IT’S ANNUAL TAX TIME

It’s Annual Tax Time

Like in other global markets, Costa Rica also has its share of annual taxes. This article will be discussing the annual taxes due for anyone who is an owner of real estate or has a Costa Rican corporation. Not all taxes are applicable to everyone. We will discuss each type below.

Luxury Tax

Due:January 15 of each year.

The Luxury Tax (Solidarity Tax for the Strengthening of Housing Programs) only applies to houses, condos, or apartments over a certain construction value(131,000,000.00 colones in 2019, approx. US $232K – this amount is adjusted each year). The amount for 2020 will be available in December and we will update this article with the 2020 amount.

Annual Corporation Tax

Due:January 31stof each year.

All corporations, subsidiaries, and limited liability companies that are currently registered before the National Registry will be subject to pay an annual tax. (Law # 9428: ‘Tax over legal entities’)

NOTE: The ‘annual corporate tax’ is aside from the VAT Tax, or Income Tax, the corporation is subject to those indicated in the event the corporation is active and is registered as a tax payer.

Property Tax & Garbage Collection

Due: March 31stof each year.

Property owners must pay Property Tax (Impuestos Bienes Inmuebles) and garbage collection fee (recolección basura) to the Municipal Government where the property is located.

The garbage collection fee is a fixed amount, adjusted yearly, that must be collected along with the property taxes. The municipality determines the fee based on location and on whether the property is used for residential or commercial purposes.

As we have discussed in previous articles, there are numerous taxes that are paid throughout the fiscal year. To ensure you do not incur any penalties or fines, it is important all applicable annual taxes are paid on time. If you have any questions, please don’t hesitate to contact us at info@gmattorneyscr.com

Annual Corporate Tax

Due:January 31stof each year.

Amount:There will be a fixed fee for inactive corporations and a progressive rate for active corporations depending on the income from the corporation. The amounts range from US $120 (for inactive corporations) up to US $380 for active corporations.

If the tax is not paid, the National Registry will not issue, certify or register any documents for the corporation and the corporation will not be able to contract with the Government or any public institution. Non-payment may also be subject to fines and collection procedures.

NOTE: The ‘annual corporate tax’ is aside from the VAT Tax, or Income Tax, the corporation is subject to those indicated in the event the corporation is active and is registered as a tax payer.

Property Tax & Garbage Collection

Due: March 31stof each year.

Property owners must pay Property Tax (Impuestos Bienes Inmuebles) and garbage collection fee (recolección basura) to the Municipal Government where the property is located.

Amount: The property tax is 0.25% of the registered value of the property, which is either the purchase price paid or the value assigned by the Tax Office.

This property tax and garbage collection fee can be paid a year in advance or quarterly. However, if paid quarterly, you must pay before the end of each quarter to avoid interest charges. The first quarter of the year ends on March 31stof each year.

Owners must fill out a form to update the value of the real property every five years. Failure to do so can lead to a Municipality assessment and fines to the real estate owner. Please verify the last time you filed the form, in case of any doubt, better verify with the Municipality. The Municipalities are already notifying appraisals and fines for people haven’t done the update.

NOTE:
The Municipalidad de Santa Cruz does not always charge both in the same statement and this can cause confusion and problems to owners. The municipality has attributed this to ‘lack of updated records and/or to administrative errors within the system’. Therefore, please review your statement carefully to avoid unpleasant surprises.

Luxury Tax

Due:January 15 of each year.

The Luxury Tax (Solidarity Tax for the Strengthening of Housing Programs) only applies to houses, condos, or apartments over a certain construction value(133,148,400.00 colones for 2020, approx. US $237,765K – this amount is adjusted each year).

Amount: The amount of tax to be paid is on a scale from 0.25% to 0.55% per year, depending on the value of the property. This tax is due for all applicable properties from 2019 and forward.
Those liable for this tax shall fill out the form called ‘Formulario Único de Inscripción, Declaración y Pago Impuesto Solidario para el Fortalecimiento de Programas de Vivienda, Ley 8683’ every 3 years. Next time to file it will be on or before January 15th, 2022, as the previous one was on January 15, 2019. The Tax Office publishes the parameters to apply for the following year sometime in late December each year.