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June 23, 2021

Costa Rican Congress approves, in second and final vote, a tax incentive regime for foreign investors, rentiers and retirees

The bill would offer a variety of tax exemptions for investors, rentiers (i.e., people who live on income from property or securities) and retirees, including exemptions from import taxes.

On 22 June 2021, the Costa Rican Congress approved, in second and final vote, a bill that would establish a tax incentive regime for foreign investors, rentiers and retirees. This bill will become law once is published in the Official Gazette.

According to the bill, the Government aims to reactivate the economy by attracting foreign investors, rentiers and retirees through the creation of a tax incentive regime that promotes investment in the national territory.

The bill would apply to persons who are authorized to enter the country under the immigration categories of investors, retirees or rentiers.

To fall under the investor category, a person must make a capital investment of no less than US$150,000 in real estate, registrable assets, shares, securities, productive projects or projects of national interest. Those who invest in venture capital funds or in sustainable tourism infrastructure projects may also be considered investors.

The beneficiaries of this regime will not automatically be considered tax residents for income tax purposes.

Tax incentives

The bill would establish the following incentives for investors, rentiers and retirees:

  • Tax exemption from import taxes for imported household goods
  • An exemption from import, customs and value-added taxes for up to two land, air or sea transportation vehicles for personal or family use
  • Tax exemption for 20% of the total transfer tax, if the beneficiary is registered as the owner of the real estate acquired while the law is in effect
  • An exemption from import taxes for materials for professional or scientific practice if an individual can demonstrate to the Ministry of Finance that the materials are required to develop the individual’s trade or business

Additionally, the bill would exempt from income tax amounts declared as capital investment by investors who qualify for the bill’s incentives. The income would be subject to income tax, however, if derived within the national territory from the investments made in Costa Rica while the incentives are valid.

The bill would require investors, rentiers and retirees to apply for the incentives within the first five years of the bill’s effective date, once it becomes law. These incentives would be valid for 10 years from the date they are granted.

The bill also would include special provisions for the replacement of certain assets in the event of theft, loss or destruction, among other things. It also would establish provisions for property transfers while the law is in effect.

The General Directorate of Migration and Foreigners would provide a special service for processing applications.


For additional information with respect to this Alert, please contact the following:

Ernst & Young, S.A., San José, Costa Rica

Ernst & Young LLP (United States), Latin American Business Center, New York

Ernst & Young Abogados, Latin America Business Center, Madrid

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific


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