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    Experts Suggest Improvements to the Law for Digital Nomads in Costa Rica

    If well done, it could bring many benefits to the country

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    From Caribbean islands such as Aruba or the Bahamas, to European nations such as Croatia and Estonia, various countries seek to attract the arrival of digital nomads as a measure of economic reactivation.

    Costa Rica is no exception. Currently, a bill, urged by multiple sectors, begins its process in the Legislative Assembly. However, legal experts consulted indicated that the text could be improved.

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    Specialists in labor law, Marco Durante and Eric Briones, applauded the initiative and expressed the importance of its objective. In response to an inquiry, both offered a couple of different suggestions that can be made prior to approval.

    New Legislation


    The “Law to Attract Workers and Remote Service Providers of an International Nature” is promoted by the deputy of the National Liberation Party (PLN), Carlos Ricardo Benavides. Given that the bill is ready for a vote, the legislator considers that there is not much room for reforms. This, unless they were contained in the reiteration motions that some deputies already presented, as he explained.

    However, any progress on file 22,215 will have to wait, at least, until the Executive Branch considers it so. On March 15th, the Government withdrew all the projects, except for Public Employment, from the legislative stream.

    For this reason, the President of the National Chamber of Tourism, Rubén Acón, urged the President, Carlos Alvarado, to convene their discussion again. The project’s impact is considerable, he argued. Even, he added, many hotels are beginning to invest in adapting their facilities in order to attract a greater number of these customers.

    Four rural establishments consulted, confirmed having made some type of recent expenditure in this regard. The vast majority highlighted the area of connectivity. Meanwhile, in territories like Bermuda, a special visa program for digital nomads has resulted in the arrival of 400 of them. This during the first six months of its implementation.

    As this modality becomes popular in the business world, more and more American and European companies consult with their legal advisers about the local jurisdictions of the most popular destinations, including Costa Rica, according to the specialized portal Nearshore Americas.

    Possible improvements


    “It is an excellent initiative, to be applauded because it seeks to generate a new income opportunity for the country. However, reading the project that is ruled in committee, I think it is more focused on the immigration and tax part than on the labor part. When we talk about this, it means labor-social security”, highlighted the Managing Partner of BDS Asesores, Marco Durante.

    In that sense, the expert highlighted two specific issues:
    Article 14 of the Labor Code and Article 3 of the Constitutive Law of the Costa Rican Social Security Fund (CCSS). In Durante’s opinion, the bill should reform article 14 of the Labor Code, or make an inclusion in a chapter called digital nomads. This, with the objective that the application of the same in terms of territoriality principle is dimensioned in advance.

    The article reads: “This law is of public order and its provisions will be subject to all companies, farms or establishments, of whatever nature, public or private, existing or established in the future in Costa Rica, as well as all the inhabitants of the Republic, without distinction of sex or nationality”.

    In the opinion of Durante, “it means that this labor code, whether we like it or not, is going to apply to all the inhabitants of the country. It must be straightened out so that the figure we want to create, with these digital nomads, is a person to whom we can say clearly whether or not it applies”, he added.
    This, for example, guarantees that no nomad could acquire a labor law that is more beneficial in said legislation than in the legal regulations in which their employment relationship was specified.

    Social Security


    Another obstacle that must be resolved, before its approval, is article 3 of the Constitutive Law of the Costa Rican Social Security Fund (CCSS), added the lawyer. “The project tries to solve, in some way, this point when it says that the working person is going to have a non-resident migratory category and even talks about insurance.

    “How can it be solved? It seems to me that a way could be sought in which the Fund also gives these workers a status. An alternative is to explore how a condition can be created before the CCSS, special and in accordance with article 3. It could be something that seeks to assimilate the figure of independent worker and of which there is already some regulation of the Fund”.

    Refine details


    For his part, Eric Briones, doctor in Labor Law, differed in his colleague’s criteria. However, he pointed to other suggestions that could make the project a more inclusive initiative. Given that the employment relationship is established outside of Costa Rica and the proposal refers to a stay permit to develop it, currently he does not perceive any type of inconvenience.

    “Eventually, I would not see any problem about the questions (asked), because there is no employment relationship that has occurred in Costa Rica. It could be that, in the future, I know of something that we did not foresee and then yes, a criterion will have to be issued. “If you have doubts, there is 432 of the Labor Code. It talks about everything that has to do with international competences in territorial labor law”, he explained.

    However, for the legal expert, other details that could be corrected and that avoid limiting the country’s potential are the maximum age of the (worker’s) children (25 years). At his discretion, nowadays it is not strange to see family nuclei with children who are over that age and who still live with their parents.

    Another issue that is pertinent, he added, is the minimum amount of salary established for digital nomads to be able to opt for the benefits. In his opinion, the net amounts available to workers should be taken into account. Since other countries have different contribution percentages, it would be proactive to review the amounts.

    Ready for voting


    The PLN deputy, Carlos Ricardo Benavides, acknowledges that some of the issues mentioned by the jurists were analyzed during the debates in committee. However, he acknowledged that others were not given as he did not consider that they were necessary due to the nature of the project.

    On the issue of the fixed amount, Benavides explained that it is about gross figures and not net amounts. This allows greater flexibility at the point mentioned by Briones. On the other hand, he acknowledged that the status of a figure was previously discussed. However, in that sense, he mentioned that he only remembers a motion to reiterate that concerns the CCSS.

    In that sense, he explained that it seeks to enable the institution so that, if it so wishes, it could establish insurance, medical services, competitive with the international market. “It has not been negotiated, whether to vote or not, a possibility that must be analyzed calmly”, he stressed.

    On the other issues, Benavides manifested himself in a line similar to Briones. The deputy considers that, as the project does not cover the establishment of labor relations in the country, there is no need to go into those details.

    “They do not have the status of worker in terms of what we understand, as such, in the legislation. They are people who could be subordinates in other countries or independent who provide services, from here to people, in other countries. “These are the two hypotheses in which it is applied, so that the Labor Code is not a legislation applicable to the specific case of any of the digital nomads,” he said.

    Adaptation


    Not only countries are adapting to this trend. Companies are also beginning to inform themselves about it. This was stated by the expert in labor law, the American Scott Nelson, a partner at the firm Hunton Andrews Kurth, established in Houston, Texas.

    “Global companies, particularly the more sophisticated ones, are seeking to enable conditions for permanent remote work,” he said. This means that they must adapt to different regulations and international requirements.

    On the other hand, the tourism sector is also showing interest in these types of clients. Several businesses consulted confirmed that they had made investments with the aim of attracting this type of travelers.

    All those consulted indicated that improvements in the internet service were mandatory, as a first step. However, each seeks to maximize its surroundings. For example, the general manager of Ecoquintas, Gaudelio Zuñiga, explained that in his experience, “what these digital nomads are looking for are mini tourist cities, they need places that have access to services such as banks, supermarkets, restaurants, shops, health centers,” he explained.

    Urgent call


    The President of the National Chamber of Tourism (Canatur), Rubén Acón, affirmed that while he supports making improvements, he pointed out that it is useless if the project cannot be discussed.

    The representative expressed his displeasure with the decision of the Executive Power, which by means of a decree, withdrew from the legislative stream all the files, except for the proposal for the Public Employment Law. This with the aim of forcing the deputies to approve it more expeditiously.

    “People are hungry today. Not in three years”, at the same time that he questioned the effectiveness of the initiative to postpone the advance of other legislation so that Congress can focus on just one.

    It remains to be seen what future awaits the proposal promoted by Benavides, urged by various sectors and applauded by experts in the field. Meanwhile, other countries are making fast progress on the matter.

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