Taxes in Costa Rica
Costa Rica's territorial tax system is one of its biggest draws for expats. Only income earned within Costa Rica is taxed—foreign pensions, investments, and remote work income are tax-free locally.
Territorial Tax System Explained
Key Principle: Costa Rica only taxes income from Costa Rican sources.
What's NOT Taxed:
- Foreign pensions (US Social Security, etc.)
- Income from foreign employment/remote work
- Foreign investment income
- Foreign rental income
- Inheritance (no inheritance tax)
What IS Taxed:
- Income earned within Costa Rica
- Costa Rican rental property income
- Costa Rican business income
Income Tax Rates (2026)
Costa Rican-source income is taxed progressively:
| Monthly Income (CRC) | Rate | Approx USD |
|---|---|---|
| Up to 941,000 | 0% | ~$1,800 |
| 941,000 - 1,381,000 | 10% | $1,800-$2,650 |
| 1,381,000 - 2,423,000 | 15% | $2,650-$4,650 |
| 2,423,000 - 4,845,000 | 20% | $4,650-$9,300 |
| Over 4,845,000 | 25% | $9,300+ |
2026 Tax Changes
Starting January 1, 2026 (Law No. 10667):
- Independent workers can deduct 25% of gross income automatically
- No receipts required for this flat deduction
- Alternative: itemize actual expenses if higher
- Benefits professionals, consultants, service providers
Other Taxes
| Tax Type | Rate | Notes |
|---|---|---|
| Property Tax | 0.25% | Of registered value, paid annually |
| Property Transfer | 1.5% | When buying/selling |
| VAT | 13% | On most goods and services |
| Capital Gains | 15% | On certain gains |
| Corporate Tax | Up to 30% | For Costa Rican companies |
What Expats DON'T Pay
- Inheritance Tax: None
- Wealth Tax: None
- Exit Tax: None
- Gift Tax: None
- Foreign Income Tax: None (territorial system)
For US Citizens
Important considerations:
- US citizens owe US taxes on worldwide income regardless of residency
- Foreign Earned Income Exclusion (FEIE) may apply (~$126,500 in 2026)
- Foreign Tax Credit available for any Costa Rican taxes paid
- No tax treaty between US and Costa Rica
- No totalization agreement (Social Security)
- FBAR reporting required for foreign accounts over $10,000
Tax Treaties
Costa Rica has limited tax treaties:
- Germany
- Mexico
- Spain
- United Arab Emirates
Tax Filing
Fiscal year: October 1 - September 30
Filing deadline: December 15 (for previous fiscal year)
Most expats with only foreign income don't need to file Costa Rican returns, but consult a local accountant to confirm.
Tips for Tax Efficiency
- Keep foreign income foreign—don't mix with Costa Rican sources
- Document income sources clearly for residency applications
- US citizens: work with expat tax specialist
- Consider Costa Rican entity only if needed for local business
- Keep records of days spent in Costa Rica for tax residency purposes
Pro Tips
- •Foreign income (pensions, remote work, investments) is not taxed in Costa Rica
- •US citizens still owe US taxes—work with an expat tax specialist
- •Keep foreign and Costa Rican income sources clearly separated
- •Property tax at 0.25% is one of the lowest in the Americas
- •No inheritance, wealth, or exit taxes make estate planning simpler
Have questions about taxes in Costa Rica?