Costa Rica Hiring at a Glance

Costa Rica is one of Central America’s most stable and business-friendly economies, with strong rule of law, democratic institutions, and a diversified export base. The country has positioned itself as a nearshore hub for shared services, advanced manufacturing, medical devices, and technology operations. Multinational corporations operate regional centers primarily in San José, Heredia, and Alajuela.

Employment relationships are governed by the Costa Rican Labor Code (Código de Trabajo), which establishes mandatory minimum standards that cannot be waived by contract. Labor protections are strict, particularly regarding severance, social security registration, and mandatory bonuses. Employees are entitled to:

• Two weeks of paid annual leave after 50 continuous weeks of service
• A mandatory Christmas bonus (Aguinaldo) equal to one month’s average salary, paid in December
• Enrollment in the national social security system (CCSS)
• Workers’ compensation insurance through INS
• Statutory notice and severance payments upon termination

Non-compliance with social security registration or improper termination procedures can result in labor court claims, administrative penalties, and retroactive contribution assessments.

‍

Key Characteristics of Costa Rica’s Talent Market

• Highly educated labor force: Costa Rica has one of the highest literacy rates in Latin America and produces strong engineering, life sciences, and IT graduates annually.
• Nearshoring advantage: Time-zone alignment with North America makes it attractive for shared services, finance operations, and technical support centers.
• Medical devices and manufacturing strength: The country is a regional leader in precision manufacturing and life sciences exports.
• Protective employment regime: The Labor Code mandates formal employment contracts, mandatory bonuses, severance protections, and strict social security registration.
• English proficiency: English-language capability is relatively high compared to regional peers, especially in corporate and technology roles.

‍

Most In-Demand Skills in 2026

Costa Rica’s hiring demand continues shifting toward knowledge-based sectors:

• ‍Software Engineering & Cloud Infrastructure: Backend systems, DevOps, enterprise SaaS support, and cloud administration.‍
• Cybersecurity & IT Governance: Risk compliance, network security, and SOC operations.‍
• Shared Services & Finance Operations: Multilingual accounting, payroll processing, financial reporting.‍
• Medical Device Engineering: Quality assurance, regulatory compliance, biomedical engineering.‍
• Bilingual Customer Support: English-Spanish technical support and client services.

‍

Top Universities Supplying Talent

• Universidad de Costa Rica (UCR) – San José – premier public university with strong engineering and science faculties.
• Tecnológico de Costa Rica (TEC) – Cartago – public institution focused on engineering and industrial technology.
• Universidad Nacional (UNA) – Heredia – produces graduates in administration, economics, and social sciences.
• ULACIT – private university with international business and technology programs.

‍

Salary Benchmarks for Roles in Costa Rica

• Software Engineer: CRC 20,000,000 – 32,000,000
• Cybersecurity Analyst: CRC 18,000,000 – 28,000,000
• Finance Manager: CRC 24,000,000 – 40,000,000
• Operations Manager: CRC 22,000,000 – 38,000,000
• Bilingual Customer Support: CRC 9,000,000 – 15,000,000

‍

Employer of Record vs Legal Entity Setup in Costa Rica

‍

To legally hire employees in Costa Rica, a company must

• Incorporate a legal entity: Register the company with the National Registry and obtain legal personality. Articles of incorporation must be notarized. Hiring cannot legally begin before entity registration.
• Obtain a Tax Identification Number (NITE): Register with the Ministry of Finance for corporate taxation and payroll withholding purposes.
• Register with CCSS (Caja Costarricense de Seguro Social): Mandatory for all employers. CCSS administers healthcare, pensions, and disability benefits. Employees must be registered from day one.
• Register with INS (Instituto Nacional de Seguros): Mandatory workers’ compensation insurance coverage.
• Enroll for payroll tax reporting: Employers must file monthly salary declarations and tax withholdings.
• Alternatively, engage an Employer of Record (EOR): An EOR hires the employee through its local entity, assumes compliance obligations, and manages payroll, taxes, and statutory benefits.

‍

Cost of Entity Setup in Costa Rica

• Legal and notary fees: $1,500–$4,000 USD depending on structure and complexity.
• Government registration fees: Several hundred dollars.
• Minimum capital: No strict statutory minimum for most corporate structures, though practical capitalization is advisable.
• Accounting and compliance setup: $1,000–$2,500 annually.
• Typical timeline: 3–6 weeks depending on documentation and registration processing.

For companies hiring small teams or testing market entry, EOR models significantly reduce setup time and administrative exposure.

‍

What Hiring Through an EOR Means in Costa Rica

An Employer of Record (EOR) in Costa Rica becomes the legal employer registered with the Caja Costarricense de Seguro Social (CCSS), Dirección General de Tributación (DGT), and Ministerio de Trabajo y Seguridad Social (MTSS), while the employee performs work exclusively for your company. You manage day-to-day responsibilities and performance, but the EOR assumes all statutory employer obligations under Costa Rican law.

