Taxation of Expatriates in Costa Rica: Income and Property

Published on April 23, 2026 and written by Cyril Jarnias

Navigating the maze of tax regulations abroad can be complex, especially for expatriates in Costa Rica, a country that is attracting more and more foreigners with its stunning landscapes and appealing lifestyle. Understanding the nuances of income tax and property tax is essential for optimizing one’s financial situation and avoiding tax pitfalls. This article aims to demystify the key aspects of these taxes while offering practical advice to help expatriates better manage their tax obligations in their new host country.

Costa Rica’s Tax System: What Expatriates Need to Know

Costa Rica’s Tax System for Expatriates

Costa Rica applies a tax system based on the principle of territoriality: only income from Costa Rican sources is taxed, with foreign income being exempt.

Main Types of Taxes for Expatriates

• Income Tax: applies only to income generated in Costa Rica.
• Property Tax (Real Estate Tax): applies to the ownership of real estate located in Costa Rica.
• VAT (Impuesto sobre el Valor Agregado, IVA): general rate of 13% on most goods and services.
• Tax on Dividends, Interest, and Other Capital Income: variable rates depending on the nature of the income.

Applicable Tax Rates

Type of Taxpayer	Taxable Income	Scale/Rate Applied
Tax Resident	Income from local sources	Progressive: 0% to 25% based on income brackets
Non-Resident	Income from local sources	Fixed rates: 10%, 15%, or 25% depending on income type
Property Owner	Cadastral value of the property	0.25% per year (property tax)

Example scale for tax residents (2025):

Annual Income (CRC)	Tax Rate
Up to 4,094,000	0%
4,094,001 to 6,115,000	10%
6,115,001 to 10,200,000	15%
10,200,001 to 20,442,000	20%
Over 20,442,000	25%

For non-residents:

• Salaries: 10% rate
• Personal service fees: 25% rate
• Dividends: 5% or 15%
• Interest: 5.5% to 15% depending on the year
• Other specific income: up to 30%

Specific Tax Obligations for Expatriates

• Tax Registration: Anyone generating local income must register with the tax administration (Dirección General de Tributación).
• Tax Identification Number (NITE): Mandatory for declaring and paying taxes.
• Income Tax Return: Self-employed individuals use form D-101. Employees have tax withheld at source.
• Deadlines: Fiscal year from January 1st to December 31st. Returns generally must be filed by March 15th of the following year (for self-employed individuals).
• Non-Taxation of Foreign Income: No declaration required for this income.

International Tax Treaties

Costa Rica has signed few bilateral treaties to avoid double taxation. To date, there is no tax treaty between Costa Rica and France or most European countries.

For U.S. citizens, the Foreign Tax Credit and Foreign Earned Income Exclusion mechanisms can be used to limit double taxation.

It is recommended to check the situation with the expatriate’s country of origin.

Practical Tips and Resources for Expatriates

• Consult a local tax expert proficient in international taxation and Costa Rican specifics.
• Use the services of chambers of commerce, embassies, or expatriate associations to obtain up-to-date information.
• Keep complete documentation of income, employment contracts, leases, property deeds, proof of tax payments.
• Plan ahead for tax filing by respecting local deadlines to avoid penalties.
• Consult the official websites of the Costa Rican tax administration (Ministerio de Hacienda) for current forms, scales, and procedures.

Understanding Everything About Tax Filing in Costa Rica

Filing Obligations for Residents and Non-Residents

• Tax Residents: Any individual or legal entity domiciled in Costa Rica must declare all their income from Costa Rican sources. Residents are taxed only on income generated within the country.
• Non-Residents: Non-residents are also taxed only on income from Costa Rican sources. Income received locally (salaries, dividends, service fees, etc.) is generally subject to withholding at source.

Fiscal Calendar and Main Deadlines

Obligation	Deadline	Notes
Income Tax Return (D-101)	March 15	For individuals and legal entities under the traditional regime
Corporate Tax Payment	January 30	For all registered companies, active or inactive
Solidarity Tax (luxury homes)	January 15	Luxury residences only
Informative Return D-195	April 30	Inactive companies
Register of Ultimate Beneficial Owners (RTBF)	April 30	Identification of ultimate beneficiaries
Partial Income Tax Payments	6, 9, and 12 months after closing	Three annual installments
Withholding Tax Return (D-103)	15th of the following month	Salaries, dividends, remittances abroad
Real Estate Income Return (D-125)	15th of the following month	Property income

Documents Required for a Correct Filing

• Appropriate tax form (D-101, D-103, D-125, etc.)
• Proof of income (pay stubs, invoices, bank statements)
• Potential deductions and tax credits
• Financial statements for companies
• Updated Register of Ultimate Beneficial Owners (RTBF)
• Tax identification number (Número de identificación tributaria)

Tax Specifics for Expatriates

Expatriates are taxed only on their income from Costa Rican sources.

To avoid double taxation, Costa Rica offers a tax credit mechanism: tax paid abroad on the same income can be deducted from the tax owed in Costa Rica, up to the limit of the applicable local tax.

There is no double taxation treaty with France or most European countries, making this tax credit essential for expatriates.

Available Digital Platforms

The official website of the Tax Administration (Dirección General de Tributación) offers the ATV (Administración Tributaria Virtual) portal for:

• Filing returns (D-101, D-103, D-125, etc.)
• Online payment
• Consulting tax history and assessment notices

Online RTBF system for declaring ultimate beneficial owners

Recourse in Case of Dispute or Filing Error

• Voluntary Correction: Possibility to file an amended return via ATV.
• Administrative Appeal: Filing a claim with the tax administration in case of disagreement on the calculation or amount of tax.
• Legal Action: Filing with the Tax Administrative Court to contest a final decision by the administration.
• Assistance from a tax advisor recommended for complex situations or disputes.

Penalties for Non-Compliance

Infraction	Main Penalty
Late filing of return	Fine proportional to the amount due and late payment interest
Non-payment of tax	Surcharge, interest, and risk of dissolution for companies
Inaccurate or incomplete returns	Variable administrative fines depending on severity
Non-declaration of ultimate beneficial owners	Suspension of tax ID and financial penalties

⚠️ It is essential to scrupulously respect obligations and deadlines to avoid financial penalties and administrative complications.

Essential Tips for Optimizing Your Taxes as an Expatriate

Types of Tax Residency and Income Tax Optimization

Tax Resident: Anyone spending more than 183 days in Costa Rica in a calendar year is considered a tax resident.

Territorial Regime: Only income generated locally is taxable; foreign income is not.

To become a tax resident:

• Pensionado Program: Prove a monthly pension ≥ 1000 USD.
• Rentista Program: Demonstrate a stable income ≥ 2500 USD/month or deposit 60,000 USD in a local bank.
• Investor: Minimum investment of 150,000 to 200,000 USD in real estate or a business.

Status	Main Condition	Tax on Local Income	Tax on Foreign Income
Tax Resident	>183 days/year + administrative procedures	Yes (progressive scale up to ~25%)	No
Non-Resident	Contact me to benefit from personalized support and make your project a success!