Payments to non-domiciled foreign corporations or individuals
Regarding payments to non-domiciled foreign corporations or individuals, taxes are withheld as follows:
|Payment||WHT rate (%)|
|Interest and other financial expenses (1)||5.5/15|
|Royalties, patents, trademarks, franchises, and formulas||25|
|Technical service and management fees||25|
|Personal services from a Costa Rican source:|
|Transportation and communication services||8.5|
- Interest paid from a financial entity supervised in Costa Rica to a financial entity outside Costa Rica subject to supervision is subject to a withholding of 5.5%. The payments to multilateral entities for development are not subject to withholding.
With the new Law, the withholding for payments of technical advice and professional services abroad is unified at 25% tax.
Double taxation treaties (DTTs)
Summary of the reduced WHT rates established by DTTs:
|Dividends||Interest, commission, and financial expense||Financial technical advisory, patents, formulas, trademarks, franchises, royalties||Personal independent work|
|Germany||5/15 (1)||5 (2)||10||(3)|
|Mexico||5/12 (4)||5/10 (5)||10||10|
|Spain||5/12 (4)||5/10 (5)||10||10|
- 5% of the gross amount of dividends if the beneficiary is a company (excluding consortiums) that directly holds at least 20% of the capital of the company that pays the dividends. 15% of the gross amount of dividends in all other cases.
- If the beneficiary of the interest is a resident of the other contracting state, the WHT shall not exceed 5% of the gross amount of interest.
- Taxed in the state in which the income is generated.
- The 5% withholding applies when the beneficiary directly has at least 20% of the shareholder’s equity of the paying company. In all other cases, the withholding is 12%.
- The 5% withholding applies when the loan has a duration of at least five years. In all other cases, the withholding is 10%.