Legal Ease – Tax Time, Corporations and Property Owners
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Corporations and/or real estate property owners in Costa Rica are reminded of the need to pay applicable annual taxes. Failure to do so is subject to penalties and possible collection proceedings.
Luxury Tax — Due Jan. 15
Solidarity Tax for the Strengthening of Housing Programs (Impuesto Solidario para el Fortalecimiento de Programas de Vivienda) is commonly known as the “luxury tax.” It applies to owners of houses, condos and apartments with construction values exceeding a certain amount that’s adjusted each year (₡126 million colones, or approximately $229,000 in 2017). The tax amount is calculated on a scale from 0.25% to 0.55% per year, depending on the property value.
Applicable property owners must complete a form every three years called Formulario Único de Inscripción, Declaración y Pago Impuesto Solidario para el Fortalecimiento de Programas de Vivienda, Ley 8683, and pay the tax annually.
Property Tax and Garbage Collection Fee — Due March 31
Real estate property owners must pay an annual property tax (impuestos bienes inmuebles) and garbage collection fee (recolección basura) to the municipal government (municipalidad) where their property is located.
The property tax is 0.25% of the registered value of the property, which is either the purchase price paid or the value assigned by the Tax Office.
The garbage collection fee is a fixed amount, adjusted yearly, that must be collected along with the property taxes. The municipality determines the fee based on location and on whether the property is used for residential or commercial purposes.
The Municipalidad de Santa Cruz does not always charge both amounts payable in the same statement, which may cause property owners confusion and inconvenience. The municipality has attributed this to “lack of updated records and/or to administrative errors within the system.” Therefore, the property owners involved are advised to review their statement carefully to avoid unpleasant surprises.
Corporate Tax — Due Jan. 30
Effective Sept. 1, 2017, all corporations, subsidiaries, and limited liability companies currently registered before Costa Rica’s National Registry, as well as all entities incorporated in the future, must pay an annual tax under law # 9428: Tax on Legal Entities.
A fixed amount applies to inactive corporations and a progressive rate to active corporations, depending on annual income. Current rates appear below.
Type of corporation
Rate* and fee
Inactive before Costa Rica Tax Office and/or with economic activity but without reported income
15% of base salary
With economic activity and gross income under ₡50,880,000*
25% of base salary
With economic activity and gross income between ₡50,880,000 and ₡118,720,000*
30% of base salary
With economic activity and gross income over ₡118,720,000*
50% of base salary
*Estimates based on the base salary of an administrative assistant in the judicial sector in 2017. The base salary and the gross income amounts will be adjusted yearly.
If the tax is not paid, the National Registry will not issue, certify or register any documents for the companies, and the companies will not be able to contract with the government or any public institution.
The municipal property tax and garbage collection fee can be paid a year in advance or quarterly. However, if paid quarterly, you must pay before the end of each quarter to avoid interest charges. The first quarter ends on March 31 every year.
Owners must complete a form every five years to update their property value. Failure to do so can lead to a municipality assessment and fines.