Buying electric cars in Costa Rica just got cheaper with the approval last month of the bill that exempts electric vehicles from the general sales tax and the selective consumption tax. Hybrids do not qualify for import tax exemption or other benefits ascribed to electric vehicles in Costa Rica.
This most recent bill was stalled in the legislative process for the past two years but has now received final approval. Once the bill is put into action, it will exempt electric vehicles being purchased in Costa Rica from paying taxes on a sliding scale.
- Fully electric vehicles costing less than US$30,000 (¢17.4 million colones) will be exempt from all taxes.
- Vehicles costing between US$30,001 and US$45,000 will pay only half of the sales tax and 75% of the selective consumption tax.
- Vehicles valued between US$45,001 and US$60,000 will pay the sales tax and only one-half of the selective consumption tax.
- Vehicles valued at US$60,001 and more will pay full taxes.
These incentives also apply to used cars not older than five years, spare parts, and charging stations.
Currently, fully electric vehicles pay the sales tax and ‘selective consumption tax” of 17.4%. Thus, the tax on a US$30,000 vehicle is US$5,220.
Three taxes will be reduced for electric vehicle users:
- VAT: Value-added tax (VAT or, in Spanish, IVA) will have a fixed rate of 1% during the first year following the publication of this reform. It will increase by 1% annually until reaching 13% in 2035. The VAT for most products in Costa Rica is 13%.
- Consumption and customs tax: The selective consumption tax and customs value will be exempted for three years after the publication of this bill, after which the exemptions will slowly decrease until they expire in 2034.
- Vehicle property tax: Electric vehicles will be exempt from payment of the vehicle property tax during the year following the publication of the bill. This exemption will gradually expire and full taxes will be paid after 2028.
Apart from the sales tax exemptions, the new bill also provides tax incentives to companies that replace their gasoline vehicles with electric. It also authorizes Costa Rica’s public institutions to replace their vehicle fleets with “100% electric” vehicles. This has been decided to be a matter of public interest and the bill contains provisions to replace the country’s bus fleets with electric buses.
Fully electric vehicles will continue to be exempt from any import (customs) duties, which came into law in Costa Rica in 2018. The law was originally passed in December 2017 when the Costa Rican National Assembly approved Law 9518 for incentives towards electric transportation and EV use, including tax exemptions on consumption, sales, and customs for imports. An additional incentives package was added in 2018 that added further benefits to purchasing electric vehicles, including tax cuts on imports, the elimination of license plate driving restrictions, waiving payment of yearly road permits, and free parking in designated areas.
Charging Stations In Costa Rica
To meet the possible demand for electric vehicles, the bill establishes that the Ministry of the Environment and Energy (MINAE) must ensure that recharge centers, known as “electrolineras,” are built every 80 kilometers on national roads and every 120 kilometers on regional roads.
As of 2020, Costa Rica has been proud to announce a nationwide electric vehicle charging grid, making it the first country in the region to achieve this.
In 2021, the Costa Rican Association Of Electric Mobility (ASOMOVE) organized an event to demonstrate the performance of electric cars and how easy it is to recharge across the country.
According to the website Electromaps, there are 267 public charging locations across Costa Rica with three in Uvita. There are also solar providers in Costa Rica that offer at-home electric charging solutions as part of their services.
Costa Rica’s Environmental Ethics
Costa Rica is considered a pioneer when it comes to encouraging green energy consumption among other environmental efforts. The country has a well-developed renewable energy infrastructure that started with building large hydro dams during the last century. Costa Rica currently generates over 99% of the country’s electricity from renewable sources: hydro, wind, geothermal and solar. During non-peak demand hours, this small nation even generates an excess of electricity supply that is distributed to various countries in Central America.
Costa Rica is also currently engaging in a National Decarbonization Plan, which aims to make Costa Rica one of the first decarbonized countries in the world. This plan stretches to 2050, but changes were implemented as soon as the plan was set into motion in 2019.
Road vehicles are responsible for almost 75% of global greenhouse gas emissions that come from transport and electric vehicles are a huge part of Costa Rica’s solution to this problem. Costa Rica sells approximately 150,000 petroleum-fueled vehicles a year (pre-pandemic), and the latest figures (March 2021) indicate EV sales of 1606 electric cars, 625 electric motorcycles, and 1,218 special use vehicles (such as golf carts).