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Costa Rica - Income Tax

Costa Rica - Income Tax

Taxation of international executives.


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Tax returns and compliance

When are tax returns due? That is, what is the tax return due date?

According to Costa Rican law, employees working under an employment relationship (including international assignees paid through Costa Rican payroll) do not have to file income tax returns. Instead, their salary tax and social security contributions are withheld and paid monthly by the employer through the payroll. This payment is the final tax liability for workers.

*Residents working independently have to file an income declaration (Income Tax Declaration). As well as non-residents receiving Costa Rican sourced income (Withholdings at source Declaration).

What is the tax year-end?

30 Sept.

What are the compliance requirements for tax returns in Costa Rica?


Residents working independently: Filing of D103 form (Income Tax), 2 months and 15 days after the end of the respective tax year. Adjoining the fiscal conciliation.


Non-residents receiving Costa Rican sourced income: Filing of D103 form (Wihholding at source): on the 15 natural days following the month in which the withholding is carried out.

Tax rates

What are the current income tax rates for residents and non-residents in Costa Rica?


Income tax table for Fiscal Year <2018>

Residents’ employment taxable income

Income Tax rates
Up to Costa Rica colon (CRC) 799,000
0% (exempt)
From CRC792,001 to CRC1,199,000
Over CRC1,199,000  15%

Income Tax (personal lucrative activities)

Income Tax rates
Up to CRC 3.339.000,00 0% (exempt)
From CRC 3.339.000,00 to CRC 4.986251.000 10%
From CRC 4.986.000 to CRC 8.317.000 15%
From CRC 8.317.000 to CRC 16.667.000 20%
Over CRC 16.667.000 25%


Nonresidents working under an employment relationship are subject to a flat tax rate of 10 percent on gross Costa Rican-sourced income.

Self-employed nonresidents working in Costa Rica are subject to a either a 15 percent tax rate on gross Costa Rican-sourced income received. (for professional services) or a 25% tariff (when rendering a technical advice).

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Costa Rica?

Residence for tax purposes is triggered by a continuous physical presence in the country for six months during the tax period. Pursuant to Article 5 of the Regulations to the Income Tax Law, the tax authorities are empowered to treat individuals who have not yet satisfied the six-month period of permanence in the country as residents for tax purposes, provided certain conditions are met: (a) the tax authorities may consider as residents for tax purposes those individuals who, even though they have resided in the country for less than six months, have been in an employment relationship with Costa Rican employers; and (b) the tax authorities have granted the residence condition to individuals who have just arrived in the country but are transferred on assignments that would exceed the six-month period; therefore, these individuals are considered as residents for tax purposes as of their first day of permanence in the country.

Is there a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country for more than 10 days after their assignment is over and they repatriate.


What if the assignee enters the country before their assignment begins?

No tax implication if the assignee is not performing any work in regards to the assignment and is not earning Costa Rican source income.

If the individual starts working before the official commencement date, under the Principle of Economic Reality, he/she could be taxed as explained above for the provision of this activity.

Termination of residence

Are there any tax compliance requirements when entering or leaving the country?

Just the departure tax.

Departure tax

$29 (by air).

$5 (over land).

What if the assignee comes back for a trip after residency has terminated?

He/she will be deemed as a tourist before the Migration Office.

Communication between immigration and taxation authorities

Do the immigration authorities in Costa Rica provide information to the local taxation authorities regarding when a person enters or leaves Costa Rica?


Filing requirements

Will an assignee have a filing requirement in the host country after they leave the country and repatriate?


Economic employer approach

Do the taxation authorities in Costa Rica adopt the economic employer approach to interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in Costa Rica considering the adoption of this interpretation of economic employer in the future?


De minimus number of days

Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?


Types of taxable compensation

What categories are subject to income tax in general situations?

  • Salaries
  • Extra payments
  • Bonuses
  • Prizes
  • Non-compulsory rewards
  • Comissions
  • Allowances

Tax-exempt income

Are there any areas of income that are exempt from taxation in your country? If so, please provide a general definition of these areas.

  • 13th month.
  • The compensation to be received by single payment or in periodic payments, by cause of death or disability caused by accident or disease
  • Commissions, when incurring in costs in order to obtain them.
  • Compensations not related to the service provided by the expatriate (as a donation of the employer).
  • Pre-assignment visits (relocation).
  • Temporary living costs.

Expatriate concessions

Are there any concessions made for expatriates in your country?

  • No.

Salary earned from working abroad

Is salary earned from working abroad taxed in Costa Rica? If so, how?

Only if the income is linked to the Costa Rican economic infrastructure. Using the progressive tax rates detailed above.

Taxation of investment income and capital gains

Are investment income and capital gains taxed in your country? If so, how?

Only TAXED (Income Tax) if the activity that generates the income is “habitual” for the seller; or the gain is generated from the disposition of tangible and depreciable assets.

Dividends, interest, and rental income

Yes, on Costa Rican source income.

Gains from employee stock option exercises

Yes. Difference between the purchase price and market price at the time of exercise of the vested option.

Foreign exchange gains and losses

Only taxed if such exchanges are “habitual” (not a random exchange).

Principal residence gains and losses


Capital losses

Only deductible if it is a depreciable asset.

Personal use items



Yes (if provided by the employer based on the work carried out), as it is deemed as salary in kind.

Foreign property reporting


Non-resident trusts


Additional capital gains tax (CGT) issues and exceptions

Are there capital gains tax exceptions in your country? If so, please discuss.

Capital gains are only TAXED (Income Tax) if the activity that generates the income is “habitual” for the seller; or the gain is generated from the disposition of tangible and depreciable assets.

General deductions from income

What are the general deductions from income allowed in your country?

Just the tax credits in regards to spouse and child explained in Module 1.

Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in your country?

By banking transfer and cash, or as credit against future income tax liabilities.

Calculation of estimates/prepayments/withholding

How are estimates/prepayments/withholding of tax handled in your country? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.

The PAYG method is applied.

When are estimates/prepayments/withholding of tax due in your country? For example, monthly, annually, both, and so on.

Taxes should be withheld and paid on a monthly basis by the employer.

Relief for foreign taxes

Is there any Relief for Foreign Taxes in your country? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?

Costa Rica has signed income tax treaties withGermany and Spain, and currently is negotiating one with Mexico.

General tax credits

What are the general tax credits that may be claimed in your country? Please list below.

  Annual in CRC 2016 Annual in CRC 2018
Spouse 26,520 26.8800,00
Per Child 17,760 18.000,00

Sample tax calculation

Compensation Bonus
Host Housing
Hotel Expenses
Furniture Rental
Furniture Purchase
Home leave -
Relocation Allowance
Location premium 1,206,022
Leasing (car) 229,426
Spouse´s Leasing car -
Vehicles expenses -
Cellular 97,056
Varios -
Total salary in kind ¢ (for ISR purposes) 1,661,406
Gross Up (for ISR purposes) 1,954,596
Total salary in kind ¢ (for ISR and CCSS purposes) 2,322,838
Gross Up (for ISR and CCSS purposes) 3,070,100
Salary $ 21,536.19
Exchange rate USD 560.00
Salary ¢ 12,060,266
Time allocation percentage 100.00%
Total salary ¢ 12,060,266
Gross Up 15,758,018
10% 40,000 
15% 2,183,852.7
Withholding tax on salary ¢ 2,223,852.7
Withholdings on salary in kind 15% ¢ 460,515
Total withholdings ¢ 2,684,367.7

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