Costa Rica

Corporate - Withholding taxes

Last reviewed - 20 December 2019

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 (%)
Dividends 15
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:  
Employees 10
Directors 15
Others 30
Transportation and communication services 8.5

Notes

  1. 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:

Recipient WHT (%)
Dividends Interest, commission, and financial expense Financial technical advisory, patents, formulas, trademarks, franchises, royalties Personal independent work
Treaty      
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

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%.