4 Note: The solidarity tax is a tax on dwellings (real estate properties), including those used habitually, occasionally, or for recreational use, established under Law 8683, to support Costa Rica’s social housing program (impuesto solidario para el fortalecimiento de programas de vivienda). The law in Costa Rica recognizes 12 different types of income as non taxable revenue… [custom_script adID=149] Among them the profits obtained by the sale of a property or real estate, whether these are vehicles, boats, properties, houses or buildings. Find answers to your questions in the Costa Rica forum. The Costa Rican tax system is unlike any in the world. Tax return are due by March 15th. How much is the capital gain tax ? Now, if you withdraw the gain from the corporation in a taxable form, then you would be subject to tax in Costa Rica and potentially subject to tax in the U.S. as well. Stay updated on legal changes that may affect your living, retirement or business in Costa Rica. Followers 1. If the partner is another corporation also subject to this withholding tax and with its capital duly registered in Costa Rica, the tax is not applicable. A 30% rate applies if the capital gains are generated from assets used in the taxpayer’s ordinary business activities. Capital gain tax in Costa Rica began on July 1, 2019. FBAR. Costa Rican corporations that are registered in Costa Rica pursuant to Costa Rican law are considered to be domiciled in Costa Rica. New tax reform legislation in Costa Rica was passed 4 December 2018. Under the new reforms, there would be a 15% on real estate transactions that involved investment properties or other properties not … Costa Rica Tax. Therefore, income tax is applicable to Costa Rican-source income, regardless of the nationality, domicile or residence of the recipient. So the family home which is your habitual residence will be exempt from capital gains. Except in unusual cases, the rate in this cou… Sales tax in Costa Rica. As the name clearly states, said tax will apply as a 15% charge over the capital gains generated by a seller when selling a property. The tax Adjustment Law increased the sales tax from 10% to 15%. Discover below a non-exhaustive list of the excellent reasons to invest in this tropical paradise in total serenity. Self-employed nonresidents working in Costa Rica are subject to a either a 15 percent tax rate on gross Costa Rican-sourced income received. After I had read the entire text of the tax bill, and remembering that this the second time during my 12 years experience, that we face significant changes in the Costa Rican Tax Law, I can tell that there is no reason to panic and worrying about “take the money and run” to other countries, remember that the “bigger the rat, the better the rat trapper”. But in this article, we will talk only about CGT (Capital Gains Tax) because that’s the only one that matters to end users or investors like us. Capital gains tax. The site was launched in 1997 and over the years has remained as a valuable source of information for individuals or entities that are considering retiring, living, investing or doing business in Costa Rica. Costa Rica, on the other hand, has no capital gains tax. There is no such tax as long as the gains were not derived from the operation of a real estate business, like being a developer and selling lots from your inventory. The services of Lawyers, Doctors, Dentists and other independent professionals are exempt from sales tax; anything else you buy, from a candy bar to a computer or furniture is taxed. Meléndez & Bonilla is able to review all documents on investments, both for personal and corporate use, to ensure that your capital gains situation is not taxable. In addition, other analysis can be done on whether some of your investment activities should relocate to Costa Rica to take advantage of this substantial tax-saving aspect of Costa Rican tax law. In December of 2018, the Costa Rican government approved a new tax law that includes the addition of a capital gains tax in Costa Rica. The rate of General Sales Tax (GST) in Costa Rica is 13%. Only revenue earned by an individual within Costa Rica is subject to an assessment by the tax authorities. Costa Rica . Property transfer tax in Costa Rica. Instead, personal investments rarely entail any capital gains tax, one of the most attractive aspects of investing in Costa Rica and one reason why so much foreign investment targets the country. Recent changes to the Costa Rican tax laws implemented Capital Gain Tax (Ganancias de Capital) which has a lot of variants. Learn about capital gains tax in some other countries: United States. For corporate entities. Income tax is assessed on an accrual basis. The tax reform law includes significant income tax law changes such as the introduction of rules on the taxation of capital gains and interest expense deduction limitations, as well as rules addressing hybrid mismatch arrangements and anti-tax haven provisions. Meléndez & Bonilla has experience dealing with these types of investment opportunity and would be glad to help you achieve your dream of the perfect foreign investment to complement your portfolio. A 15% tax is introduced on income from movable capital, such as dividends, interest, cooperative and “solidarity surplus” royalties, key rights (such as brand) and real estate capital (e.g. Costa Rica Tax The Costa Rican tax system is unlike any in the world. The Association of Costa Rica Residents (ARCR) - Retirement, Life, Work and Travel in Costa Rica Real Estate in Costa Rica New Capital Gains Tax from July 2019 Everybody else was exempt. In arriving at effective capital gains tax rates, the Global Property Guide makes the following assumptions: The property is directly and jointly owned by husband and wife; They have owned it for 10 years; It is their only source of capital gains in the country The final version differs from the one proposed by the Tax Administration due to negotiation in Congress. In December of 2018, the Costa Rican government approved a new tax law that includes the addition of a capital gains tax in Costa Rica. In arriving at effective capital gains tax rates, the Global Property Guide makes the following assumptions: The property is directly and jointly owned by husband and wife; They have owned it for 10 years; It is their only source of capital gains in the country Capital gains derived from habitual transactions are taxed at the standard income tax rate. Mandatory Disclosure of Corporation Shareholders and Beneficial Owners... How do you become a Real Estate Broker... Costa Rica Creates a Final Beneficiary Registry For... How to Apply for Residency in Costa Rica – a Step by Step Guide, Buying ? Contact Meléndez & Bonilla directly to evaluate your personal situation and advise you on the legal ramifications of owning property in Costa Rica and your tax liabilities. Capital gains– Capital gains from a Costa Rican source are subject to a 15% capital gains tax. There is a 13% sales tax on most items, but certain foods and medicinal products are exempt from that tax. Whenever possible I ensure that the information provided in the articles is referenced to the actual law or regulations on which the statements are based. 6. New tax reform legislation in Costa Rica was passed 4 December 2018. However, if the property was acquired PRIOR to the law being implemented which is July 1, 2019, then the taxpayer has the one-time option to sell the property and pay a 2.25% tax on the sales price of the property. In Costa Rica, capital gains taxes are much different and in investments involving real estate or most banking accounts, no capital gains tax is taken when the investment appreciates in value. Real Estate in Costa Rica ; New Capital Gains Tax from July 2019 Sign in to follow this . This is obviously a great benefit of investment in Costa Rican opportunities and Meléndez & Bonilla is extensively experienced in managing wealth in this way. Cost of Living. This tax will incur a 15% charge on the capital gains generated when selling… Costa Rica works a bit differently than in other countries. Capital gain tax in Costa Rica began on July 1, 2019. Among other tax measures, the Law replaces the existing sales tax with a new value-added tax (VAT) and introduces a new capital gains tax on the transfer of shares in Costa Rican companies. That profit is called capital gains and can be taxed either as it happens or when you cash out the earnings, depending on the asset. 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