Employment in Costa Rica is governed primarily by:

• Código de Trabajo
• CCSS Social Security Law
• Income Tax Law (Impuesto sobre la Renta)
• Aguinaldo (13th salary) regulations
• Occupational Risk Insurance (INS – Instituto Nacional de Seguros)

Foreign companies cannot legally employ workers in Costa Rica without:

• A locally registered legal entity
• CCSS employer registration
• Tax registration with DGT
• Workers’ risk insurance coverage

An EOR provides this entire employer infrastructure without requiring you to establish a Costa Rican company.

An EOR in Costa Rica handles:

• Labour Code-compliant employment contracts
• Payroll processing in CRC (Costa Rican Colón) or USD (where applicable)
• Income tax withholding
• CCSS social security contributions
• Mandatory Aguinaldo bonus
• Vacation and public holiday compliance
• Occupational risk insurance (INS)
• Termination and severance calculations
• Immigration and work permits

This model is ideal for companies that want to hire in Costa Rica without directly managing high social security contributions, strict termination laws, and mandatory bonus obligations.

‍

Risk Involved in Both Models

Costa Rica has a highly protective labour framework, particularly around termination and employee benefits.

Key characteristics:

• Mandatory CCSS enrollment
• High employer social contributions (~26–27%)
• Mandatory Aguinaldo (13th month salary)
• Strict severance (Cesantía) rules
• Strong labour court enforcement

Compliance failures can result in:

• Retroactive CCSS liabilities
• Interest and penalties
• Court-ordered severance
• Reinstatement claims

In Costa Rica, the largest employer risks involve social security underpayment, wrongful termination, and improper Aguinaldo calculations.

‍

EOR Vs. Entity: When to use What?

‍

Why an EOR Is the Most Efficient Way to Hire in Costa Rica

Costa Rica is a major nearshore hub for technology, shared services, life sciences, and multilingual customer support. However, hiring is governed by high statutory costs, mandatory annual bonuses, and strong employee protections.

An EOR is not simply a payroll processor. It is the legal employer recognized by CCSS and MTSS, responsible for:

• Labour Code compliance
• Social security reporting
• Income tax withholding
• Mandatory bonus administration
• Termination procedures

This allows foreign companies to operate in Costa Rica without assuming direct employer liability.

‍

#1. EOR Manages CCSS Social Security Contributions

Employers must contribute approximately 26–27% of gross salary to CCSS.

Employees contribute around 10–11%.

CCSS covers:

• Health insurance
• Pension fund
• Disability and maternity benefits

Failure to comply can result in:

• Business operation restrictions
• Heavy fines and penalties
• Retroactive payment demands

An EOR ensures precise calculation and timely remittance.

‍

#2. EOR Handles Mandatory Aguinaldo (13th Month Bonus)

Costa Rica requires employers to pay the Aguinaldo, equivalent to one month’s average salary, paid in December.

It is calculated based on earnings between December 1 and November 30.

Common compliance risks include:

• Miscalculating average earnings
• Missing payment deadlines

An EOR ensures accurate accrual and timely disbursement.

‍

#3. EOR Controls Termination and Severance Risk (Cesantía)

Termination in Costa Rica can be costly.

Without justified cause, employers must pay:

• Notice period (Preaviso)
• Severance (Cesantía) based on tenure
• Accrued vacation
• Aguinaldo proportion

Severance can accumulate up to 8 years of service under current caps.

Improper dismissal can lead to:

• Labour court disputes
• Reinstatement claims
• Additional penalties

An EOR manages:

• Legal termination grounds
• Severance calculations
• Labour dispute representation

‍

#4. EOR Ensures Occupational Risk Insurance Compliance

Employers must obtain mandatory occupational risk insurance through:

• Instituto Nacional de Seguros (INS)

An EOR ensures:

• Proper employee classification
• Accurate premium calculation
• Coverage compliance

‍

EOR vs. PEO in Costa Rica: How to Decide the Right Hiring Model?

A PEO in Costa Rica cannot legally employ workers on behalf of foreign companies without a registered entity.

‍

‍

For companies without a Costa Rican entity, EOR is the compliant and lower-risk solution.

‍

Payroll, Taxes, and Monthly Compliance in Costa Rica

Costa Rican payroll includes multiple statutory burdens. Employers must withhold income tax under progressive rates and remit monthly to the Ministry of Finance. In addition, employers and employees contribute to social security through CCSS.

Typical contribution breakdown:

Employer contributions: Approximately 26–30% of gross salary
Employee contributions: Approximately 10–11% of gross salary

Employer obligations include:

• Health insurance contributions
• Pension fund contributions
• Family allowance fund contributions
• Workers’ compensation premiums (INS)

When combined, statutory costs can increase total employment cost by 35–45% above base salary.

