Will Citizenship Add Coolness to My Already Astonishing Life in Costa Rica?

I've been arguing with myself for over a year about pursuing citizenship here in Costa Rica. I've put in the time, which is 7 years, why not get something for it?

 

There are a lot of benefits, such as drastically lower health ins. premiums (like so low they fall into my budgetary noise), a free 10-year cedula, easier banking, ability to leave CR and return at will and return of my $200 residency security deposit.

I've also been told by those who have gone this path before that many everyday transactions that involve use of ID become somehow easier because you are no longer a foreign contaminant in the eyes of Ticos, especially those that control various process gateways. Doors open that swung with difficulty before and the wheels of bureaucracy in general suddenly present less friction if you are perceived as "normal." Those benefits are rather intangible to me at the moment.

And, of course, one mustn't overly discount the "coolness" factor of having dual citizenship and that inoffensive passport when visiting certain places disagreeable to the latest U.S. meddling around the world.

One drawback that I was hung up on for a while was the name change thing.

Squeezing Colossal Returns from Your Retirement Kitty in Costa Rica

Update: It has been almost a year since we opened our Costa Rica CDs. After nearly perfect stability in the U$D exchange rate for a couple of years, the Costa Rica Colon depreciated this year about 3%. Given that our CDs average approx. 11% return, we are still 8% ahead this year and expect to renew the shorter term certificates. 

Our confidence has also been increased in CoopeNae after a recent meeting for investors that we attended (or maybe it was the delicious shrimp, shishkebab and Argentinian wine served afterwards? :) ). For example, they have the highest growth rate among credit unions here and better liquidity than the national banks!

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I've been aware of the enormous interest rates on savings in Costa Rica since we moved here, but until recently was unable to take full advantage of them because spare cash was tied up in other things and, I must admit, the big returns made me gun shy. I mean, there has to be a catch right? Yes, there is a catch, but looking back over our 7 years residing here, with the absolute clarity that 20-20 hindsight provides, I wish we'd taken the plunge sooner.

Typical CD Rates in Costa Rica for Colones Deposits

As you can see from the chart at the right, phenomenal rates can be had on Certificates of Deposit denominated in Colones. Rates for U$D deposits are dramatically less, but much higher than in the U.S., up to 3.5%.

For deposit amounts in five figures or higher, you can actually negotiate slightly higher rates as well. We were able to get 12% with a quarterly payout of interest on one CD.

The highest rates are not universal. These quoted at the right are from a local credit union. Bank CDs yield 2 or 3 points lower and National Banks even lower. The latter provide something like the FDIC insurance coverage enjoyed in the States however.

Which brings us to why you might not want to invest in such CDs:

How The Move to Costa Rica All Began and Other Topics

Bridge in MonteVerde

This blog started over five years ago. It was always my intent that our experiences would benefit others starting their own expatriate journeys as well as provide an ongoing "letter home" to friends and family.  

After the first couple of years of preparing for our move to Costa Rica, moving, building, and settling in, the posts tend toward daily life, plus coverage of the minor crises and triumphs along the way. Readers of A Dull Roar who are not in Costa Rica, and may be contemplating a move here or some other ex-pat destination, might be looking for something a bit more relevant to their own cliff-jumping experience.

Is Costa Rica The Happiest Place On Earth? Maybe Not for the Reasons You Think.

In a walk across the web, I stumbled over this article about how Costa Rica is again the Happiest Place On Earth, and my stubbed virtual toe is still smarting a little.

A lot(!) is written about how Costa Rica is an undiscovered paradise (mostly by the Tourism bureau and real estate agents methinks), and this Happiness Index thing keeps popping up every year. 

This particular article, however, seemed more over-the-top than most, so I couldn't resist dissecting it a bit - tongue-in-cheek - based on my own experience in "paradise." Yes, I've cherry-picked for brevity's sake, but 80% of the article is intact below. I'm going to use my own scoring, +1, -1 and 0 for neutral. Let's see what my "happiness index" comes up with.

Having just been voted the single-most happiest place to live on the planet, Costa Rica has grabbed the attention of many. But the question burning up the Internet is, "why is Costa Rica ranked the happiest place on Earth?"

...

First off, the country is ideally located in Central America between  Nicaragua to the north and Panama to the south.

I have no idea why that positioning would be considered an ideal location and the article doesn't say, either. I think a happier location would be between, say, France and Spain, or elsewhere on the Mediterranean. Will give this the benefit of the doubt, score 0.

President Chinchilla's Christmas Gift

Two days after Christmas 2011, La Presidénte Laura Chinchilla gave many people in Costa Rica a belated present. She signed into law yet another tax. This one is aimed at a long-standing tradition here for protecting one's assets, namely Socieadades Anonomias, in English, corporations. The use of corporations, especially inactive ones, is quite common among those who wish to protect assets in this country. Usually, it's your house and cars that need some protection from lawsuits and most of these corporations have no other purpose than holding such assets. One for each car, one for each house, etc.

