Investment Outside The Metropolitan Area

The Free Trade Zone Regime in Costa Rica has been instrumental in attracting foreign direct investment. It has not only been used to promote, attract, and retain investments that drive job creation and increase exports in the country but has recently become the government’s primary tool to enhance the competitiveness of investments outside the greater metropolitan area.

This is a national strategy to address the challenges faced by areas outside the metropolitan area, where investments do not frequently reach. The Costa Rican government’s idea was that companies wishing to invest and establish themselves outside the metropolitan area should not only invest in new fixed assets but also have the opportunity to invest in public infrastructure and/or human capital.

Firstly, these projects must be completely new investments outside the metropolitan area. In other words, they cannot be projects that have already made investments outside the free trade zone regime, nor can they be projects already benefiting from the regime that simply want to change location. They cannot involve investments in subsidiary companies of other beneficiary companies, nor can they be company restructurings.

When referring to new investment in public infrastructure required of a company establishing itself outside the metropolitan area, it must be in improvement or construction projects such as: perimeter road access to its location; construction and maintenance of bridges, sewerage, potable water supply networks; installation and improvement of power transmission, data, and telecommunication lines; as well as construction, improvement, or maintenance of educational and community care center infrastructure aimed at enhancing infrastructure and community life in the canton where the beneficiary company of the regime will be established.

It is important to note that before a company makes its infrastructure investment, it must formalize the required public-private partnership agreements and/or strategic alliances, and comply with the requirements established by current regulations.

Regarding investment in human capital, this should be understood as investment related to the authorized activity of the company upon entering the free trade zone regime, aimed at: closing gaps, acquiring new skills for activity transformation, research and development, investments in supplier training, or potential human resources to be hired.

Companies deciding to establish themselves outside the metropolitan area and make such investments must first communicate and formalize their decision in their application to enter the free trade zone regime. Likewise, the company must establish and detail its commitment, indicating how the investment will be made and the timeframe within which it will be completed, which, in accordance with current legislation, cannot exceed 5 years.

The investment in infrastructure and/or human capital made by these companies may represent up to 50% of the total committed investment and must be maintained throughout the duration of their participation in the free trade zone regime. In this regard, it is important to consider that this commitment will be annually audited by PROCOMER through the annual operations report that companies must submit, or through periodic audits conducted on the companies.

Furthermore, in its effort to attract investment outside the metropolitan area and create suitable services, infrastructure, and operating conditions for companies, the government has exempted the generation of renewable electric power for self-consumption. This means that companies establishing themselves outside the metropolitan area may partially or fully generate their electric power from renewable sources for self-consumption. The distribution and/or commercialization of renewable or non-renewable electric power is prohibited as an activity within the free trade zone regime.

We trust this information will prove highly beneficial to you.

Alejandra Arguedas M.
aam@quatro.legal
Free Trade Regime Director

Disclaimer: The information provided in this blog post is for general informational purposes only and is not intended to constitute legal advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change. For the most accurate and up-to-date information, please contact our office directly. Some images may be AI generated.