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August 21, 2023

Costa Rica's Tax Authority issues resolution on declaring income from movable and immovable capital under the corporate income tax regime

  • To have movable and immovable capital taxed under the corporate income tax regime, taxpayers must have at least one employee that meets certain conditions.
  • If a taxpayer no longer has an employee that meets the conditions, the taxpayer must register for the tax on capital income regime.

On 17 August 2023, Costa Rica's Tax Authority published, in the Official Gazette, Resolution No. MH-DGT-RES-0018—2023, which establishes the requirements for declaring income from movable and immovable capital under the corporate income tax regime.

Taxation of income from movable and immovable capital

Under the Income Tax Law Regulations, taxpayers may choose to have their income from movable (e.g., interest, royalties) and immovable (e.g., real estate rentals) capital taxed under the income tax regime, when they have at least one employee contracted for the generation of income from the movable or immovable capital and the employee's salary is subject to the contribution regime of the Costa Rican Social Security Fund. For income from immovable capital, taxpayers must communicate this choice to the Tax Administration in advance and must remain in this regime for a minimum of five years. For income from movable capital, taxpayers must communicate their choice to the Tax Administration before the start of the tax period and that decision must apply for at least one annual tax period.

Transition to the tax on capital income regime when the employee requirement is no longer met

The resolution clarifies that, if an employee no longer meets the conditions required by the Regulations for declaring income from movable and immovable capital under the corporate income tax regime, the taxpayer must transition from that regime to the tax on capital income regime, starting with the month following the month of non-compliance with that requirement. For this purpose, taxpayers must submit Form D-140 and pay capital income tax.

Additionally, taxpayers with employees who no longer meet the requirements must file a self-assessment tax return for income tax for the months in which they remained in that regime during the tax period. Likewise, they must calculate and pay the income tax within two months and 15 calendar days following the end of the tax period.

Once the taxpayer is registered in the tax on capital income regime, they must submit the tax return within the first 15 calendar days of the following month.

Transitional provisions

Taxpayers who are currently registered in the income tax regime but no longer have at least one employee registered with the Costa Rican Social Security Fund must transition to the tax on capital income regime, from the month following the entry into force of the resolution.

The resolution entered into effect after its publication in the Official Gazette.


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

Ernst & Young, Costa Rica

Published by NTD’s Tax Technical Knowledge Services group; Jennifer A Brittenham, legal editor


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