9635, which recently was approved and published in the Costa Rican Official Gazette, provides major tax reform. Before July 1st, 2019, capital gains were only taxable in Costa Rica when derived from the sale of depreciable assets, or when derived from the ordinary trade of a course or business of the taxpayer, in which case, it was considered regular income and subject to the applicable Income Tax rate. Law No. Income tax is assessed on an accrual basis. An enormous fiscal reform law takes full effect on July 1, 2019, which has far-reaching effects on Costa Rica real estate. The Costa Rican tax year is different from the American, running from October 1st to September 30th. There is also a small property tax payable annually by property owners based on the value of the property, however there is no capital gains tax in Costa Rica. Capital gain tax in Costa Rica began on July 1, 2019. According to the Law, the obligations contained on Section 2, including the Capital Gains` Tax will begin applying on July the 1st, 2019. Costa Rica’s capital gains tax is the highest in the region, and one of the highest in the world in terms of the impact on the productive sector. To find the answer we need to look at Article 5 of the Income Tax Regulations which defines who is considered to be a domiciled person for tax purposes. However, if the transaction is habitual (for example flipping properties) there is a capital gains tax of 30%. Many investors have made the plunge into the Costa Rican economy and with inviting tax laws such as Costa Rica’s stance on capital gains, Meléndez & Bonilla would love to help you do the same thing. As of July 1, 2019, there will be a new Costa Rica capital gains tax of 15%. Costa Rica one-year remote work visa for digital nomads, New Law to Attract Baby Boomers and Investors to Costa Rica. Under the new reforms, there would be a 15% on real estate transactions that involved investment properties or other properties not … Blogs, pictures, forum Costa Rica on expat.com Everybody else was exempt. Stay updated on legal changes that may affect your living, retirement or business in Costa Rica. Whenever possible I ensure that the information provided in the articles is referenced to the actual law or regulations on which the statements are based. Sales Tax. Costa Rica Tax The Costa Rican tax system is unlike any in the world. As of July 1, 2019, there will be a new Costa Rica capital gains tax of 15%. Costa Rican-source income is any amount arising from services rendered, goods located or capital used in the territory of Costa Rica. As discussed above, a rule on interest payments deduction is now part of the tax legislation in Costa Rica. Starting on November 18, 1995 this new sales tax … Costa Rica . As the name clearly states, said tax will apply as a 15% charge over the capital gains generated by a seller when selling a property. As a non-resident, you will be taxed at a flat rate of 10% of the gross income that you earn in Costa Rica. The tax reform law includes significant income tax law changes such as the introduction of rules on the taxation of capital gains and interest expense deduction limitations, as well as rules addressing hybrid mismatch arrangements and anti-tax haven provisions. The site was launched in 1997 and over the years has remained as a valuable source of information for individuals or entities that are considering retiring, living, investing or doing business in Costa Rica. The services of Lawyers, Doctors, Dentists and other independent professionals are exempt from sales tax; anything else you buy, from a candy bar to a computer or furniture is taxed. How do you become a Real Estate Broker in Costa Rica ? The rate of General Sales Tax (GST) in Costa Rica is 13%. Capital gains – Capital gains from a Costa Rican source are subject to a 15% capital gains tax. The previous law only applied capital gains tax to real estate developers that were in the business of developing and selling real estate. Because property taxes in Costa Rica are so low and because no capital gains tax is collected within the country, real estate investment is a popular activity for foreign investors looking at Costa Rica as an opportunity. Costa Rica sales tax is 13% on the amount paid for goods and for some services. For many years property owners in Costa Rica never had to worry about capital gains when selling their Costa Rican real estate. And, as a self-employed non-resident, you will be required to either pay 15% tax on the gross income you receive in Costa Rica (for professional services) or a 25% tariff (for technical advice). Many, especially realtors, are aghast at the nerve of the Costa Rican government for doing such a thing. That profit is then taxable. PROPERTY TAX Real Estate/Habitation Tax (Impuesto sobre bienes inmuebles) The second amendment introduces several changes to the Income Tax Law including the introduction of a capital gains tax. Recent changes to the Costa Rican tax laws implemented an across the board Capital Gains Tax (Ganancias de Capital) and in this article, I will review the impact of that law on the sale of real estate in Costa Rica. Meléndez & Bonilla has a team full of specialists that can expertly monitor your real estate investment properties over time to look out for your interests. One of the reasons Costa Rica is such a popular investment region is the beauty of no capital gains tax! Specifically, dividend distributions and shares are exempt from the capital gains tax. This tax will incur a 15% charge on the capital gains generated when selling… Evidence of a local domicile or place of business within Costa Rica will be considered when determining the domicile of corporations. The new Law establishes withholdings for capital gains obtained by non-domiciled persons when it comes to the transfer of real estate located in Costa Rica, or when it deals with other assets or rights located in Costa Rica when the acquirer is a taxpayer of the tax on profits. There is a 13% sales tax on most items, but certain foods and medicinal products are exempt from that tax. Cost of Living. Building ? Costa Rica: Capital gains taxes (%). This opens up many financial opportunities to the foreign investor wishing to make a move to … There is no such tax as long as the gains were not derived from the operation of a real estate business, like being a developer and selling lots from your inventory. 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