Tax treatment of the enterprises internationalization forms: a view from Costa Rica, a system in transition

• Author: Adrian Torrealba Navas
• Pages: 22-94

Studi Tributari Europei 1/2017

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Tax treatment of the enterprises internationalization forms: a

view from Costa Rica, a system in transition1

Adrián Torrealba Navas 2

Table of Contents

1. The two international trends in the tax treatment of multinational groups. 2.

The Costa Rica and CIAT Tax Procedure Code Model regulations of relevance in

the tax treatment of international companies. 2.1. Tax-law forms of

multinational groups established in Costa Rica. 2.2. Tax treatment of dividends

received by non-residents. 2.3. Corporate profits and dividends of residents in

Costa Rica. 2.4. Exchange of information about the owners of companies. 2.5.

The tax treatment of economic group. 2.5.1. Consolidation, transfer pricing

and economic reality. 2.5.2. Limitations on the deductibility of interests. 2.5.3.

Treatment of groups of societies at the collection phase: jointly and subsidiary

responsibilities. 2.5.4. Corporate reorganization.

1. The two international trends in the tax treatment of multinational

groups

1 How to quote this article: ADRIÀN TORREALBA NAVAS, Tax treatment of the enterprises

internationalization forms: a view from Costa Rica, a system in transition, translated by JUAN JOSÈ

NIETO MONTERO e JORGE TABOADA VILLA Universidad de Santiago de Compostela European Tax

Studies n. 1/2017 (ste.unibo.it), pp. 22-94, DOI: 10.6092/issn.2036-3583/8768

2 Professor in the Master in Public Law at the University of Costa Rica; PhD on Financial and

Tax Law from the Universidad Complutense of Madrid and specialist in the field by the

Università degli Studi di Pisa.

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The phenomenon of economic and financial integration of multinational groups

has been addressed by the tax law of different countries. In general, we find

concerns that come from different directions: on the one hand, to favor the

concentration processes or business consolidation, so that the groups reach

the “critical mass considered necessary to compete in the global marketplace”3,

as well as to prevent phenomena of double international taxation; moreover, in

reverse, the latest to prevent phenomena of cross-border derivation of profits

to jurisdictions with low or no taxation in these processes, with the effect of

erosion of tax bases in countries where it is generated the higher value added

and economic activities are developed.

Certainly the first trend has found its natural home in the capital exporting

countries, which does not mean it has not been extended to traditional

importing countries, such as Latin America, which even have developed their

own “multilatinas”. In this regard, we can see the citation that we find in the

update of the GIULIANI FONROUGE’s work by ASOREY Y NAVARRINE4:

“Works widely available have revealed the concern of the peoples of

Europe against the potential of US companies and the need to expand

the dimensions of commercial organizations to address the danger of

annihilation from an economic point of view. And indeed, this situation,

which is already pressing on the continent and has contributed to the

3 UCKMAR, V., CORASANITI, G., and DE'CAPITANE DI VIMERCATE, P., “Principios y Reglas

Generales”, First part of UCKMAR, V., CORASANITI, G., DE'CAPITANE DI VIMERCATE, P.,

TORREALBA , Manual de Derecho Tributario Internacional. Primera edición costarricense,

Editorial Jurídica Continental, San José, 2014, p. 113. The authors emphasize how this

concern is in the basis of Directive 434/90/EEC that contains the tax discipline of corporate

reorganization transactions involving companies resident in different Member States of the

European Union.

4 GIULIANI FONROUGE, CM, Derecho Financiero, Tomo I, 10th ed., Updated by NAVARRINE,

S.C. and ASOREY, R.O., La Ley, Buenos Aires, 2011, p. 435.

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creation of the Common Market and the European Union (EU), will

project from day to day, to Latin America”.

That is why the “companies unions” are regulated, in its various forms. This

class of unions

“sometimes take place in the horizontal plane, so common among those

doing the same production process and to organize the competition, with

the designation of consortium, cartel and syndicate; sometimes they occur

vertically and are characterized by the group or concerno (from German,

Konsern) that don’t pursue essentially market dominance but industrial or

commercial rationalization. In the legal aspect, can be appreciated

different typological criteria, but in general it can be said that sometimes

the concentration does not result in the loss of legal personality of its

members, may consist of stable unions and temporary unions; while

sometimes it causes loss of the personality and takes place by fusion of

the entities in a new entity, or absorption of one or more of them by other

subsisting”5.

This first trend is developed in typical legal regimes in the different national,

international and supranational regulations, such as:

• The regulation of corporate reorganization regimes, both internally and

supranational, as in the case of Directive 434/90/EEC, that contains the

fiscal discipline of corporate reorganization transactions involving

companies resident in different Member States of the European Union,

5 GIULIANI FONROUGE, CM, Derecho Financiero, Tomo I, 10th ed., Updated by NAVARRINE,

S.C. and ASOREY, R.O., La Ley, Buenos Aires, 2011, p. 435-436.