Costa Rica Tax Residency and the 183-Day Rule, Explained for 2026
Guides · Costa Rica
Key Facts
- The country — Costa Rica is a Central American democracy of about five million people, with no army and a services-led economy. President Laura Fernández Delgado took office on 8 May 2026.
- The system — taxation is territorial. Article 1 of the income tax law, Ley 7092 of 21 April 1988, reaches income from a Costa Rican source, which it defines as services rendered, goods located or capital used in the national territory. Nothing else is caught.
- What matters now — the 183-day test lives in the regulation rather than the statute, at Article 10 of Decreto 43198-H, and the statute itself delegates the point. Becoming tax resident changes very little for someone whose income is all foreign.
- What happened — this guide sets out, as of September 2026, how fiscal residency is determined, what falls inside and outside the tax, and what is only proposed.
- The numbers — more than 183 days in the fiscal period makes you resident, with absences under 30 consecutive days still counted. Costa Rican capital income is taxed at 15%, with a one-off 2.25% option on assets held since before July 2019.
- What it means for you — a foreign pension, a foreign salary for work done abroad and foreign dividends are outside Costa Rican income tax. Your home country may still tax them, and there is no double taxation treaty with the United States.
- Still open — a bill filed on 20 August 2026, expediente 25.734, would tax foreign passive income linked to Costa Rican elements. It is awaiting committee assignment and is not law.
Costa Rica taxes what happens inside Costa Rica. That one idea answers most of the questions foreigners ask about their tax bill here, and most guides get it wrong.
Costa Rica tax residency sounds like the decisive question, and for most new arrivals it is not. The country taxes income by its source, not by the taxpayer’s passport or address. Crossing the 183-day line makes you a fiscal resident; it does not pull your foreign pension, foreign salary or foreign dividends into the Costa Rican tax net. What follows is where the rules actually live.
Where Costa Rica tax residency is actually defined
Article 1 of Ley 7092, the income tax law of 21 April 1988, reaches Costa Rican source income received or accrued by people and companies domiciled in the country. Then it does something unusual. It delegates the meaning of domicile to the regulation.
So the famous 183-day test is not in the statute at all. It sits in the Reglamento. The concept was rewritten to match the international fiscal residency standard by Decreto Ejecutivo 41274-H, published on 24 October 2018.
Under the current Reglamento, Decreto 43198-H, the rule is at Article 10, numeral 1(a). You are fiscally resident if you stay in the country for more than 183 days in the fiscal period, continuously or not, counting the days of entry and exit.
Counting the days, and getting the certificate
Two refinements decide most real cases. A sporadic absence of fewer than 30 consecutive calendar days still counts toward your 183 days. A long weekend in Panama resets nothing.
An absence of more than 30 continuous days does not count, unless you can prove fiscal residency somewhere else. For taxes whose period is not annual, the authority examines the 12 months before the tax fell due.
The certificate of fiscal residency is issued by the Dirección General de Tributación under Resolución DGT-R-65-2018, as later amended. You will need it whenever another country asks where you are resident.
What is taxed, and what is not
Article 1 defines Costa Rican source income in three geographic limbs: services rendered, goods located, or capital used in the national territory. Article 2 makes nationality, domicile and place of incorporation irrelevant to who pays. Only the source counts.
Taxed: a salary for work performed in Costa Rica. Also profits of a business operating here, rent from Costa Rican property, and interest on capital lent and used here. Gains on the sale of Costa Rican assets are caught as well. Note one trap. A freelancer’s fees for services physically performed in Costa Rica are Costa Rican source, even when the client sits abroad.
Not taxed: a foreign salary for work performed abroad. Nor dividends from a foreign company, interest on a foreign bank account, or rent from a house in Florida. Gains on foreign shares and a foreign pension, state or private, stay outside the tax.
Costa Rican capital income has had its own rates since 1 July 2019, under Ley 9635. The general rate is 15%, covering capital gains, rental income, dividends and most movable capital. A one-off option of 2.25% applies to the first sale of an asset acquired before July 2019. A non-resident selling property to a resident taxpayer faces a 2.5% withholding.
