Understanding the Most Common Taxes Applicable in Costa Rica for Corporations and Individuals: A Guide for Expats

Your Complete 2025 Guide for Expats and Investors

For most expatriates and foreign investors, the charm of Costa Rica lies in its laid-back lifestyle, natural beauty, and political stability. But when you trade winter coats for tropical sunsets, one practical matter remains inescapable: taxes.

Understanding Costa Rica’s tax system is essential whether you plan to establish a business, purchase property, or simply live as a legal resident. While the system is straightforward in principle — you pay taxes only on income generated within Costa Rica — the structure includes several layers that expats must navigate carefully.

This guide explains the most common taxes affecting individuals and corporations in Costa Rica in 2025: corporate tax, income tax, value-added tax (VAT), capital gains tax, and the solidarity (luxury home) tax. Each section includes updated rates, examples, and filing guidance to help you remain compliant and confident.

Corporate Tax (Impuesto a las Personas Jurídicas)

Who Must Pay Corporate Tax

All registered corporations in Costa Rica — including Sociedades Anónimas (SA) and Sociedades de Responsabilidad Limitada (SRL) — must pay an annual corporate tax. This applies even if the company is inactive or only holds assets, such as a property or bank account.

Corporate tax is due every year between January 1 and January 31, and failure to pay can lead to suspension of registry services or even dissolution after three consecutive years of nonpayment.

How Corporate Tax Is Calculated (2025 Update)

Costa Rica applies a two-tier system based on annual gross income.

1. Large Corporations:
   If your company’s annual gross income exceeds ₡119,629,000 colones (approximately US $235,000), you’ll pay a flat rate of 30 %.
2. Small and Medium Enterprises (PYMES):
   Smaller companies benefit from a progressive scale:

• Up to ₡5,642,000: 5 %
• ₡5,642,000 – ₡8,465,000: 10 %
• ₡8,465,000 – ₡11,286,000: 15 %
• ₡11,286,000 – ₡119,629,000: 20 %

Example: A Small Business in Tamarindo

Let’s say John, a Canadian entrepreneur, opens a small eco-tourism SRL in Tamarindo that earns ₡10 million in gross annual income. His company falls under the third bracket and will pay 15 % corporate income tax on profits.

If he expands and earns ₡150 million in a later year, the rate will jump to 30 %, reflecting his new corporate size.

Penalties for Non-Payment

If corporate tax remains unpaid:

• Late interest and penalties accumulate monthly.
• The company loses access to registry certifications.
• It cannot legally enter contracts with government institutions.
• After three consecutive unpaid years, the Registro Nacional may dissolve it administratively.

CRI Tip:

Even if your company is inactive, you must file annual declarations with Ministerio de Hacienda and keep your registry and tax obligations current. See [link to CRI Corporate Tax Guide] for detailed filing steps.

Income Tax (Impuesto sobre la Renta)

Territorial Principle

Costa Rica taxes only income generated within its borders. That means foreign-source income is generally exempt, a major advantage for retirees or remote workers paid from abroad.

However, if you provide services, operate a business, or receive rental income from Costa Rican sources, you must pay local income tax.

2025 Income Tax Rates for Individuals

Example: An Expat Consultant

Maria, a U.S. citizen living in Escazú, offers digital marketing services to Costa Rican businesses and earns ₡2.5 million per month. She will pay 20 % income tax on her taxable income. However, her freelance contracts with U.S. clients remain exempt since that income is considered foreign-sourced.

Filing and Deadlines

• Fiscal Year: January 1 – December 31.
• Filing Deadline: March 15 of the following year.
• Form: D-101 (Declaración del Impuesto sobre la Renta).

Taxpayers can deduct legitimate expenses related to income generation — such as rent, utilities, or office supplies — if properly invoiced (facturado).

For married couples, filing separately is often more efficient since tax brackets apply per individual.

CRI Tip:

If you work remotely for a foreign employer, confirm your tax status with a Costa Rican accountant to ensure your income qualifies as exempt foreign-source income. See [link to CRI Income Tax Overview].

Value-Added Tax (Impuesto al Valor Agregado – IVA)

Introduced in 2019, the IVA (Value-Added Tax) replaced the old sales tax system and now applies to most goods and services.

Standard and Reduced Rates

• Standard rate: 13 %
• Reduced rates:
  • 1 % for essential goods (e.g., basic food)
  • 2 % for medicines and some medical services
  • 4 % for private healthcare and education

Filing and Payment

Registered taxpayers must file monthly VAT returns using Form D-104 within 15 days after the end of each month. Businesses act as collectors, passing the tax to the Ministry of Finance.

Example: A Coffee Shop in Heredia

Anna, an expat from Germany, opens a coffee shop in Heredia. Each sale includes a 13 % VAT, which she collects from customers. At month’s end, she submits her declaration via the ATV (Administración Tributaria Virtual) and remits the VAT minus the credits for business expenses (such as beans and supplies).

CRI Tip:

Foreigners who operate businesses must issue official electronic invoices (facturas electrónicas). See [link to CRI VAT & Consumption Taxes in Costa Rica].

Capital Gains Tax (Impuesto a las Ganancias de Capital)

Introduced under Ley 9635 in 2019, this tax applies to profits from the sale of real estate, shares, or other capital assets.

Standard Rate

15 % on the net gain (selling price minus acquisition cost and documented improvements).

Special Options and Exemptions

1. Primary Residence Exemption:
   Selling your own home is generally exempt, provided it was your principal residence.
2. One-Time Option for Older Properties:
   If you owned the property before July 1, 2019, you may elect to pay 2.25 % on the total sale price instead of 15 % on the gain.
3. Withholding for Non-Residents:
   When a foreign non-resident sells Costa Rican property, the buyer must withhold 2.5 % of the sales price as a prepayment toward capital gains tax.

Example: Selling a Beach Home

David, a retiree from Florida, bought a beach house in Nosara in 2015 for ₡200 million and sold it in 2025 for ₡300 million. He can choose to pay 2.25 % of ₡300 million (₡6.75 million) instead of calculating 15 % on his gain.

If he had bought the property in 2021, he’d owe 15 % on his ₡100 million gain instead.

CRI Tip:

When selling property, retain all proof of improvements (receipts, invoices, and contractor documents). These can significantly reduce your taxable gain. See [link to CRI Capital Gains Tax in Costa Rica].

Solidarity Tax (Luxury Home Tax – Impuesto Solidario)

The Solidarity Tax for the Strengthening of Housing Programs applies to luxury residential properties. It funds low-income housing initiatives nationwide.

2025 Thresholds and Rates

You must pay this tax if your home’s construction value exceeds ₡145 million (roughly US $240 k–$275 k).

Example: Luxury Villa in Santa Teresa

Laura, a French expat, owns a luxury ocean-view villa valued at ₡800 million. Her tax rate is 0.30 %, meaning she pays ₡2.4 million annually. Every three years, she must reassess her property value and submit Form D-179 via the ATV platform.

CRI Tip:

Luxury home tax applies to the construction value, not land value — meaning even a modest lot with a high-end structure could qualify. See [link to CRI Luxury Home Tax Explained for Expats].

Staying Compliant and Confident

Costa Rica’s tax system rewards transparency and compliance. The country has made significant progress in digitalizing processes, allowing expats and investors to handle filings online through the ATV system.

Still, understanding which taxes apply to you — and which don’t — can be complex, especially for corporations or investors managing multiple assets.

Working with a Costa Rican tax professional or corporate lawyer familiar with expat matters ensures you pay only what you owe and stay in good standing with local authorities.