I really have no idea what proportion of Ticos use corporations in this manner, but it is routine for the gringos. They are also used to establish yourself as a "person" to the government, which, sans residency, allows you to set up bank accounts, get utilities, etc. This is what's known as a Persona Juridica.

The C.R. government often sets its sights on us, since we are, in general, more affluent than the majority of the population, and of course we can't vote. Their assumption that we are a bottomless well of booty ignores the probability that as C.R. piles on scheme after scheme to garner some extra cash from the gringos (e.g., the "luxury home tax", which was a complete disaster) that poco a poco they make their country a little less desirable to prospective foreign residents, who bring in a lot of much needed capital, which gets distributed to local populations in many ways much more efficiently than government programs.

We be farmin' now! Planting Coffee in Costa Rica

"Farming looks mighty easy when your plow is a pencil, and you're a thousand miles from the corn field." - Dwight D. Eisenhower.

Our first crop, 200 organic coffee plants, has been in the ground for a couple of months now and despite our best efforts appears to be surviving!

The first planting is in a lower portion of the property where there was already an established grove of bananas and plantain to provide shade. We borrowed some workers from our neighbor Luis (who was adding a hectare or so to his already large plantation) for a little clearing, the terracing, and the planting holes. We planted the matas ourselves. A mata is a seedling or cutting. In the case of coffee the matas come as a pair, thus our 200 matas = 400 plants.

"A nickel ain't worth a dime anymore." - Yogi Berra

If you follow news or blogs about Costa Rica even a little then you've read that the country has been upgrading its paper currency for about a year now. New look, new feel, lots of anti-counterfeiting technology included. 50,000 and 20,000 Colones bills are being introduced where previously the largest denomination was 10,000 (approx. 20 U.S. bucks at the current exchange rate). I'm not going to re-hash all the features here that have been covered generously elsewhere. I only use this currency shuffle as prelude to commenting on how easily humans in other countries (notably the U.S.) have a tendency to seek out fault with other countries and cultures. 

In particular, one off-hand remark from a U.S. commenter on a different blog ticked me off: "50,000 bill? Why don't they just reset the currency?". Count to ten... 

Smell that? Mmmm, it must be that time of year again!

The coffee and the Roble de Sabana are in full bloom. It can mean only one thing ... tax time! 

For U.S. citizens the income tax filing deadline is fast approaching (extended 3 days this year, however). I used to be one for getting in my filing early as soon as I had the last 1099 in hand, but the last couple of years and for the foreseeable future I don't have any refund coming so why not procrastinate?

There is another peculiar tax here in Costa Rica that's also due, on March 31st of each year. There's actually a long list of various taxes due in March, but none of the others apply to us. This one, Timbre Educación y Cultura, ostensibly to benefit those programs contained in its title, is due on each and every corporation in the country. We have three corporations, one each for the cars and one for our house and land. These are known as inactive corporations, formed to hold assets only, there is no other activity. This is a common practice, especially for ex-pats who actually have some assets to protect.

The paying of this tax demonstrates in a nutshell how CR chooses to distribute the process of government interaction over multiple entities. One-stop shopping for this kind of thing is rare (one exception is our municipal property taxes). I stayed relaxed, because now my expectations are that I will be lucky to get something like this done in even two trips.

The Tax Man Cometh and the Tax Man Sucketh, again

The universe's best and last defense against entropy is government, of any kind.  - Me  :^)

Did anyone else delight in Brad Pitt's confusion (as Joe Black in the remake of Death Takes a Holiday) in the equivalence of resignation towards death and taxes expressed by his mortal hosts? I think in Costa Rica it's more like Taxes and Another Good Story That Will Bring a Smile to Your Face and a Shrug to Your Shoulders. 

Recently some friends sent me this link to a Tico Times article discussing the impuesto solidario (Solidarity Tax) on so-called luxury homes. The tax is in its second year of implementation and watching the tax man go through backwards somersaults over this thing always gives me a grin.

Don't get me wrong. I am not normally a tax whiner, and I'm especially not going to do that in someone else's country (when/if I get CR citizenship then I think I'll be entitled to a little more whining). Also, I'm not going to bat about the pros and cons of this particular tax, but let's take a quick look at how far the CR Tax Man has to go to become truly professional at inventing and collecting new taxes (ala' the U.S.!).

