Many investors hesitate to buy in Costa Rica for fear of being taxed twice: once there, once back home. Good news — the Costa Rican system is territorial, and double taxation is often reduced — but it all depends on your country of residence. Here is how it really works, and the crucial point to know before you invest.
The key principle: a territorial tax system
Costa Rica applies a territorial tax system: it taxes only income from Costa Rican sources. Income you earn elsewhere — salary, dividends, rent from a property located outside the country — is not taxed in Costa Rica, even if you live there.
In practice, as a real estate investor, the Costa Rican tax authorities only reach what is generated locally: the rent from your property in Costa Rica, the capital gain on resale, and the profits from any local business activity.
What Costa Rica actually levies
| Income / transaction | Tax in Costa Rica (2026) |
|---|---|
| Rental income (after a flat 15% allowance) | ≈ 12.75% of gross rent |
| Capital gain on resale | 15% of the gain |
| Company profit | 30% (reduced rates for small companies) |
| Ownership (annual property tax) | 0.25% of the registered value |
The crucial point: very few tax treaties
A double taxation treaty (DTT) allocates the right to tax between two countries and prevents the same income from being taxed on both sides. Yet Costa Rica has only four treaties in force: Germany, Spain, Mexico and the United Arab Emirates.
There is no tax treaty between Costa Rica and France, Belgium, Switzerland, Canada or the United States. The country has signed tax information exchange agreements (TIEAs) with France, Canada and others — but these agreements serve transparency, not the avoidance of double taxation.
So, will you pay twice?
It depends mainly on your country of residence — but two mechanisms limit the risk:
- Costa Rican territoriality: Costa Rica does not touch your foreign income. There is therefore no double taxation on it.
- The treatment in your own country: France, Belgium, Switzerland and Canada generally tax their residents’ worldwide income. Tax already paid in Costa Rica is treated differently from one case to the next — a tax credit (often in Canada), an exemption while keeping the rate (often in Switzerland), or, in the absence of a treaty, a mere deduction as an expense — which is notably the case for a French resident. In that last case, partial double taxation remains very real on rental income: hence the importance of confirming your exact situation.
Best practices for the investor
- First determine your tax residence: it is what decides who taxes you, and on what.
- Declare your Costa Rican income at home if you are a tax resident there, and keep proof of the tax paid in Costa Rica (essential to obtain the tax credit).
- Choose your ownership structure (personal name or company) up front — it affects the tax treatment.
- Get support on both sides: an accountant or attorney-notary in Costa Rica, and a tax adviser in your country of residence.
Disclaimer: this article is for information only and does not constitute tax advice. International taxation depends closely on your residence and your situation, and the rules change. Always have your structure validated by a tax adviser in Costa Rica and in your own country. Tendance Immo Latina, a trilingual agency in Costa Rica, can point you to the right professionals — contact our team.
