Costa Rica: Are You an Independent Contractor?

Published on Apr 1, 2024

Are you an independent Contractor? This information will interest you!

Today we would like to share with you relevant information about applicable regulations, which will be available for a short time, and which will allow independent contractors to regularize their status as a contributor to Social Security.

An independent contractor is a person who conducts is the work autonomously, without subordination and that can organize themselves through an economic unit that allows them to generate income, through goods or services of a non-wage nature. Independent contractors exercise control over their activities and are entitled to independently make the most important decisions, they can work alone or in collaboration with other independent contractors and provide or not work to third parties, in addition to assuming the risks of their activity.

Did you know that, for these independent contractors, the Board of Directors from the Costa Rican Social Security approved Law 10.232 (Authorization of Waiver for the Formalization and Collection of Social Security Charges), creating a process of waiver of surcharges, fines, interest and also bills for medical services.

The Board of Directors from the Costa Rican Social Security also authorized an amendment to the "Bylaw for Contributory Insurance of Independent Contractors" in accordance with the provisions of Law No. 10.363 "Independent Contractor Law".

Under this bylaw reform, the statute of limitations for independent contractors was reduced, and will now covers both the stage of determination of contributive obligations, which is the investigation phase carried out by the Inspectors of Laws and Bylaws, as well as the collection process and the first-time registration.

But what is the Waiver of Debt?

It is the forgiveness of debts to Social Security as an independent contractor related to surcharges, penalties, interests, even applicable for medical services, this waiver is not applicable to the principal amount.

The waiver applies to debts that by the date of the entry into force of the bylaw, had existed for over a year, meaning, the terms prior to December 14, 2021.

What do I mean by this?

For example:
If you are a contractor who registered on December 14, 2017, and maintain that condition to date, the surcharges, penalties and interests that would be waived will be those arising from December 14, 2017 and up to December 14, 2021, but not those accumulated from December 15, 2021 to the date of submission of the application.

It is important that you DO NOT forget that the Social Security Authorities do not automatically apply the waiver, meaning, it must be activated by means of a formal request.

As for the statute of limitations on debts, how does this apply?

The statute of limitations for the Social Security Authorities to collect the following debts has been reduced from 10 years to 4 years and will apply to the following items: i) independent contractor social security charges, their interests and surcharges and ii) additional independent contractor social security charges with interests and surcharges.

This means that prior to this new regulation, debts from the last 10 years could be collected, but currently only those from the last 4 years will be collected, from the time the request is made.

And what if you have never completed the registration process with the CCSS?

The law also makes it possible for an independent contractor who has not yet joined the Social Security Authorities to do so, regardless of whether they have carried out any type of economic activity in the past.

At the time of registration, the inspectors in charge shall determine the contribution obligation for the last four years of service.

How long do I have to complete these processes?

The deadline to request the waiver of surcharges, penalties, interests, and even medical services expires on December 14, 2024.

For contractors who have not registered during the first 24 months after the entry into force of the law, a 4-year statute of limitations will apply for debts that arose before and during this period. For example, it is important for contractors to register with the Social Security Authorities before the 24 months have elapsed. Otherwise, the applicable statute of limitations will be 10 years. This deadline is May 8, 2025.

But wait, there's also an additional benefit that you're sure to be interested in!

This Law also regulates the formalization of payment agreements or agreements that provide the possibility of canceling the amounts owed under special conditions.

If the debt is in a judicial collection process, this will not prevent the application for prescription from being submitted to the administration, in which case, if the request is approved; either the Social Security Authorities or the interested party will send the respective resolution to the corresponding Court.

We hope you find this information useful!

If you would like to know a projection about your debts, make the respective requests or obtain more details on this subject, please contact us!

I am Paola Rojas, associate of the Labor Area of Arias. If you want to access more content on labor matters do not hesitate to follow us on our social networks. Thank you!

Paola Rojas - Associate, ARIAS Costa Rica.

The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, and does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.