My short take on this article is this:

• They clearly have very weak enforcement of the tax. The first year they got less than 10% of what they were expecting in revenue. This despite the threat of Draconian fines of 5 to 10 times the amount due. There are clear reasons for this failure, which point out how far they still have to go.
•  So, they decide to crack down!  They track down all the folks who paid the first year (fools!) but didn't pay the next year.  Result?  They collected another whopping 1.2% of that expected annual revenue. I wonder how much they spent collecting that enormous amount?
• They decide maybe the punishing level of the fine was a bit overdone, so now the fine is 1% on the tax due per month. By CR standards that's cheap.  Here's why: right now you can get about 14% per annum on a CD denominated in CR Colones at just about any bank. Why bother paying the tax to the tax man when you can stash it and in the worst case still make 2% a year compounded?
• Since the level at which this surtax begins (about $212,000, house only, not the land) it is very clearly aimed at the wealthiest gringo ex-pats. That may seem cheap by Norteamericano standards, but here, that's a lot of house. Hey, the tax man goes where the money is (just like the famous bank robber Willie Sutton said, except he didn't really). Who can blame them? 

Money Changers

About a week ago Costa Rica introduced a 20,000 Colone bill. Up until now we haven't had a bill larger than 10,000 (roughly 20 bucks). I haven't yet gotten one in my mitts, but saw one from a distance. Soon (a very fluid term here, but supposedly by end of year) there is to be a complete face-lift of all the paper money and the introduction of a new 50,000 Colone bill as well (reverse side pictured above).

You can see all the bills (except, inexplicably, the front side of the 20K bill) at the Banco de Costa Rica site: Nueva Familia de Billetes del BCCR

Interestingly, each denomination of bill is a different length, short to long, lower denomination to higher, respectively. This feature is to help the sight-impaired to distinguish a bill's value.

Trailer redux

Regular readers certainly recall the semi-trailer we loaded with 99% of our household stuff and left behind in Oregon. The plan was to delay delivery until the road was rocked down here and use it as storage and eventually as a shed. Well, we’ve had to scrap the latter part of this plan as after a lot of brainstorming with local haulers we see the improbability of it making up these long, in-ill-repair, twisty roads. It’s possible, but likely more trouble and expense than it’s really worth. Plan B is to park it in secure storage in town and haul the contents up a bit at a time. Then we'll try to sell it. The flip side is that we’ll be able to bring our goods down a little sooner, since it’s not dependent on when the road is rocked now, and we’ll end up with a new permanent (and more aesthetically appealing) storage building on the property. I'm contracting one of our neighbors to build the new shed (300 sq mtrs) before the trailer gets here so we have a place to put the contents. His work in town just finished so he's happy to have a new project, especially one in the neighborhood. The shed design includes a couple large windows on one side overlooking the valley. This is where I’ll set up my new radio station.

After three weeks, we finally have a CR bank account now, via HSBC. Since it’s not FDIC insured we plan to use it only as a way-station for near-term funds. We have savings accounts in both Colones and Dollars, plus a Colones checking account. Also, they claim to be able to process US bank checks in 12 business days, which is about 10 days faster than the CR banks claim. If so, that will save us a ton in wire fees, since it’s not difficult to anticipate fund needs that far ahead.

One thing I like about the banking system here is that you can use just about any bank to pay your utility bills. They all have access to the ICE database so that you (or they) can see your current bills and pay them on the spot with an instant funds transfer. Beats having to go to separate sites for each bill as we do in the States. I suppose they have it set up this way since home delivery of mail is little used. The PO will deliver mail via motorcycle courier but it is not the norm. I don’t know what happens if there is no one home when the courier arrives as there are no mailboxes. We now have a PO Box in town anyway that I check about once a week.

We have had a lot of wet weather this past week, nothing really heavy, but misty, cloudy, damp. It is supposedly due to a multi-day storm on the Caribbean side. I heard that US helicopters were evacuating folks in Limon after 9 days of rain there. We are more or less protected from these Caribbean side storms by the Talamance Cordillera. The 100-year exception to that though was last May when Pacific Tropical Storm Alma rolled in and dumped rain for 3 days straight. Seems to be clearing up here today by the way, lots of blue sky.

Last night the sky was mostly clear and I took a quick survey of the stars. It took me a while to get my bearings since all the familiar constellations are offset to the north by 36 degrees! Orion was in the northern part of the sky and upside down. Very strange! I think I have a star chart in the trailer, which I'll have to consult during the "summer" here to figure out what all the stars and constellations are in the southern sky, stars I've never seen before.

Kiva? Is that some kind of tropical fruit?

Actually, not. It's really a specific kind of room used for specific religious rites, but I was being facetious anyway. It's also the adopted name of a non-profit organization, Kiva.org, which I wish, in a tiny way, from this tiny soap-box of a blog, to promote to my intrepid readers.

If you haven't heard of micro-lending before, then you definitely owe it to yourself to learn more about this innovative way to make your non-profit donations have an increased and extended impact. Kiva is just one of several of these kinds of organizations, but my favorite among them and my favorite way to "donate" what small portion of our assets that we share with others less fortunate than ourselves. One "donation" (really a loan) of just $25 can be used over and over again to help folks in developing countries with their business plans, people who are already helping themselves. BTW, default rates are extremely low.

I love the idea, and I plan in the future to start giving Kiva gift certificates for birthday and Christmas presents. Check it out!