Costa Rica Proposes Income Tax for Expats, Perpetual Tourists
The Costa Rican Government is planning to start collecting income tax, not only on earnings by individuals and corporations in the country, but income generated abroad as well – a global income tax, or renta mundial in Spanish. Presently taxes in Costa Rica are based on the principle of territoriality. As such, all personal income from a foreign source is tax exempt.
The new scheme would apply to Expats and “perpetual tourists,” those persons living in Costa Rica and leaving every 90 days to renew their tourist visa.
The government will consider excluding tax on income from foreign sources if a person provides proof they have paid income tax in the country where it was generated.
Early this year, a presidential decree required the Banco de Costa Rica (BCR) to open bank accounts to foreigners, allowing the government to identify and tax all foreigners living in the country.
Some speculate the proposed tax law will snare expats who work remotely from Costa Rica for US companies and claim the Foreign Earned Income Credit. Because this income is exempt from US federal income tax it would be fully-taxed in Costa Rica.
Source: qcostarica.com
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