Incentives for Foreign Nationals
A few months ago, the CR Government announced in a press conference the intention to attract more expats to Costa Rica. People have asked frequently about the status of the proposal. On August 19th, three representatives from CR Congress put a bill on the floor under file number 22.156 with the name of “Law to Attract Investors, Rentistas and Retirees.
Objective of the Law
The main objective of the bill is to create incentives with the intention to attract more foreigners coming to Costa Rica under those three categories. Namely, investors, rentistas and retirees. The Introduction of the bill lays out the background to justify it. Some arguments include the necessity for Costa Rica to compete with other countries when it comes to being destination for expats as well as the current economic environment requiring foreign investment to the country.
Incentives
The bill proposes some incentives for foreign nationals with the intention to make Costa Rica more attractive as a destination.
- Tax exemptions
- 100% tax exemption for the importation of household goods.
- 100% tax exemption for the importation of vehicles.
- 20% tax exemption for the transfer of property.
These exemptions will be applicable to all foreigners and dependents applying under one of those three categories.
- Reduction of minimum capital required for investors.
Currently, the law requires a minimum capital investment of $200,000 USD to qualify for this category. The bill proposes to reduce the amount to $150,000 USD.
My opinion
While it is a good start to create some incentives for expats to relocate to Costa Rica, a lot more should be done.
From an immigration perspective, the government can create other incentives and/or adjustments to make it more attractive for foreign nationals to relocate to Costa Rica. Some of them are:
- Simplify the residency process for people applying as self employed or with a small business. Currently, the requirements and the process to obtain this category makes it virtually impossible to obtain this category.
- Grant estancias (a lesser immigration category) for people who do not want residency or do not meet the investment amount but have property in Costa Rica. There are thousands of people who have a second home in Costa Rica and spend a few months a year in Costa Rica (more than 90 days, and less than six months) just to avoid winter.
- Digital nomads. Make more flexible regulations for digital nomads. They can also get an estancia for one year. If they want to stay longer, they can get residency.
- Make driver’s licenses more accessible to foreign nationals.
- Create a tax exemption to all start ups (regardless it is an expat or a tico) for income taxes during a period of three years from the moment of incorporation.
Of this options, only the fifth one will require a law, the other options can be passed via executive order. Just my thought.
I am sharing the bill for you to review. The translation may not be perfect.
One item the CR Government could consider is to create a category of immigration/residency for the foreign nationals that are and have been in the country during the pandemic and have had their Visa extended. For example, create a $1500 law firm submitted application that includes finger prints/birth certificate and expedited process and approval. $1500 is allocated to CR government and a portion to law firm. The price could help recoup lost revenue on past and future exit taxes. Just a thought and probably needs to be modified but it could generate revenue quickly.
Sandy,
That is a good idea.
How about us ‘tourists’ who stayed, weathered the pandemic and made a positive impact on the local economy?
Maybe some sort of reduced residency requirements as a tank you?
Rob,
What would you recommend? What your proposal would look like?
It could be likely that those that will be here +1 year should be able to make a humanitarian claim for temp residency if having established roots during that time. Is that possible under the existing Humanitarian category? International law could support this , such as right of return to “my country” which includes where you were allowed to legally live for an extended time (there is more to it than that, but something out there might support this). Would your law firm be willing to try a case such as this?
Jayson,
I would not like to say that is not an option. Currently, it will be difficult, but is possible to make the case.
Also under recent possibilities being considered is the taxation of all residents worldwide income. If that were to happen, you can expect these modest measures to be futile and out-migration to start rapidly. The typical response to that is to enact currency controls. Resulting in zero new investment capital and the currently issued securities becoming near-worthless – there is little internal demand for them now and the foreign market would evaporate overnight. The history of how this plays has been written too many times to expect a different outcome this time. Show me where that’s wrong.
Great now this is the first real step to encourage retires to look at CR again. But I agree another crucial items is a speedy path to residency. An office or path with simplicity as to not have additional costs due to the complexity of the process and requiring an attorney to get things done.
Thank you this information. How long do you think it will be for this bill to be passed into law? We are hoping to relocate to Costa Rica in the near future.
John,
We cannot anticipate how long it will take. It could be the case that it is not approved. We will have to wait and see.
