Tax season is here in Costa Rica and if you are currently living in the Central American country, you know it is best to have a professional accountant look into your finances before filing. But who is watching the watcher? Having a Costa Rican accountant prepare your taxes is fine but what if they are missing things? Write-offs and expenses may be overlooked by a typical accountant that is used to doing things a certain way. That is why it is good to have a tax consultancy firm in Costa Rica that can make sure things are going to go your way at tax time.
Getting an audit before your annual taxes can help you find things that accountants may overlook. Have you been paid by all of your clients? Are you missing invoices? Affordable tax preparation with a one-time consultancy fee can get you back on track if you are a business owner in Costa Rica.
Costa Rica Tax Info
If you are generating income inside of Costa Rica, either in person or through a corporation, you will be responsible for paying income tax. Your tax return must be filed before December 15 of each year, with the tax year going from October 1 to September 30.
There are new tax brackets for corporations that went into effect on January 1, 2022.
The following corporate income tax rates apply to the income of companies with an annual gross income of ¢112,070,000 (US $175,383) or less (exchange rate CRC¢639 per USD$1):
|Amount of income||Rate|
|Up to ¢5,286,000 (USD $8,272)||5%|
|¢5,286,001 to ¢7,930,000 (USD $8,272 to US $12,410)||10%|
|¢7,930,001 to ¢10,573,000 (USD $12,410 to US $16,546)||15%|
|Over ¢10,573,001 (USD $16,546)||20%|
The corporate income tax rate will be 30% for companies with an annual gross income that exceeds ¢112,070,000 (USD $175,383).
If you are an individual who is living in Costa Rica and is obtaining income within the boundaries of the country, your income is considered Costa Rican-source income and is taxable.
The following income tax rates apply to the income obtained by individuals from profitable activities:
|Amount of income||Rate|
|Up to ¢3,836,000 (USD $6,000)||Exempt|
|¢3,836,001 to ¢5,729,000 (USD $6,003 to US $8,965)||10%|
|¢5,729,000 to ¢9,555,000 (USD $8,965 to US $14,953)||15%|
|¢9,555,001 to ¢19,150,000 (USD $14,953 to US $29,968)||20%|
|Over ¢19,150,000 (USD $29,968)||25%|
Even if you have an active corporation in Costa Rica, you must pay the Corporation Tax, or Impuesto a las Sociedades Anónimas. All Costa Rican corporations are obligated to file an Income Tax Return D-101 form, which is due every year on March 15. If you are not a legal resident and want to file yourself, you can request a NITE number from the Ministry of Hacienda. If not, you can pay an accountant every year to file this form.
Costa Rica Property Tax
The Capital Gains Tax is charged at 15% for residential properties and 30% for commercial properties. You are exempt if you are selling your primary residence, but you will have to prove that you lived in it for 183 days or more each year. For those with a titled property purchased prior to July 1, 2019, you have the one-time option of paying a flat 2.25% of the sale price rather than the Capital Gains Tax. Costa Rica implemented the Capital Gains Tax in 2019.
Vacation rentals, hotels, restaurants, and stores are categorized as commercial real estate and taxed at 30%. This is something to keep in mind if you are considering buying a vacation rental in Costa Rica. It is advised to speak with a tax consultancy firm in Costa Rica like Costa Consultants regarding your income tax obligations with a vacation rental property prior to buying a property.
The Luxury Home Tax, or Impuesto Solidario para el Fortalecimiento de Programas de Vivienda, should also be considered before purchasing a property in Costa Rica. The Luxury Home Tax targets high-end homeowners and is based on the construction value of the home. For 2022, all homes with a construction value over CRC ¢133.000.000,00 (USD $208,138) are required to pay this tax.
The project value includes the total cost to the owner for the construction in the property’s completed form. This includes the cost of design, construction materials, all building work, building systems, and the profit of the contractor and all subcontractors. It does not include the cost of non-fixed furnishings or non-fixed equipment. Every three years homeowners are required to do an appraisal in order to update the value.
Vehicle Tax in Costa Rica
Another tax that needs to be paid soon is the road tax. After the second half of November and before the December 31, you must make your Marchamo payment if you own a vehicle. The rates of the vehicle circulation permit depend on the age and types of vehicles you own.
Taxes in Costa Rica can be confusing, especially for those who have just moved here or are planning to move here. Whether you are dealing with corporate taxes or property taxes in Costa Rica, use a Tax consultancy firm in Costa Rica with feet on the ground. Get an affordable tax preparation done by a company that has been offering financial services in Costa Rica for nearly a decade.
Our financial services are offered for an expat, by an expat. Owner and founder of Costa Consultants Kathryn Gordon was born and raised in Tennessee. She earned her MBA from Crummer Graduate School of Business in Winter Park, Florida in 2012 and studied at INCAE Business School in Alajuela, Costa Rica, after double majoring in college. Kate established her business consulting firm in 2015 and has managed to grow her clientele well beyond the Costa Rican borders.
Although Kathryn manages a team of graphic designers, content creators, marketing managers, and SEO experts, she uses her own expertise when it comes to fulfilling her client’s financial and accounting needs. You can trust her to find whatever your accountant might be missing with an affordable tax preparation that could save you thousands of dollars.