Tax on property income in Costa Rica
Taxation Researcher | January 10, 2023
Effective Tax Rate on Rental Income
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Global Property Guide research
Nonresident individuals are liable to tax only on their Costa Rican-sourced income. Married couples are taxed separately.
Income is taxed at progressive rates. Income earned by nonresidents is subject to withholding taxes. PE (Permanent Establishment) is required to rent out residential property in Costa Rica, which means the landlord must show rental income in his/her annual tax declaration. Rental income qualifies as real estate capital income, which is taxed at a flat rate of 15% with a set deduction rate of 15% of the annual gross income.
CAPITAL GAINS TAX
Capital gains are not taxed in Costa Rica unless they are derived from habitual transactions.
Capital gains derived from habitual transactions are taxed at a flat rate of 15%.
Real Estate/Habitation Tax (Impuesto sobre bienes inmuebles)
Property taxes are levied on the cadastral value of the property as assessed by the tax authorities. Property taxes are levied by the municipalities at the flat rate of 0.25%. The real estate tax is calculated on a calendar year basis and must be paid annually, semiannually or quarterly, depending on the municipality.
Income and capital gains earned by companies are generally subject to corporate income tax at a flat rate of 30%. Income-generating expenses are deductible when calculating taxable income.
Small companies whose gross income does not exceed a particular limit may be subject to corporate income tax at progressive rates.
CORPORATE TAX 2023
|TAXABLE INCOME, CRC (US$)||TAX RATE|
|Up to 5,286,000||5%|
|5,286,000 to 7,930,000||10%|
|7,930,000 – 10,573,000||15%|
|Over 10,573,000||20% on all income over|
|Source: Global Property Guide|