Exciting news for those who plan to move to Costa Rica

In March 1992, a change in the pensionado law eliminated many tax privileges that retirees had enjoyed since the program started in 1964. Under the old system, foreigners with official pensionado or rentista (permanent retiree) status were required to live in the country four months a year. They were entitled to the following perks: residency without immigration hassles, all the privileges of Costa Rican citizens except the rights to vote and work for hire, and the right to import one of each of the major appliances such as refrigerator, stove, microwave, television, washer and drier, as well as many personal household goods free of taxes.

Pensionados could import a new car every five years duty-free, provided it was worth less than $16,000. In 1992, low taxes on imported cars and duty-free household goods were eliminated. Since then, all pensionados have to pay taxes on their automobiles and household goods the same as Costa Rican citizens do. Despite the changes in this law, Costa Rica continues to be Latin America’s prime relocation and retirement haven.

Good news! Due to the pandemic’s devastating effect on the economy, the Costa Rican government is seeking new ways to generate revenue. On September 9, 2020, a new bill called “Law to Attract Investors, Rentiers and Pensioners” appeared in the official newspaper La Gaceta. The purpose is to create new perks in order to attract people from other countries who are interested on investing and or living in the country.

Here are the new incentives aimed at attracting more foreigners.

1. Under the current current law the amount need to get residency as an investor is $200,000. Said amount will be lowered to $150,000. Investments can be in Real Estate or assets as cars, capital stock, securities and productive projects or projects of national interest. Assets can also be combined so as to total the $150,000 amount. For instance, a house that is worth $120,000 plus a vehicle that has a value of $30,000.
2. One-time duty free and all import taxes to import household items
3. The amounts reported as income to obtain tax exemption benefits will be exempt from any income tax.
4. An exoneration of twenty percent on transfer taxes on Real Estate Property that the beneficiaries acquire in their personal name. If the beneficiary transfers said property within a period of less than three years, he or she must refund the difference in the exempted tax.
5. Finally, it is provided that this investment window will be in effect for five years.
6. All that has to be done now is to have congress support the new bill and make it an official law.

Let’s keep our fingers crossed.