Costa Rica has a unique basis of taxing. The taxing principle itself is called territoriality, which means that any personal income coming from a foreign source is tax exempt. The only revenue that is subject to taxation in Costa Rica is revenue earned by an individual within the country.
Income Taxes in Costa Rica
Both employment income and non-employment source income are taxed in Costa Rica. Every person employed in Costa Rica is required to pay a withholding tax each month, and the amount is based on the individual’s salary. Each month, employment income is taxed 15%, and the income for self-employed individuals are taxed from 10% to 25%
Income tax is decided by a tax scale, and the amount you pay in income tax is deducted from your job earnings, your professional services, and, if you own a corporation, the kinds of activities your corporation performs.
The fiscal year in Costa Rica is from the first of October to September the 30th of the following year. Each person working in Costa Rica is required to file their taxes; if an individual has had no earnings in a year, this must be declared.
Property Transfer Tax in Costa Rica
When purchasing a property in Costa Rica, you will be required to pay a 1.5% property transfer tax on the value of the property being purchased. This tax is required in order to transfer the property to your ownership.
Sales Tax in Costa Rica
Goods in Costa Rica are taxed both when they are imported and when they are sold, and the sales tax is 13%. The sales tax is levied on nearly all goods, although food items, medicinal products, the services of doctors, lawyers, dentists, and independent professionals, as well as other specific items, are exempt from Costa Rica sales tax.
Municipal Taxes in Costa Rica
The local government levies municipal taxes in order to take care of the general maintenance of the area, such as keeping the streets clean, public lighting, and also uses these taxes to fund the local bureaucracy. The amount taxed is based on two things: the Municipal Government’s decision, and the measurement in meters of where your property meets the street. The municpal tax in Costa Rica varies, but it’s usually not over 10 US dollars.
