Costa Rica

Payments to non-domiciled foreign corporations or individuals

Regarding payments to non-domiciled foreign corporations or individuals, taxes are withheld as follows:

Notes

1. Interest, commissions and other financial expenses paid or credited by natural or legal persons domiciled in Costa Rica to foreign banks that are part of a Costa Rican financial group or conglomerate regulated by the National Council for the Supervision of the Financial System will pay a rate of five point five percent (5.5%) during the first year of effectiveness of this law; during the second year they will pay nine percent (9%); during the third year they will pay thirteen percent (13%) and, starting from the fourth year, they will pay fifteen percent (15%) of the amount paid or credited.

Double taxation treaties (DTTs)

Summary of the reduced WHT rates established by DTTs:

Notes

1. 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.
2. 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.
3. Taxed in the state in which the income is generated.
4. 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%.
5. The 5% withholding applies when the loan has a duration of at least five years. In all other cases, the withholding is 10%.