Tax Rates in Costa Rica

Find out about taxation on income in Costa Rica. Information on who qualifies for resident and non-resident taxation, as well as standard income tax rate guidelines...

In general all individuals (and corporations) whether Costa Rican citizens or foreigners (resident or non-resident) must pay income taxes for income generated in Costa Rica.

Non-residents

Residence in Costa Rica is determined by the individual’s immigration status (permanent resident).

Expatriates who have been living in the country for six continuous months or more during a single tax year are treated as residents for tax purposes.

Foreigners on assignment in Costa Rica for six months or more (during the same tax year) could also be subject to payroll tax withholdings in accordance with the payroll or permanent employment table (see below: Income tax for permanent employees).

In the case of US expatriates (and possibly other countries too), taxes must also be paid in the home country. This system applies for countries that follow a world taxing model (like the US) and not a territorial one, as Costa Rica does.

Non-residents (corporations or individuals) that receive income generated in Costa Rica are subject to withholding tax. The entity or person making the payment is responsible by law for withholding the tax and making corresponding payments.

Self-employed

Costa Rican legislation distinguishes between the self-employed (liberal professionals) and those who are employed on a fixed salary and/or receive other remuneration from a company.

The following table shows the tax rate for liberal professionals or the self-employed who generate profits through their business activities.

Gross annual income rate

From CRC 0.00 to 3,042.000.00 0 percent
From CRC 3,042,000.00 to 4,543,000.00 10 percent
From CRC 4,543,000.00 to 7,577,000.00 15 percent
From CRC 7,577,000.00 to 15,185,000.00 20 percent
More than CRC 15,185,000.00 25 percent 25 percent

Note:

  • Figures are in CRC (colones) and are for a complete year
  • Deductions for children (who are underage or a student who is 25 years old) and spouse are allowed; currently these are set at CRC 15,480.00 and CRC 23,040.00 per year, respectively
  • Liberal professionals must also pay 9.5 percent of their gross earnings into the Social Security Fund (Caja Costarricense del Seguro Social, CCSS)
  • Current exchange rate is about USD 1 = CRC 500.00

Professionals working under this structure must be registered with the tax office (Tributación Directa) and must use approved invoices for their transactions.

Income Tax for Permanent Employees

Permanent employees pay income tax based on their gross monthly salary. The employer is responsible for both deducting income tax and making the payment to the tax office.

Monthly gross income tax rate

From CRC 0.00 to 685.000.00 0 percent
From CRC 685,000.00 to 1,028,000.00 10 percent
More than CRC 1,028,000.00 15 percent

Note:

  • Figures are in CRC (colones)
  • Deductions for children (who are underage or a student who is 25 years old) and spouse are allowed; currently these are set at CRC 1,290.00 and CRC 1,920.00 per month, respectively
  • Corporations with active payrolls must pay 26.17 percent of an employee’s gross salary to the Social Security Fund (Caja Costarricense del Seguro Social, CCSS) every month. The employee’s contribution is 9.17 percent
  • Calculations are on the basis of USD 1 = CRC 500.00