The EU list, and what Ley 10381 really changed
On 14 February 2023 the Council of the European Union placed Costa Rica on Annex I, its list of non-cooperative jurisdictions. The stated reason was a commitment the country had not fulfilled on the harmful aspects of its foreign source income exemption regime.
Costa Rica answered with Ley 10381, published in La Gaceta 180 on 2 October 2023. The Council moved the country off Annex I on 17 October 2023 and onto Annex II, the grey list. It left Annex II on 18 February 2025, and in 2026 appears on neither list.
The politics were close. Then-president Chaves vetoed the law, preferring a rule that taxed foreign income where an economic link to Costa Rica existed. The Assembly overrode the veto by 38 votes to 15.
What the law did is narrower than most guides suggest. It did not introduce worldwide taxation. It made foreign source passive income — dividends, interest, royalties and capital gains — taxable only for an entidad no calificada. That means a member of a multinational group that cannot show real substance here: premises, qualified staff and decisions taken in the country. An ordinary resident individual and a purely domestic company stay outside it.
The bill that would change the rules
On 20 August 2026 the Frente Amplio filed bill 25.734. It would amend the income tax law to tax foreign passive income: dividends, interest, royalties and capital gains. The tax would bite where that income derives from services, goods or capital used in Costa Rica.
It would also reach later income generated from those same elements, earned inside the country or outside it. Colon figures here use the Banco Central reference rate for 22 September 2026, ¢450 (about US$1) to the dollar. The bill’s justification cites 36 administrative determinations on extraterritorial income, with Delfino reporting some ¢36,943.6 million (about US$82 million) of tax at stake.
That figure is reported rather than official, and its phrasing is ambiguous, so treat the magnitude with care. The status matters more. The bill is awaiting committee assignment. It is not law, and none of it applies today.
What a retiree on a foreign pension owes
On the pension itself, no Costa Rican income tax. A pension paid from abroad, for work done abroad, has no Costa Rican source under Article 1 of Ley 7092. Becoming a fiscal resident does not change that.
The real bill is the Caja, the public social insurance fund, and it is not a tax. Unbroken affiliation is a condition of renewing a residency card under Articles 78 and 80 of the immigration law, Ley 8764. A retiree with no local income joins as a voluntary insured person. Figures commonly cited for a couple are around US$115 a month combined, which is indicative rather than official.
Then come the local items. Income tax applies to anything generated here, including 15% on rent from a Costa Rican property. Property tax runs at 0.25% of registered value, with a separate solidarity tax on high-value homes. Value added tax of 13% sits on what you buy.
Finally, your own country. The United States taxes its citizens on worldwide income wherever they live, and Costa Rica has no double taxation treaty with it. The Costa Rican treaty network is thin, with Spain and Germany the main partners, though the full current list was not verified for this guide.
Frequently Asked Questions
Does becoming tax resident mean my foreign income is taxed here?
No. Costa Rica taxes income from Costa Rican sources, defined in Article 1 of Ley 7092 as services rendered, goods located or capital used in the territory. Fiscal residency changes very little for a person whose income is entirely foreign.
How are the 183 days counted?
They need not be consecutive, and the days of entry and exit both count. An absence of fewer than 30 consecutive days still counts toward the total, while a longer absence drops out unless you can prove fiscal residency in another country.
Did Ley 10381 end the territorial system?
No. It created a narrow regime for foreign source passive income earned by entities in multinational groups that cannot show real substance in Costa Rica. Individuals and purely domestic companies remain outside it, and the source test in Article 1 is unchanged.
Is Costa Rica still on an EU tax list?
No. It was added to Annex I in February 2023, moved to Annex II that October, and removed from Annex II on 18 February 2025. In 2026 it appears on neither list.
Connected Coverage
- Costa Rica Taxes for Expats: A Guide
- Costa Rica Residency: A Guide for Expats
- How to Open a Bank Account in Costa Rica as a Foreigner
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error
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