Income Tax for Foreigners who Invest in Costa Rica

Since September 25, foreigners who acquire securities from the local stock market will have to pay 8% tax on the dividends generated.

Tuesday, September 26, 2017

The differences that had arisen regarding how much and in what form the tax on dividends generated from investments made by foreigners in securities on the local stock market should be collected, have been resolved, and the Ministry of Finance confirmed that the tax will be collected from September 25th.

"...  The Directorate General for Taxation considered that the amendment to article 59 of the Income Tax Law, which was implemented by the Law on Development Banking, implied that foreigners should be pay 15% and nationals 8%. Therefore, Taxation issued a directive, in 2015, establishing a 15% withholding rate for interest or financial gain obtained by foreign investors who do not live in Costa Rica."

Nacion.com explains that "... On the other hand, the general superintendent of Securities, Carlos Arias, consulted the Attorney General of the Republic on the rate of the tax that had to be applied to foreigners, to which they responded to him by means of an ruling of the 16 of February of the 2017."

In the end, the Comptroller's Office ruled that the charge should be 8%, the same as that charged to national investors. 

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A 15% tax, charged by the Treasury on income from interest generated on foreign investments in securities in the local market, has been described as incorrect.

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