Inheritance tax and inheritance law in Costa Rica

Taxation Researcher | September 16, 2019

The Global Property Guide looks at inheritance from two angles: taxation, and what inheritance laws apply to foreigners leaving property in Costa Rica: what restrictions there are and whether making a is advisable.


How high are inheritance taxes in Costa Rica?

Inheritance and gifts are not specifically taxed in Costa Rica. However, the gratuitous transfer of properties and property rights are subject to a substitute tax system. The transfer of properties is taxed at progressive rates depending on the property value.


Up to 700,000 (US$1,250)
700,000 - 1,000,000 (US$1,786)
Over 1,000,000 (US$1,786)
Source: Global Property Guide


What inheritance laws apply in Costa Rica?

Costa Rica´s inheritance law follows the territorial principle: i.e., the applicable law depends on the location of the property.

The pertinent regulations are Civil Code, Title XI, General rules on Inheritance: sections 520 to 570; Title XII, Inheritance proceedings in the absence of a will: sections 571 to 576; Title XIII, The Will: sections 577 to 62. Law N° 3284, Commercial Code; Trust: sections 633 to 662. Law N° 5476, Family Code, Title I, Marriage; Wealth of the Family: sections 37 to 47. Title V, Guardianship: sections 175 to 229.

These regulations generally apply to everyone who owns property in Costa Rica. According to its constitutional principles, Costa Rica does not discriminate against or provide different legal treatments to members of different religions, nationalities, or any other groups; they are all treated as Costa Rican citizens.

In the case of real estate, the territorial principle applies; in the case of other kinds of assets, a different regime may apply. The competent court with jurisdiction over property matters is that where the property is located in Costa Rica. The courts with jurisdiction over inheritance matters are the Civil Courts, or where there are appeals the Superior Tribunal, and in the last instance the "Corte de Casación". A court´s jurisdiction is divided according to the subject matter. All judicial procedures are processed in the Civil Court.

The judicial process in inheritance cases usually takes from 1 to 4 years, depending on its complexity. But Costa Rican law also has an easier and faster procedure before a public notary, which can be applied when all heirs are of legal age, and are willing to reach agreement regarding the distribution of the property.

If one spouse belongs to one nationality, or religion, and the other spouse to another, this is unlikely to raise any legal problem under Costa Rican law, since the legal system is applies the territorial principle, regardless of the nationalities of husband and wife.

A specific reserved portion is not established in Costa Rican Law but if the probate hearing is initiated before a Costa Rican court, the judge will reserve a portion for economic dependents of the deceased.

Everyone is free to draft a will, which expresses their testamentary intention, and may include all their properties and assets. They have no obligation to reserve a portion to anyone specific.

However, if the probate hearing is initiated before a Costa Rican Court, the judge will reserves a portion of the estate for those who depend economically on the deceased. This portion is to maintain the person(s) appointed by the judge, until the final ruling of the probate proceedings. It is usually granted to the spouse and children of the deceased.

With the right legal advice, formalizing a Will is simple.

For Costa Ricans it is not usual to make a will, although the legal framework allows everyone to draft a will.

A foreigner in Costa Rica has two options: S/he may have a will made by a local public notary regarding his/her assets in Costa Rica. This is fully valid in Costa Rica and the assets must be distributed according to his/her instructions. The other option is to validate a foreign will with the Costa Rican authorities; in this case, after a foreign court decision, an exequatur must be sent to Costa Rica for approval, and duly recorded in the Public Registry.

It is advisable for a foreigner to make a will because the proceedings for executing a local will are easier and faster. If the will is made abroad, the execution requires some special proceedings, with embassies or consulates, and the exequatur. These proceedings require time and usually are more expensive.

The Civil Code recognizes two types of wills: the nuncupative or Open Will and the sealed or Closed Will.

A notarized Open Will is written in the presence of a Notary Public and three witnesses. If the testator hand writes the will, then two witnesses and a Notary Public are required. An attested Open Will can be written without a Notary Public if witnessed by the testator and four witnesses. If it is not hand written by the testator, then six witnesses must attest to it.

The writing of a Closed Will must follow certain formal requirements. Once the will is signed by the testator it must be placed in an envelope and sealed. The envelope containing the will is then taken to a Notary Public who must draft a notarized writing on the envelope itself. The notarized statement must attest that a sealed envelope containing a will was handed to the Notary Public by the testator and that the testator has informed him/her as to the number of pages contained in the will. It must also indicate that the will was written and signed by the testator and whether it contains any annotations or smudges. The Notary Public must take a record of this proceeding in his/her protocol book and it must be signed by the testator and three witnesses.

