Costa Rica’s New Law To Attract Investors, Rentiers, and Pensioners
The law for the attraction of investors, renters, and retirees was recently approved in Costa Rica, including the reduction of the investment bar to USD$150,000. To get more details, we contacted our lawyers at Invicta Legal, Alberto Saenz-Roesch and Monique Azuola-Castro, who are local immigration and real estate experts. They told us that this law aims to grant additional benefits to new residency applicants in three categories, all of which we will outline for you below.
There has been a lot of confusion about the details of this law since it was announced in July about how it will be regulated. Invicta Legal helped us clear up some of this confusion, although we will not know exactly how it will be regulated until immigration establishes the guidelines for implementation.
Costa Rica’s New Law 9996
Costa Rica’s new immigration law has been passed and published in La Gaceta, the country’s official newspaper where new laws are published, on July 14th, 2021. The benefits of this new immigration law will apply to those who file and application for residency in Costa Rica in the first 5 years of the validity of the law and will last for 10 years after they are approved for residency.
The main benefits are as follows:
- A one-time only tax exemption for the import of household goods. These include new and used household goods in reasonable quantities, such as: appliances, furniture, decorative items, among others, all free of import, tariff, and value-added taxes.
- The tax-free importation of two vehicles (land, marine, and air transport all apply) for personal or family use.
- Local import tax for the amounts declared to obtain the migratory status does not apply. Further income resulting from the investment within the national territory will be required to pay income tax.
- A 20% transfer tax reduction of the property acquired during the 10 year period.
- Tax exemption for equipment or materials for professional or scientific use carried out by the person with the migratory category of investor, retired resident, or rentier resident. The person must demonstrate before the Ministry of Finance that what is imported corresponds to their economic activity and has criteria of proportionality and reasonableness.
- The beneficiaries of the immigration status of investors, residents, and retirees will not automatically be considered as tax residents.
In addition, in the investor category application, there was a permanent reduction of the investment sum from USD$200,000 to USD$150,000. The investment can be executed by acquiring assets, shares, securities and projects of national interests. Moreover, they will also be considered within this category those investors in venture capital or sustainable tourism infrastructure.
Further Explanation of The New Immigration Law in Costa Rica
Some of the main questions that our clients have had since this law was announced on July 14th are about how these benefits can be claimed and who are the viable recipients. Invicta Legal helped shed some light on some of these points based on their experience with the Department of Immigration in Costa Rica and successfully helping many expats gain their residency in this country.
Here are some points of clarification:
- In case of loss of the household goods or vehicles due to theft, total destruction by fire, flood, collision, or accident during the term of the benefits, you can import another vehicle or household goods free of the indicated taxes.
- “Reasonable amount” will likely have to be proven to the newly created department within Costa Rica’s Immigration Office. They are expected to have a definition of what is considered reasonable for a home, which is expected to be ample for equipping a typical home that expats will be moving into.
- Each of these exemptions applies to every individual applicant for residency and their family members and dependents. This means that a family submitting a residency application can expect to be able to import two cars in total over 10 years after receiving their residency approval.
- Those who already have residency are not able to access these new benefits but it is unclear if those already in process will be able to access these benefits. We will update this article when the Department of Immigration begins taking applications later this month.
This law is pending regulation. Immigration should issue the bylaw within the next 60 days. Until then, we will not know how to apply or opt for these benefits.
Reasons for The New Immigration Law
The President of the Republic, Carlos Alvarado Quesada, signed Law 9996 on July 14th and stated:
“What this law achieves is to create the conditions so that these rentiers can come to the country, bring their investments and we can generate employment. It is one more step in the direction of recovery, which we all must continue to push in the country.”
Costa Rica’s Minister of Tourism, Gustavo Segura, pointed out that “this law will create a 25% decrease in investment so that a foreign person is granted the category of resident as an investor, including his dependents. In this way, it is intended to produce a necessary revitalization of the economy and a recovery of the levels of foreign investment of a decade ago (close to 7.8% of GDP and which today represent only 3.5%).”
This legislation creates a regulatory framework meant to encourage the attraction of investors, rentiers, and pensioners, thus contributing and promoting the necessary economic reactivation of the country in the post-pandemic period of Covid-19.