a strategic activity, a new investment of at least USD 150,000 (inside an industrial park), a minimum score on PROCOMER’s eligibility index, a monthly fee (0.30% of sales inside a park, minimum USD 200) and a guarantee deposit. Admission takes about three months on average. Only a company you own can apply — an EOR setup cannot.

How Crest Partners does it

We set up your own legal entity in Costa Rica, build your engineering team under your brand and run payroll, HR, accounting and compliance for you — so the team, the IP and the upside stay yours. It’s the ownership of an entity with the simplicity of a single partner.

See also: Services · Why Costa Rica · Case studies

FAQ

Can a foreign company own 100% of a Costa Rican company?

Yes. Both the S.A. (corporation) and the S.R.L. (limited liability company) allow 100% foreign ownership, and both offer limited liability.

How long does it take to set up a company in Costa Rica?

Typically 3–6 weeks: notarized incorporation deed, National Registry filing (about 5–7 business days for the corporate ID), tax registration with Hacienda, beneficial-owner (RTBF) filing, bank account and CCSS employer registration before the first payroll.

How much does an Employer of Record cost in Costa Rica?

Published EOR prices for Costa Rica are typically about $400–$600 per employee per month. That fee is on top of salary and mandatory employer costs, which are the same under an EOR or your own entity.

What does it cost to employ someone in Costa Rica beyond salary?

Employer CCSS social charges are 26.83% of gross salary (2026), plus the mandatory 13th-month bonus (aguinaldo, about 8.33%) and work-risk insurance (around 1%) — roughly 36% on top of salary, before vacation, severance reserves and optional benefits.

Can a service company benefit from Costa Rica’s Free Trade Zone regime?

Yes, if it qualifies. Service companies inside the Greater Metropolitan Area can get 0% income tax for years 1–8 and 15% for years 9–12, among other exemptions. Requirements include a strategic-sector activity, a minimum new investment (USD 150,000 inside an industrial park) and a minimum score on PROCOMER’s eligibility index. Admission takes about three months on average.

When is an EOR the better choice?

When you are hiring one to a few people, testing the market, or need someone to start within days. For a team you plan to keep and grow, owning the entity usually costs less over time and keeps the IP and the people inside your company.