Monthly compliance requires:

• Electronic salary reporting
• Timely CCSS contribution payments
• Withholding and remittance of income tax
• Maintenance of payroll documentation

Failure to register an employee with CCSS exposes employers to back payments, penalties, and interest.

‍

Salary Structure: Where Most Compliance Issues Begin

Most compliance failures arise from miscalculating the “salario base” used for social security contributions. In Costa Rica, almost all recurring remuneration — including overtime, commissions, bonuses, and certain allowances — must be included in contribution calculations.

Common mistakes include:

• Excluding the Aguinaldo from total compensation planning
• Underreporting overtime
• Misclassifying employees as service providers
• Improper termination without statutory notice or severance

Costa Rican labor courts tend to interpret ambiguities in favor of employees, increasing litigation risk in wrongful termination cases.

‍

What Monthly Payroll Operations in Costa Rica Actually Involve

• Each payroll cycle typically includes:
• Collect attendance, overtime, commission, and variable compensation data.
• Calculate gross salary and statutory contributions.
• Withhold employee income tax and social security contributions.
• Add employer social security and workers’ compensation contributions.
• Issue compliant electronic payslips.
• Remit payments to CCSS, INS, and the Ministry of Finance.
• Maintain payroll records in accordance with statutory retention requirements.

‍

Step-by-Step Onboarding Process With an EOR in Costa Rica

Hiring in Costa Rica involves multi-agency registration, strict benefit compliance, and labour documentation.

‍

1. Verify EOR Registration

Confirm the EOR is registered with:

• CCSS
• DGT (Tax Authority)
• MTSS
• INS

‍

2. Determine Employment Contract Type

Costa Rica recognizes:

• Indefinite contracts (default)
• Fixed-term contracts (limited circumstances)

Improper contract structuring increases severance exposure.

‍

3. Validate Salary and Minimum Wage

EOR ensures compliance with:

• Sector-specific minimum wages
• Working hour regulations

‍

4. Calculate Total Employment Cost

Includes:

• Employer CCSS contributions
• Aguinaldo accrual
• Severance exposure
• INS insurance premiums

‍

5. Draft Labour Code-Compliant Contract

Must include:

• Job duties
• Compensation
• Work schedule
• Probation period
• Termination clauses

‍

6. Register Employee With CCSS and INS

Registration must occur immediately upon hiring.

‍

7. Establish Payroll and Leave Tracking

EOR sets up:

• Monthly payroll
• Vacation accrual tracking
• Aguinaldo accrual system

‍

8. Immigration Compliance (If Applicable)

For foreign nationals, EOR manages:

• Work permits
• Residency documentation

‍

9. Execute First Payroll

Includes:

• Salary payment
• Social security remittance
• Tax reporting

‍

10. Ongoing Compliance Management

EOR oversees:

• Monthly CCSS filings
• Tax reporting
• Labour inspections

‍

11. Termination and Final Settlement

EOR manages:

• Notice compliance
• Severance calculation
• Final benefit settlement
• Labour dispute representation

Most employer disputes in Costa Rica arise during termination.

‍

Build Your Costa Rica Team with Bolto EOR

Hiring in Costa Rica requires careful management of high social security costs, mandatory annual bonuses, and strict severance rules.

Bolto’s Employer of Record model absorbs:

• Labour Code complexity
• CCSS compliance risk
• Aguinaldo administration
• Termination and litigation exposure

This allows you to expand into Costa Rica without setting up a local entity.

‍

Full Legal Employer Coverage in Costa Rica

Bolto becomes the legal employer before:

• CCSS
• DGT
• MTSS
• INS
• Labour courts

Bolto manages:

• Contracts and compliance
• Payroll and statutory filings
• Social security contributions
• Bonus and severance administration
• Termination execution

You manage employee performance. Bolto manages legal risk.

‍

Built for Nearshore Expansion Into Latin America

With Bolto EOR:

• Hire within weeks
• Avoid incorporation costs
• Skip local payroll infrastructure
• Exit without liquidation procedures

‍

Transparent Cost Structure

Bolto provides:

• Clear statutory breakdowns
• Social security visibility
• Predictable EOR fees

No hidden liabilities.
No unexpected compliance penalties.

‍

End-to-End Employee Lifecycle Management

Bolto manages:

• Contract drafting
• Payroll and tax reporting
• CCSS compliance
• Leave and Aguinaldo administration
• Termination handling

You never interact directly with Costa Rican labour authorities.

‍

Designed for Risk-Controlled Expansion in Costa Rica

Costa Rica enforces strict penalties for:

• Social security non-compliance
• Failure to pay Aguinaldo
• Improper termination

Bolto enables hiring in Costa Rica without inheriting employer liability risks.

Book a call to understand your real employer exposure before hiring in Costa Rica.