- We are changing from SALES TAX to AGGREGATED VALUE TAX, this means that all the “services” you receive from Doctors, Dentists, Lawyers, Engineers, Barber Shops, Etc, will now starting July 2019, be taxed with the so called “IVA” tax, for example, so if you used to pay 5000 colones for a hair cut , starting July 2019 it will cost you 13% more.
- Income Tax: First, what does not change: neither the rate of the companies (remains at 30%), nor the interest gained on checking or savings accounts, will change, nor will we have worldwide income, although some form of “global income” (the concept is different than what you would normally understand) was included in the new law. It does increase the tax on bonds and securities, for example, an investment in a certificate of deposit, which today pays 8% income tax, now will pay 15%. It also increases the tax percentage to be paid over higher salaries (they go from 15% to 20 and 25 in the higher sections). Although it lowers the rates on Small industry “PYMES” , but raises the tax on Coops and Solidarism Associations.
- Capital gains. A new 15% tax is created on capital gains: if today you buy a lot at 1 million and then sell it at 2 million, you pay nothing (unless you are in the business of selling lots, of course) but with the new law, you will pay 150 thousand colones, 15% of the million profit. An exception is made in the case you are selling the only house you have and live in, even if it is in the name of a company or an inheritance. With the new law lottery prizes will also be considered a capital gain.
- Regarding global income the concept in the new law is that if you have different sources of income ( all in Costa Rica, or generated by your work in Costa Rica), instead of declaring them individually , with the new law, you have to bundle them together to declare your income as one, this with the intention of collecting more taxes over the chance that you will fall into a higher tax bracket that will increase your income tax all together. Expats that do not work in the country or do not generate income in Costa Rica via a business or investment do not have to pay income tax.
There is more about the law, you might want to get yourself a copy and read it all, the info in this article is, in my opinion some of the most important aspects for expats. Take your time to inform yourself, be patient, this is something we all are going to have to bear with
If you have any questions or need a consultation, please don't hesitate to contact our office at 22 20 00 55, or via email to [email protected] and we will gladly answer your questions or set an appointment for a private conference.