Costa Rica (CR)

Costa Rica is Central America's most stable democracy — a small, lush republic that abolished its army in 1948 and instead invested in education, healthcare, and the environment.

Capital: San José

Region: Americas

Language: Spanish

Currency: CRC (₡)

Cost of living: Affordable (index 48)

Emergency: 911

Tax & Payslip Guide

Understanding your taxes in Costa Rica — tax year January 1 – December 31.

📅

Tax Year

January 1 – December 31

⏰

Filing Deadline

March 15 (Declaración de Renta D-101 for individuals and companies). Employees whose only income is a salary withheld at source by their employer generally do not need to file a separate return. Self-employed, freelancers, and company owners must file annually. The Declaración Informativa D-151 (reporting payments to third parties) is also due in January.

🧾

VAT (Standard)

13%

📊 Income Tax Brackets

Income from	Income to	Rate	Notes
0	918,000	0%	Tax-free bracket for salaried employees, retirees, and pensioners in fiscal 2026. Monthly salary up to ₡918,000 is exempt under Hacienda's published 2026 bands.
918,001	1,347,000	10%	Applies only to the portion between ₡918,001 and ₡1,347,000/month.
1,347,001	2,364,000	15%	Applies to the portion between ₡1,347,001 and ₡2,364,000/month. Covers many professional and technical workers.
2,364,001	4,727,000	20%	Applies to the portion between ₡2,364,001 and ₡4,727,000/month. Upper-middle professional incomes.
4,727,001	∞	25%	Top salary tax rate on all monthly income above ₡4,727,000. This is the highest personal salary withholding rate in Costa Rica.

🏛️ Social Contributions

CCSS Health Insurance (SEM — Seguro de Enfermedad y Maternidad)

Employee: 5.50%

Employer: 9.25%

Mandatory health and maternity insurance. Funds the CAJA public healthcare system. The employer contribution is the primary funding source for hospitals and EBAIS primary care centres. Applied to all gross wages with no ceiling.

CCSS Pension (IVM — Invalidez, Vejez y Muerte)

Employee: 4.33%

Employer: 5.58% employer + 1.75% state

Mandatory public pension scheme. For 2026-2028 the total IVM contribution is 11.66% split between worker, employer, and state. Vests at 240+ months (20 years) of contributions. Retirement age 65. No ceiling on contributions.

OPC Supplementary Pension (Operadoras de Pensiones Complementarias)

Employee: 1.00% mandatory (additional voluntary contributions allowed)

Employer: 3.25%

Mandatory second-pillar pension managed by private operators (Popular Pensiones, BAC Pensiones, BN Vital, etc.). Worker chooses their OPC provider. Contributions are invested and returned as an individual pension account at retirement. Voluntary top-ups are tax-deductible up to 10% of salary.

FCL (Fondo de Capitalización Laboral)

Employee: 0% (employer pays)

Employer: 3.00%

Employer-only contribution to the worker's individual severance savings fund. Workers can access accumulated funds upon termination (regardless of cause) or at retirement. Managed by OPC operators alongside the supplementary pension. Reduces employer's separate severance (preaviso) obligation.

Asignaciones Familiares, INA, IMAS (Other Social Funds)

Employee: 0%

Employer: 8.00% (Asignaciones 5% + INA 1.5% + IMAS 0.5% + MTSS 0.5% + other 0.5%)

Employer-only contributions to family allowances, vocational training (INA — Instituto Nacional de Aprendizaje), social welfare (IMAS), and other social programmes. Workers receive benefits (Asignaciones Familiares for low-income families) from these funds. Total employer social contributions are approximately 26.83% of gross salary in 2026 after the IVM adjustment.

🛒 VAT Rates

13%

Standard

4% on private healthcare services, professional services, and veterinary services; 2% on basic medicines and non-processed basic food basket items; 1% on the canasta básica (staple food basket including rice, beans, oil, eggs, pasta)

Reduced

Costa Rica's IVA (Impuesto al Valor Agregado) replaced the previous sales tax (impuesto de ventas) in 2019 as part of the fiscal reform (Ley 9635). The 1% rate on the canasta básica covers about 30 specific basic food items as defined by INEC and Hacienda. Digital services consumed in Costa Rica (Netflix, Spotify, Amazon, software subscriptions) are subject to 13% IVA — charged directly by providers or collected at source.

🧾 Sample Payslip Decoder

Gross Salary ₡1,200,000/month (approx. USD $2,300 — mid-level professional)

Gross Salary (Salario Bruto) + ₡1,200,000

Income Tax (Impuesto sobre Renta) — 0% on first ₡918,000, 10% on next ₡282,000 - -₡28,200

CCSS Health Insurance Employee (SEM 5.50%) - -₡66,000

CCSS Pension Employee (IVM 4.33%) - -₡51,960

OPC Supplementary Pension (1.00%) - -₡12,000

Net Salary (Take-home) ₡1,041,840/month (~87% of gross)

Employee takes home approximately 87% of gross salary at this income level. Employer's total labour cost is approximately 129% of gross salary after the 2026 IVM adjustment. All contributions are calculated on gross salary with no earnings ceiling. The 13th month aguinaldo (bonus salary) of ₡100,000 (1/12 of annual gross) is accrued monthly and paid by December 20. This example assumes no voluntary pension top-up or union dues.

🌍 Special Expat Tax Rules

Costa Rica uses a strict territorial tax system (principio de territorialidad): only income generated from Costa Rican sources is subject to Costa Rican income tax. Foreign-sourced income — salary from a foreign employer, dividends from foreign companies, rent from foreign property, capital gains on foreign assets — is generally NOT taxed in Costa Rica. This makes Costa Rica attractive for retirees (Pensionado visa income is not taxed here) and digital nomads (foreign income exempt). The Digital Nomad Visa (Ley 9996) explicitly confirms that nomads' foreign income is not subject to Costa Rican income tax. IMPORTANT: This does not relieve expats of their home-country tax obligations. US citizens must file US taxes on worldwide income. UK, Australian, and Canadian residents who do not properly establish non-residency may remain liable at home. Consult a tax professional in both countries.

📋 Double Tax Treaties

Costa Rica has a limited number of double tax treaties (DTT). Active treaties: Germany, Mexico, Spain (signed 2010, ratified), United States (limited treaty; no comprehensive DTA as of 2026). The CR-US information exchange agreement (TIEA) is active. CR participates in CRS (Common Reporting Standard) automatic exchange of financial information with 100+ countries. FATCA reporting applies to Costa Rican banks for US account holders. For expats from most countries, there is NO comprehensive DTA with Costa Rica — plan accordingly to avoid double taxation.

Ministerio de Hacienda — Dirección General de Tributación (DGT)

https://www.hacienda.go.cr

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