This is great news for people who want to be expats there! I know it’s hard to predict anything, but do you have an idea of when these changes may take place? It would help us figure out our plans! Thank you!
Emily,
This is just a bill in the CR Congress. First, it must be approved to take effect.
Do you have to already have residency under Investor, Rentista and Retiree to benefit or can you be in the process, or even just planning residency in the future?
Jamie,
The bill does not mention whether this benefit will be retroactive.
A thought for the upcoming winter season…where Nicaragua and Panama borders are still closed and so many are cancelling their stays.
The government could/should upon arrivals of travellers with airlines tickets with overs 90 day stays…charge like 100US$ per person….maybe even per month for extended stays. Ex-a couple for 6 months would pay 600US$ directly to the government at the airport. We do alos help local groceries, bar and restaurants and more.
It is a thought.
With so many countries trying to attract short and long term people to live/spend in their countries, such an obvious entry tax would merely re-direct the potential flow to other locations, i.e. a competitive disadvantage
It will be great to get an update on the status of the pending FileN 22,156, “Law to attract Investors, Rentistas & Retirees” The last I heard it was under review by the Legislature’s Tax commission.
Rafael, any updates on the progress of the new incentives law? Thanks, John Miller
Rafael,
Will residents be able to import their vehicle from US if this bill passes into law?
Vehicles are included in the proposal. Tax exemptions
100% tax exemption for the importation of household goods.
100% tax exemption for the importation of vehicles.
20% tax exemption for the transfer of property.
These exemptions will be applicable to all foreigners and dependents applying under one of those three categories.
Has the bill been approved if not when?
Law to attract foreign Investors, Pensionados and Rentistas approved in second debate! These are great news for the expat community.
The law now needs to be signed by the President and published. We must also wait for the ruling that will come to dictate how the law is actually applied to be prepared and published.
Many of the questions we all currently have regarding this new law shall be answered by the ruling. However, we celebrate this huge step for Costa Rica!
Is there any information regarding the law proposal incentives being retroactive? Such as someone who has received temporary residency recently being included in the proposal?
We are not sure of all the details as it is still in process – it could be possible. We need to wait for the final ruling
Would a person who already has Residency fall under these exemptions also? It would be nice to bring my vehicle down from Canada?
We are not sure of all the details as it is still in process – it could be possible. We need to wait for the final ruling
Does this type of resident as inversionista allow the person to seek employment in CR?
As an investor you can own a business but you cannot work in it. You would need to hire local staff.
Now that this bill has been signed in law, have the new procedures been published? Also, does the residency as investor mean that
1. my family can seek employment
2. can we get CR passport?
Great summary. Thank you.
https://ticotimes.net/2021/07/05/project-to-attract-residents-to-costa-rica-signed-into-law
Hello! No you cannot work under those categories of residency and passports are only for citizens of a country.
When can I bring my family cars and house hold goods without being taxed.I am a retired senior from USA owning a home in Costa Rica and now a non resident.Is this law in effect?
We are still waiting to hear when this will go into effect. We will post on all our social media platforms when we receive news. It continues to be a bit of a waiting game
I want to move to Costa Rica. I am prepared to sell my house and business in the USA. Buy property, build a house and shop and pay hard earned cash for it and possibly employ a couple of people and contribute to the tax base. I am concerned about the costs of moving my household and machinery as pertains to import duties and weather or not I can buy a property that has both my house and shop on it. Does Costa Rica have any incentives for me to start a business that contributes to the national GDP? Other countries in central and south America offer incentives to do this. Also I would like to know more about business’s that are tourist related since that is the #3 income earner in Costa Rica. Do they want me to come to this country to help grow this business or will I be mired in red tape forever?
If you would like I could put you in touch with our Business and Real Estate teams – they would be able to answer your questions.
SELLING OUT IN FLORIDA AND GOING TO BUY OR BUILD A HOME IN C.R. IN REGARDS TO BILL 22.156 AND VEHICLE IMPORTATION, DO I HAVE TO PERSONALLY IMPORT THE CAR OR CAN I BUY A NEW CAR IN C.R. AND NOT HAVE TO PAY THE DUTY/TAXES? THANKS, SETH R.
They still have not implemented the law so we do not know the final language of the law. We will need to continue to wait to see when it is implemented
Has this been signed into law yet? Thanks!
Katherine,
The law has been signed, but the regulations have not been published yet.