In the absence or invalidity of a will, inheritance follows intestate succession.

The distribution of property and assets in the absence of a will depends on each case, but usually, if the deceased was married, the spouse inherits the major portion of the estate. From the total wealth of the deceased, the judge allocates the amount corresponding to conjugal property rights, and the balance is then distributed between the legitimate heirs appointed by the judge. The Civil Code defines legitimate heirs as follows:

  • First Degree: The spouse, children and parents of the deceased. If the deceased has no spouse, children or parents, the judge summons other relatives arranged in the following degrees:
  • Second Degree: The grandparents and other legitimate ascendants.
  • Third Degree: The natural brothers and sisters on the mother´s side.
  • Fourth Degree: The nephews of the deceased.
  • Fifth Degree: The uncles of the deceased.
  • Sixth Degree: The State. If the estate does not pass to the preceding five degrees, then the Civil Code specifically directs that the property must pass directly to the Board of Education in the district where the property of the deceased was located.

Property in Costa Rica can be given freely during the life-time of the owner.

A gift can be executed by one of three legal procedures: a donation, a free transfer of share certificates or a trust.

A beneficiary must specifically accept a donation, and the acceptance must be notified to the donor. A free transfer of share certificates may occur if the property is owned by a legal entity. The law demands the signatures on the share certificates, and a record in the company´s shareholder registry. Costa Rican Commercial Code also allows the establishment of a trust, with any kind of clauses, according to the needs of the trustee.

In general terms these procedures are simple, but require the assistance of a Public Notary, in order to record the name of the new owner at the Costa Rican Public Registry.

Different legal restrictions affect the transfer of property, such as:

If the transfer of the property is made by donation, the donor is allowed to establish limitations for the beneficiary, with a lapse of ten years.

A family home cannot be transferred or mortgaged without the consent of the married couple. For this limitation to be legally valid, the property must be recorded in the Public Registry as a family home, and fulfill the requirements for such purpose e.g. it can be no larger than 10763.9 square feet in an urban zone or 107639 square feet in a rural zone.

Other limitations apply, related to the development plan of the county where the property is located. This plan establishes the distribution of commercial, industrial and residential areas. Moreover, the property situation has to be analyzed on a case by case basis.

If a donation is properly made according to legal procedures established in the Civil Code, the gift is not open to challenge after death; however, to avoid such a challenge, and avoid subsequent nullification, the donation must be made in a public deed. Moreover, the property or assets must be clearly described by registration in the Public Registry.

Marital status may restrict inheritance, irrespective of where the marriage took place, or where is the current residency. If the purchase of the property was made as a single person, it is not subject to conjugal property rights, but if it was purchased as a married person, the property is subject to the conjugal property regime. This does not mean that the property falls under common ownership per se. The division of assets has to be legally established by a court.

If there is a divorce procedure ongoing, the Costa Rican courts may order the Public Registry to withhold the property until the final judicial decision is made. Once finished, the divorce ruling needs to be recognized by an executor. If the divorce is filed in Costa Rica, the conjugal property rights are equivalent to fifty percent of the net price of all the properties and goods bought during the marriage. To file this, the marriage certificate, and the titles of the properties and goods involved are required.

Minors may inherit property.

If the property (or part of it) goes to a minor or minors (a child, or children not of legal age, or to others not legally adult) the property can be registered under the name of the minor in the Public Registry; however the minor is not able to administer the property. In this case, a guardian has the ability to act on behalf of the minor. A guardian can be appointed in the will, but if he is not, the court can appoint one according to the law. For example the priority order established at the Costa Rican Family Code is as follows: The grandparents have priority; in their absence, one of the brothers or sisters of legal age, and as a third option, the aunts and uncles. If none of these relatives is willing to accept the guardianship, the court can appoint an independent guardian.

To avoid inheritance problems, it is advisable for an owner of property in Costa Rica to:

  • Confirm that the property deed has been registered in the Public Registry as soon as possible. S/he must ask the Notary Public for a document confirming the situation. Sometimes foreigners purchase a property and then leave the country without the property deed duly recorded; this situation may cause problems.
  • Be clear about the legal condition of the property, since there are different kinds of ownership in Costa Rica.
  • Appoint a manager or person to take care of the property whilst s/he is not in Costa Rica. This is important because of the maintenance of the property; besides avoiding any disturbance or illegal use.