The Chance to Opt Out of the New Car and Property Tax in Costa Rica

The newly approved tax on legal entities has many Costa Ricans feeling disgruntled. This tax, which is known as the Corporate Tax Law, will take effect shortly. In basic terms, this law means that if a resident of Costa Rica owns a home, car, or some other type of personal property in an inactive company, that person must pay an annual tax on that company, even though companies with inactive status pay the lowest rate.

Since so many locals have disapproved of this new tax, the Costa Rican government is giving them one chance to transfer personal property without paying a penalty or any tax during the first year after the law becomes active. Unfortunately, these two factors are the only things that people know when it comes to this new law.

In a detailed report, officials explained that for exemption status, companies must be inactive for a minimum of 24 months before the enactment of this law. That means that if a holding company qualifies, the owner can use this one-year window to transfer property into his or her name or into a different company that has no tax payment or transfer cost.

In addition, companies with outstanding payments due from the time when the tax formerly went into effect (2012 and 2015) can pay without facing penalties or internet charges. On the other hand, if a company lapsed in payment three years in a row, it will be dissolved. If that happens, the company is required to go through a special process for recovering titles and holdings.

For Costa Ricans with pending payments associated with the prior law, they are encouraged to talk with an accountant or attorney in determining the best course of action. The official report stated that the approved methods to pay the tax will be announced publicly, as soon as the new law goes into effect.

Daveed Hollander

With over 2 decades of doing business in Costa Rica real estate industry Daveed Hollander is a trusted realtor for the southern pacific region of Costa Rica. Delivering a professional and tailored service Daveed offers you a wide ranging portfolio of quality properties. With an in-depth knowledge and a genuine appreciation for the area, he enthusiastically supports sustainable development in the southern pacific. A respected and active participant in the local community Daveed and his family reside in Dominical. Fluent in English and Spanish, Daveed has established regional connections and excellent communication skills allow him to successfully identify valid and authenticated investment opportunities. Well known for his friendly and genuine approach your search for a potential property is benefited by his conscientious and detail orientated service.