Tax
13% VAT and territorial income taxation
The 2018 fiscal reform (Ley 9635) replaced the old sales tax with a full value-added tax at 13% and modernised income tax. Costa Rica taxes on a territorial basis: only Costa Rican-source income is taxable, a feature that has drawn EU attention and produced targeted amendments on passive foreign income.
Key rules
- Corporate income tax is 30% for larger companies, with reduced brackets for smaller gross income.
- VAT is 13%, with reduced rates of 4%, 2% and 1% for defined supplies including private health services.
- Employment income is withheld at source on a progressive scale.
- Capital gains are generally taxable at 15% since the 2018 reform.
- Electronic invoicing is compulsory for all taxpayers through the Hacienda platform.
Governing law
- Ley del Impuesto sobre la Renta (Ley 7092)As amended by Ley 9635.
- Ley del Impuesto sobre el Valor Agregado (Ley 9635 Title I)VAT.
- Código de Normas y Procedimientos TributariosProcedure and penalties.
In practice
Registration through ATV and a digital signature are prerequisites for filing. Inactive companies must still file the informative D-195 return, a duty many foreign owners of holding entities overlook.