Last modified: 07/01/2025 00:18

Corporate taxation

	Rate
Corporate income tax rate	30%1
Branch tax rate	30%
Companies granted with the Free Trade Zone status	0% (full exemption for 8 years)
Capital gains tax rate	30% or 15% 2

1. Reduced tax rates for small businesses may apply.
2. For company’s conducting businesses activities the applicable tax rate is 30%. In case of capital gains considered as passive capital gains, the tax rate is 15%.  

Residence: Any bussiness entity constitued in Costa Rica, trust fund, escrow or permanent establisment acting in Costa Rica for more than 183 days

Basis: Local companies are taxed on their source income or territorial income, but multinational companies without sufficient economic substance in the country, obtaining offshore dividends, interests, royalties, capital gains or other types of passive income from investments abroad, are taxed on their worldwide income

Taxable income: Corporate income tax the net profit according to Costa Rican Income Tax Law rules that in some cases may differ from IAS net profit

Significant local taxes on income: – Municipal income tax: ranges between 0.5 to 1.5%, depending on the Municipality

Alternative minimum tax: There is no alternative minimum tax

Taxation of dividends: After the regular 30% income tax, dividend distributions are taxed with an additional 15% tax rate on the gross amount of dividends distributed, for an effective overall tax rate of 40,5%

Capital gains: Capital gains from business assests are taxed with a 30% tax rate. Passive capital gains from non-business assets are taxed with a 15% tax rate, but if the assets or rights were owned before July 2019, the vendor will choose to pay a 2.25% of the sale price.

Losses: May be carried forward for three years (five years for agricultural business). Losses may not be carried back.

Foreign tax relief: Only for the four countries that have signed a DTA (Double Taxation Agreement) with Costa Rica, which are: Spain, Germany, México and United Arab Emirates.

Participation exemption: There is no participation exemption.

Holding-company regime: When a subsiadiary distributes dividends to a holding company, a withholding tax of 15% is applicable (dividends distributed from an active company carrying business activities to another Costa Rican active company, are exempt). Dividends received by the holding company are considered non-taxable income and thus are not subject to further corporate taxation.

Tax-based incentives: – Free Trade Zone incentives granted to companies manufacturing exportation goods and investing more than $150,000.00 (USD) will enjoy a full income tax exemption for 8 years if established in the metropolitan area or up to 12 years if established abroad the metropolitan area.

Group relief/fiscal unity: There is no group relief/fiscal unity

Small company/alternative tax regimes: Small and medium companies dully registered have the following income tax rate: – 0% on income tax obtained on their first, second and third year of activities – 25% on income tax obtained on the fourth and fifth years of activities – 50% on income tax obtained on the sixth year of activities – Full taxation (30% income tax rate or reduced tax rates if applicable) after the sixht year of activities

Corporate taxation: compliance

Tax year: From January 1st to December 31st

Consolidated returns: There are no consolidated returns

Filing and payment: The filling of the D-101 form and its payment, is due within 2 months and 15 natural days after the clossing of the tax year period (around March 15th)

Penalties: The fine for omission or late presentation of the tax return is equal to fifty percent (50%) of the base salary, around $300 (USD). All penalties are established and regulated by Law No. 4755 “Tax Principles and Procedures Code”

Rulings: Tax rulings may be issued by Tax Authorities on various tax matters

Taxation of individuals

	Rate
	Income Tax
$6.665 to $9.954,82 (USD)	10%
$9.954,82 to $16.602 (USD)	15%
$16.602  to $33.275 (USD)	20%
<  $33.275 (USD)	25%

1. xxxxxxxx
2. xxxxxxxx

Residence: After 183 days of continuos residence in the country

Basis: Individuals are taxed on source income only.

