Costa Rica

Value-added tax (VAT)

The Value Added Tax (VAT) is an indirect tax levied on the sale of goods and services in Costa Rica. It came into effect on July1, 2019, replacing the previous General Sales Tax (GST).

VAT applies to the sale price of goods and services, including both tangible goods and digital or intangible services, regardless of whether they are domestic or imported.

The standard applicable rate is 13%, however there are specific goods and services that are subject to reduce rates and exceptions:

• Private health services: 4%
• National flights: 4%
• Medicines: 2%
• Private education services: 2%
• Private insurance premiums: 2%
• Goods of basic consumption: 1%

Tax Credit: Taxpayers may deduct VAT paid on purchase of goods and services (input VAT) from the VAT collected on sales (output VAT), provided the purchases are related to their respective taxable activity.

Reverse charge mechanism: when the service provider or supplier of the intangible good is not domiciled in the national territory, the reverse charge mechanism will apply, and the local taxpayer must issue the electronic voucher and withhold the corresponding tax including it as a debit in the Value Added Tax declaration for the purchase made, being able to use it as a credit, when applicable.

Selective consumption tax

The selective consumption tax may be applied at a rate of up to 100% and is levied on goods that are considered non-essential. The tax base is the cost, insurance, and freight (CIF) price plus import duties for imported items or the sales value for items produced in Costa Rica. The tax is levied at only one stage in the sale of merchandise. Payment of the tax is required at the time of importation or, for articles produced in Costa Rica, within 15 days of the month of the sale.

Customs duties/import tariffs

In Costa Rica, all importation of goods and merchandise, with certain exemptions, are liable for corresponding import tariffs and customs duties. Other taxes (e.g. VAT, selective consumption tax) are also levied on the importation of said goods and merchandise.

The most important legal instruments for customs regulations are the Central American Uniformed Customs Code, the Customs Law and its rulings, and other administrative rulings that are periodically issued by the Customs Authority.

Property tax

Each local municipal government oversees real estate appraisal. The annual property tax to be applied throughout the Costa Rican territory is 0.25% of the appraised value, registered in the respective municipality where the tax liability originates.

Real estate transfer tax

Real estate transfer tax is calculated as 1.5% of the selling price of the real estate or its property tax value, whichever is higher. The tax is triggered by the direct sale of the real estate or through the indirect transfer of real estate when there is a modification in the control of the entity holding the real estate.

Stamp duties

Through Law 10,586 the requirement to pay tax stamps was removed, which means this requirement is no longer needed for all testimony or certification of public instruments or documents not subject to registration in the National Registry, to all private contract documents, to all power of attorney or bond documents and to judicial transaction documents; or arrangement, transfer or sale; in the division or allocation of non-registerable assets.

Franchise tax

The payments realised abroad for the use of a franchise will be subject to remittances abroad with a 25% withholding tax (WHT).

Withholdings on salary

Companies are required to withhold from employees the amount corresponding to the tax on salary according to the following progressive table on a monthly basis in 2025:

The tax applies over the excess over each of the frames, and the withholding is considered as 100% of the tax.

There is also a 13th annual payment, called 'Aguinaldo', which is free of income and social security taxes.

Social security contributions

Companies must withhold the monthly contribution to social security and submit its own contribution calculated as a percentage of the monthly income received by the employee:

This applicable contribution has been gradually increasing since 2009, until it reaches the 12.16% in the year 2029 onwards.