Moving to another country like Costa Rica is always a big step, especially if you don’t have all the information together to be able to follow the rules. In most countries the tax authority or city will send you a notice when it’s time to pay your taxes. That’s not the case in Costa Rica, and you will be fined for late payment. Needless to say there are a couple of taxes you should know about.
Import tax, or impuesto de importación
Every imported product that is not covered by a commercial treaty between the exporting country and Costa Rica pays import tax before it clears customs. This tax is charged over the invoiced C.I.F. value (Cost + Insurance = Freight). So if you buy a product in a local store, the tax is already paid. If you order a product online, you will have to pay the tax on it to get it to clear customs. Should you plan to bring your household goods and your car with you to Costa Rica, you must pay the import tax based on its value. To calculate the import tax on your car, customs uses the Blue Book.
Sales tax, or impuesto de ventas
Every product and most services, excluding what is called the canasta básica, or basic food basket, pay 13 percent sales tax. The canasta básica is a list of basic products like fruits, vegetables, rice and beans, meat, medicine, agricultural tools and supplies, certain veterinarian products, essential educational products and commercial fishing tools and supplies, which are all exempt from the sales tax. The Costa Rican government has plans to change the 13 percent sales tax into 15 percent IVA.
Income tax, or impuesto de la renta
If you generate income in Costa Rica in person or through a corporation, you will have to pay income tax. Income tax is paid before Dec. 15 every year. The Costa Rica tax year runs from Oct. 1 to Sept. 30. If you generate a foreign income and you already pay in the country where the income was generated, you don’t have to pay any income tax in Costa Rica.
Capital gains tax
Costa Rica does not have a capital gains tax, but check with your home country where you might have to pay capital gains taxes over your gains in Costa Rica.
Property tax, or Impuesto sobre la propiedad
If you own property in Costa Rica, you have to pay annual property tax, payable quarterly. Most municipalities will give you a discount if you pay the whole year in advance. The tax is 0.25 percent of the registered value of your property in the municipality (not in the National Registry), as regulated by Law 7509. Starting this year, and every five years after that, you have to declare the value of your property yourself. If you don’t, the engineering department of the municipality will do it for you. The property tax is paid in the municipality where your property is located.
Luxury home tax, or Impuesto Solidario
The luxury home taxes has to be paid before the 15th of January each year and only has to be paid if the construction value of your property exceeds ¢128 million ($242,000 at today’s rate). This tax is 0.25 percent of the total value of your property up to ¢319 million including the land value and goes up to 0.55 percent for a property of ¢1.9 billion. If you are not sure about the value of your property, hire a licensed appraiser. The Luxury Home Tax can be paid at any Banco de Costa Rica.
Road tax, or Marchamo
Every year, after the second half of November and before the 31st of December, you have to pay the road taxes or marchamo – also known as a vehicle circulation permit – for every motor vehicle you own. You can consult online how much you have to pay. It can be paid at almost any Costa Rican bank and at the National Insurance Institute, or INS. Starting in January you can pay (with fines) at any of the INS offices. When you pay the marchamo, you will also find charges of any unpaid tickets from that year. When you pay, you will receive a sticker, which you should put on the right side of your windshield. Traffic police monitor the windshields of cars on the road heavily, and if you don’t carry the sticker, they will confiscate your license plates.
Corporation tax, or Impuesto de Sociedades
This tax has seen an amazing amount of changes, updates and changes again. It’s easier to read the latest update on the corporation tax in the article November 2017 Update Corporation tax and form D140.
FBAR for US citizens
Some nationalities also have to pay taxes in their home country even though they live in Costa Rica. U.S. citizens and U.S. green card holders living in Costa Rica are required to file the FBAR (Report of Foreign Bank and Financial Accounts or the form TD F90-22.1) if:
1. They have a financial interest in or signature authority over at least one financial account located outside of the United States, and
2. The aggregate value of foreign financial accounts exceeds $10,000 at any time during the year.
U.S. citizens who marry in Costa Rica also have to be aware that once they marry, they will need to select either “Married Filing Jointly” or “Married Filing Separately” on their U.S. tax return.
If you are in doubt about any of the above taxes, ask an accountant for professional advice.
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Ivo Henfling, a Dutch expat who has lived in Costa Rica since 1980, founded the American-European Real Estate Group back in 1999, the first functioning MLS with affiliate agents from coast to coast. You can contact Ivo at (506) 2289-5125 / 8834-4515 or at ivo@american-european.net.
