Verified Facts
In Costa Rica, tax rates range from 0% to 25% for individuals and 30% for corporations, with a variety of deductions and incentives available for both personal and business income.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Costa Rica operates under a territorial taxation system, where only income earned within the country is subject to taxation, except for certain types of income earned by tax residents, who are subject to worldwide taxation. To be considered a tax resident in Costa Rica, an individual must have lived in the country for more than 183 days in a calendar year, or have a permanent home in the country, or have a spouse or dependents who are tax residents. The tax system is overseen by the Ministry of Finance, which is responsible for collecting taxes, enforcing tax laws, and providing guidance to taxpayers.
The tax system in Costa Rica is designed to promote economic growth and development, while also ensuring that taxpayers comply with their tax obligations. The country has a relatively complex tax system, with a range of taxes, including income tax, corporate tax, value-added tax (VAT), and capital gains tax. Taxpayers must file their tax returns annually, and must pay their taxes on time to avoid penalties and interest.
Personal Income Tax
| Income Bracket (CRC) | Tax Rate |
|---|---|
| 0 - 1,106,067 | 0% |
| 1,106,068 - 2,212,134 | 10% |
| 2,212,135 - 3,318,201 | 15% |
| 3,318,202 - 4,424,268 | 20% |
| 4,424,269 and above | 25% |
| Personal income tax rates in Costa Rica are progressive, with higher income earners paying a higher tax rate. Taxpayers are allowed to claim deductions for certain expenses, such as mortgage interest, charitable donations, and medical expenses. Tax returns must be filed annually, and taxpayers must pay their taxes on time to avoid penalties and interest. Taxpayers can claim allowances for dependents, and can also claim a tax credit for certain types of income, such as foreign-sourced income. |
Corporate & Business Tax
- The corporate tax rate in Costa Rica is 30%, which applies to all types of businesses, including sole proprietorships, partnerships, and corporations.
- Small businesses with annual sales of less than CRC 120 million are eligible for a reduced tax rate of 20%.
- Companies operating in free zones are exempt from paying corporate tax, as well as VAT and other taxes.
- Businesses must register with the National Registry and obtain a tax identification number to operate in Costa Rica.
- Companies must file their tax returns annually, and must pay their taxes on time to avoid penalties and interest.
VAT / Sales Tax
- The standard VAT rate in Costa Rica is 13%, which applies to most goods and services.
- A reduced VAT rate of 5% applies to certain goods and services, such as basic food items and public transportation.
- Exemptions from VAT are available for certain types of goods and services, such as exported goods and financial services.
- Tourists are eligible for a VAT refund on certain purchases, such as hotel accommodations and tour packages.
For Expats & Foreign Workers
- Expats and foreign workers are considered tax residents in Costa Rica if they live in the country for more than 183 days in a calendar year.
- Tax residents are subject to taxation on their worldwide income, including foreign-sourced income.
- Costa Rica has double taxation treaties with 15 countries, including the United States, Canada, and the United Kingdom.
- Expats and foreign workers must register with the Costa Rican Social Security Administration and pay social security contributions.
- Remittances from abroad are subject to taxation in Costa Rica, unless they are exempt under a double taxation treaty.
- Expats and foreign workers can claim a tax credit for certain types of income, such as foreign-sourced income.
Crypto & Investment Income
- Investment income, including dividends, interest, and capital gains, is subject to taxation in Costa Rica.
- Cryptocurrency is considered a taxable asset in Costa Rica, and gains from the sale of cryptocurrency are subject to taxation.
- Taxpayers can claim a tax loss for losses incurred from the sale of cryptocurrency or other investments.
- Investment income earned by non-residents is subject to a withholding tax of 15%, unless exempt under a double taxation treaty.