Costa Rica offers a dynamic environment for businesses and property investments, but understanding the local tax landscape is crucial for compliance and financial planning. This article outlines the essential taxes corporations and property owners must know, ensuring you stay informed and prepared. From home luxury taxes to capital gains, we provide a comprehensive guide to help you navigate the Costa Rican tax system effectively. The following taxes can be paid online or in person via a Costa Rican bank account.
Home Luxury Tax.
The Home Luxury Tax is due annually on January 15th and applies to residential properties exceeding a specific construction value. For 2024, this threshold is set at 145,000,000 colones (approximately US$ 280,000). This amount is adjusted annually to reflect changes in property values. Owners of eligible properties must fill out, with the help of an appraiser, the «Formulario Único de Inscripción, Declaración y Pago Impuesto Solidario para el Fortalecimiento de Programas de Vivienda» every three years, with the following submission due in January 2025. However, this tax must be paid yearly.
Corporate Tax (Law 9428).
Corporate tax in Costa Rica will vary if the CR LLC is inactive or active CR LLCs. The due date for this tax is January 31st each year. Inactive corporations pay a fixed fee of around US$ 130. Active corporations, however, pay a progressive rate based on their gross income, with amounts ranging up to US$ 390. These amounts are subject to annual adjustments under the Tax over Legal Entities.
The Education & Culture Stamp
Due by March 31st annually, the Education & Culture Stamp tax is based on the CR LLC’s registered capital stock. The tax rates are:
- Capital stock up to ¢500,000 colones: ¢5,000 colones ($10)
- Capital stock from ¢500,000 to ¢2,000,000 colones: ¢6,000 colones ($12)
- Capital stock from ¢2,000,000 to ¢4,000,000 colones: ¢12,000 colones ($24)
- Capital stock above ¢4,000,000 colones: ¢18,000 colones ($36)
Property Tax & Garbage Collection
Property owners must pay property taxes and garbage collection fees quarterly: March 31st, June 30th, September 30th, and December 31st. The property tax rate is 0.25% of the property’s purchase price or registered value, whichever is higher. Alternatively, the tax can be paid in full annually. The garbage collection fee is approximately US$ 200 per year. Additionally, to maintain accurate assessments, property values must be updated every five years by submitting a value declaration form to the local municipality. Failure to update property values can result in fines, so it’s essential to stay current.
Capital Gain Tax (Law 9635)
The Capital Gains Tax imposes a 15% tax on all investment income and real estate sales. This tax is calculated based on the difference between the asset’s purchase and sale values. The formula is straightforward: (Purchase Price + Value of Investments and Improvements) – Sales Value * 15% = Capital Gain Tax. Other considerations and tax percentages are to be paid if the seller is an active CR LLC and/or a foreign (person or entity) without a legal tax domicile in CR.
Costa Rican LLC (either an SA or an SRL) duly registered at the National Registry are considered «domiciled» in Costa Rica as long as their legal domicile (domicilio social) or place of business (domicilio fiscal) is within Costa Rica.
CR LLC and property owners can manage their obligations by keeping abreast of deadlines and requirements for home luxury tax, corporate tax, the education & culture stamp, property tax, and capital gains tax. GM Attorneys at Law is dedicated to providing personalized guidance and expert advice to help you navigate these taxes. Contact us to ensure your tax matters are handled precisely and carefully, allowing you to focus on your core business and investments.
We at GM Attorneys will be pleased to help you with legal matters in Costa Rica! You can contact us at info@gmattorneyscr.com or visit our website and blog section at https://gmattorneyscr.com/blog/
By Aline Van Geyt