Costa Rica Tax Guide
Everything you need to know about taxes as an expat in Costa Rica.
Disclaimer
This guide is for informational purposes only and does not constitute tax advice. Always consult with a qualified tax professional for your specific situation.
Overview
Costa Rica operates a territorial tax system—only Costa Rican-source income is taxable. This is highly advantageous for US expats as foreign pensions, Social Security, investment income, and remote work salaries from US employers are NOT taxed in Costa Rica.
Tax Residency Rules
Tax residency is determined by the 183-day rule: spending 183+ days in Costa Rica during the fiscal year makes you a tax resident. Tax residency is separate from immigration status—you can be a tax resident without formal residency if staying 183+ days as a tourist.
Capital Gains Tax
Capital gains tax rate is 15% on gains from Costa Rican assets (introduced July 1, 2019). Properties acquired before July 2019 may opt for 2.25% of sale price instead of 15% on gains. Primary residence exemption may apply if property was lived in 183+ days/year.
Property Tax
Annual property tax (ISBI): 0.25% of registered property value, paid quarterly or annually (early payment discounts available). Luxury home tax applies to construction value exceeding ~₡145-150 million (~$275,000) with progressive rates from 0.25% to 0.55%. Luxury tax deadline is January 15 annually.
VAT / Sales Tax
Standard IVA (VAT) rate is 13%. Reduced rates for certain goods (1-10%). Exempt items include basic groceries, essential goods, and exports.
Special Tax Regimes
Territorial Tax System
Foreign-source income is completely exempt from Costa Rican taxation. This includes US pensions, Social Security, foreign rental income, dividends, and remote work salaries.
Eligibility:
All tax residents benefit from this system
Digital Nomad Visa Tax Exemption
Digital nomad visa holders enjoy complete exemption from Costa Rican income tax on all foreign-sourced income plus duty-free import of work equipment.
Eligibility:
Must hold valid digital nomad visa
For US Expats
CRITICAL: US citizens must file Form 1040 regardless of where they live, reporting worldwide income to the IRS. NO TAX TREATY exists between US and Costa Rica—you must rely on FEIE and Foreign Tax Credit to avoid double taxation. NO TOTALIZATION AGREEMENT exists—Costa Rican CAJA contributions do NOT count toward US Social Security. Self-employed may face dual social security taxes. FATCA: Costa Rican banks report US account holder information to the IRS. Form 8938 thresholds for expats: $200,000 end of year OR $300,000 any time (single). FBAR: Threshold is $10,000 aggregate in foreign accounts at ANY time. File FinCEN Form 114 electronically by April 15 (auto-extension to October 15). Costa Rican bank accounts must be reported. Penalties are $10,000+ per account per year for non-willful violations. The combination of Costa Rica's territorial system (foreign income not taxed locally) and the US FEIE ($130,000 exclusion) can result in $0 total tax on the first $130,000 of earned income.
Foreign Earned Income Exclusion (FEIE)
The Foreign Earned Income Exclusion (FEIE) 2025 allows exclusion of up to $130,000 of foreign earned income. Qualification requires either Physical Presence Test (330 days outside US) or Bona Fide Residence Test. File using IRS Form 2555. Note: FEIE applies to earned income only—not pensions, dividends, or Social Security.
Tax Treaty Benefits
No US-Costa Rica tax treaty exists. US expats must rely on FEIE and Foreign Tax Credit. The lack of treaty means no special dividend/interest withholding provisions or tie-breaker rules.
Filing Deadlines
US expats abroad receive automatic 2-month extension to June 15 for filing. Costa Rica fiscal year follows calendar year. Recommended: Use two tax professionals—a US expat specialist (Greenback, Bright!Tax, TaxesForExpats) for IRS filings and a Costa Rican accountant for local compliance.
Recommended Approach
Use TWO tax professionals: 1) US expat tax specialist for IRS filings ($500-$1,500 basic, $1,500-$5,000+ complex), and 2) Costa Rican accountant for local compliance ($200-$500). File FBAR and Form 8938 as required. Track days spent in Costa Rica carefully for tax residency determination.
Need Help with Your Taxes?
Use our tax calculator or find recommended expat tax preparers.