Taxable income: Gross income obtained as a compensation for work performed on a labour relationship is taxed with progressive tax rates ranging from 10%, 15%, 20% and up to 25%. Monthly salaries are exempt up to aproximately $1.500

Capital gains: Capital gains are taxed separately from income tax. The general tax rate applicable to individual capital gains is 15%, but if the assets or rights were owned before July 2019, the vendor will choose to pay a 2.25% of the selling price

Deductions and allowances: All expenses incurred as to obtain taxable income, are deductible

Foreign tax relief: Only in the case of the four Non-double taxation agreements signed by Costa Rica with Spain, Germany, México and United Arab Emirates

Taxation of individuals: compliance

Tax year: From January 1st to December 31st for individuals carrying business activities, but income from salaries are withheld by the employer on a monthly basis

Filing and payment: The filling of and payment of the D-101 form, is due within 2 months and 15 natural days after the clossing of the tax year period (around March 15th). Employers should file and pay the withholding tax on salaries on a monthly basis, every 15th day of the following month

Penalties: The fine for omission or late presentation and payment of the form is equal to fifty percent (50%) of the base salary (around $300 USD).

Rulings: Rulings may be obtained from the tax authorities on various tax matters.

Withholding taxes

Type of Payment	Resident recipients		Non-residents recipients
	Company	Individual	Company	Individual
	Rate (%)	Rate (%)	Rate (%)	Rate (%)
Dividends	N/A	N/A	15%	15%
Interest	N/A	N/A	15%	15%
Royalties	N/A	N/A	5%	15%
Capital gains	N/A	N/A	15%	15%
Fees for profesional services	N/A	N/A	25%	25%

Branch remittance tax: There is no branch remittance tax.

Anti-avoidance legislation

Transfer pricing: Party transactions have to be carried out at arm’s length terms. Costa Rica follows OECD principles. Also the Ruiling No. 43198-H contemplates some regulations on the subject. Companies classified as large taxpayers are obliged to carry out TP studies.

Interest restriction: A maximum deductibility is established for net interest expenses of 20% of the profit before interest, taxes, depreciation and amortization (EBITDA) for each tax period.

Controlled foreign companies: There is no such regime.

Hybrid mismatches: There is no such regime.

Disclosure requirements: All bussiness entities should disclose their final beneficiaries each year

Exit taxes: There is no exit tax.

General anti-avoidance rule: Anti-avoidance rules are contemplated on the Legislation No. 8204. Also the Tax Administration has established regulations such as the resolution No. DGT-R-017-2013, about the deductibility from gross income of expenses payed by cashed for an amount of $1.900 (USD) or more, which are complaied to be made by a bank transaction.

Digital services tax and Other significant anti-avoidance legislation: There is no digital services tax, it only applies to VAT.

Value-added tax/Goods and services tax

Type of tax: Consumption type VAT

Standard rate: 13% on goods and services

Reduced rates: 4%: on private health services, 2%: on medicines, private education services and personal insurance, 1%: basic food basket including the necessary services, machinery and inputs, throughout the production chain

Registration: Bussiness entities and persons that habitually sell goods and provide services have to be registered before the Tax Administration at the RUT (Registro Único Tributario).

Filing and payment: The Declaration D-104 has to be filled and payed in the first fifteen days of the following month

Social security contributions

	Employer	Employee
	Contribution (%)	Contribution (%)
SEM	9.25%	5.50%
IVM	5.42%	4.17%

Self-employed

1) 5.32% : from $474 (USD) to $1.090 (USD) 2) 7.20% : from $1.090 (USD) to $2.189 (USD) 3) 7.65% : from $2.189 (USD) to 3.270 (USD) 4) 8.09%: < 3.270 (USD)

Other taxes

Capital duty: The increase in registered capital and reorganization of companies are not subject to taxation. Only the transfer of shares as capital gains are taxed.

Immovable property taxes: The purchase of immovable property is subject to a property transfer tax of 1.5% on the overall transaction price.

Transfer tax: Transfer tax is contemplated within capital gains tax. The rate might be 15% on the capital gain or 2.5% on the selling price if the property was owned before July 2019.

Stamp duty: There are some minor stamp taxes but the general stamp tax due on all agreements and contracts was abrogated

Net wealth/worth tax: The only tax related to wealth is related to real estate property value that exceed the amount of $233.589 (USD).

Inheritance/gift taxes: Inheritance or lottery are not subject to taxation

Tax treaties

– Costa Rica only has four Non-Double Taxtion agreements signed with Spain, Germany, Mexico and Arab Emirates – Multilateral Agreement on Tax Information Exchange on tax matters