Residency and Visas in Costa Rica: Taxation and Estate Planning for Spaniards

Costa Rica has positioned itself in recent years as a relevant destination for Spanish citizens considering options for international mobility and wealth diversification. This consideration is not driven by tax evasion strategies, but by objective factors of stability and regulatory design.

Why is Costa Rica of interest to Spaniards from an estate-planning perspective?

Institutional and legal stability

Costa Rica is internationally recognised for its uninterrupted democratic stability since 1949 and for abolishing its army in 1948. According to the Global Peace Index, Costa Rica maintains levels of institutional security above the Latin American average. Its judicial system, while capable of improvement, offers rule-of-law guarantees that inspire confidence for investments and long-term planning.

Territorial tax system

The Costa Rican tax system is based on the territoriality principle, regulated mainly in the Tax Rules and Procedures Code and the Income Tax Law (Law No. 7092). This principle means that, as a general rule, only Costa Rican-source income is subject to taxation in the country, regardless of the taxpayer’s residence.

This feature distinguishes Costa Rica from systems such as Spain’s, which tax the worldwide income of their tax residents. However, it is essential to understand that this framework does not automatically mean an absence of taxation, but rather a different structure that must be analysed on a case-by-case basis.

Official source: Ministry of Finance of Costa Rica

It is important to note that the Costa Rican tax system is not a “low-tax” regime in absolute terms. Costa Rican-source income may be subject to significant tax rates, and there are formal and substantive obligations that must be complied with rigorously.

Most relevant types of residency and visas in Costa Rica for Spaniards

Costa Rican immigration regulations establish various categories of temporary and permanent residency. For Spanish citizens with a medium-to-high net worth profile, the following are the most relevant:

Residency as a Pensioner

Aimed at individuals who receive a lifetime pension of at least USD 1,000 per month (approximately €950) from foreign social security schemes or private pension systems.

Main requirements:

• Documentary proof of the pension
• Criminal record certificates
• Birth and marriage certificate (if applicable)
• Medical examination carried out in Costa Rica

This category allows self-employment but not employment by an employer in Costa Rica.

Residency as a Rentier

Requires proving stable and ongoing income of at least USD 2,500 per month (approximately €2,375) for a minimum of two years. This income must come from stable sources abroad (rental income, bank deposit interest, investment dividends, etc.).

Alternative: A bank deposit in Costa Rica of at least USD 60,000 in an authorised financial institution, equivalent to the minimum income required for two years.

Residency as an Investor

Aimed at individuals who make investments in Costa Rica. The minimum investment amount has varied depending on the applicable regulations and is currently around USD 200,000 in strategic sectors or specific government-approved projects.

Investments may be channelled through:

• Real estate
• Companies incorporated in Costa Rica
• Securities issued by the State
• Other approved assets

This category allows work in the business activity linked to the investment.

Digital Nomad Visa

In 2021, Costa Rica approved a specific programme for foreign remote workers and digital professionals who provide services to companies or clients outside the country. This category allows a stay of up to one year, renewable for the same period.

Main requirements:

• Prove minimum income of USD 3,000 per month (individual) or USD 4,000 (if including dependants)
• Employment or professional contract with a foreign company
• Health insurance with coverage in Costa Rica

Official source: General Directorate of Immigration and Foreign Nationals of Costa Rica

Note: Obtaining legal residency in Costa Rica does not automatically confer tax residency there, nor does it imply a loss of Spanish tax residency. These concepts must be analyzed separately.

How does the tax system work in Costa Rica?

Territoriality principle

The Costa Rican tax system taxes income according to its source. Article 1 of the Income Tax Law establishes that the tax applies to “all income or earnings, whatever their origin or source, obtained in Costa Rican territory”.

What is considered Costa Rican-source income?

According to current regulations and the interpretation of the General Directorate of Taxation, the following are considered Costa Rican-source income:

• Income from services provided in Costa Rican territory, regardless of where it is invoiced or collected
• Income derived from assets located in Costa Rica (leases, property sales)
• Profits from business activities carried out in the country
• Salaries and remuneration for personal services provided in Costa Rica
• Interest, dividends, and returns on capital invested in Costa Rican entities

Which foreign income is, in principle, outside the Costa Rican tax scope?

As a general rule, and subject to specific interpretation in each case:

• Dividends from foreign companies without a permanent establishment in Costa Rica
• Interest on bank deposits in foreign entities
• Income from real estate located outside Costa Rica
• Capital gains from securities listed on international markets
• Pensions and returns from foreign insurance policies

Important: This exclusion is not absolute and may depend on the specific circumstances of the case, administrative interpretations, and case law. Correct classification of each income source requires an individual analysis.

Applicable tax rates

Income Tax in Costa Rica applies a progressive scale for employment income and business activities:

• Up to 3,876,000 colones per year (approx. USD 6,500/year): exempt
• Next bracket up to 5,714,000 colones: 10%
• Next bracket up to 9,571,000 colones: 15%
• Next bracket up to 19,142,000 colones: 20%
• Excess over 19,142,000 colones: 25%

Capital income and capital gains may be subject to specific taxation, with rates ranging from 15% to 25% depending on the nature of the return.

Official source: General Directorate of Taxation of Costa Rica

Residency in Costa Rica and tax residency in Spain: different concepts

This is one of the most critical and frequently misunderstood aspects of international mobility processes. Obtaining legal residency in Costa Rica does not automatically mean ceasing to be a tax resident in Spain.

What is tax residency in Spain?

Under Article 9 of Law 35/2006 on Personal Income Tax (IRPF), a person is a tax resident in Spain when any of the following conditions is met:

1. Presence in Spanish territory for more than 183 days during the calendar year (including sporadic absences unless tax residency in another country is proven)
2. Centre of economic interests in Spain: when the main core or base of economic activities or interests, directly or indirectly, is located in Spain

In addition, the taxpayer is presumed to have their habitual residence in Spain when the legally non-separated spouse and dependent minor children habitually reside in Spain, unless proven otherwise.

Centre of economic interests: a qualitative criterion

This criterion is fundamental and does not depend only on amounts. The Spanish Tax Agency assesses:

• Location of main assets
• Source of most income
• Management of businesses and corporate shareholdings
• Location of significant investments
• Place where wealth is managed

Critical example: A Spanish citizen who obtains residency as a rentier in Costa Rica but keeps their investments, companies, real estate, and wealth management in Spain, with income mainly from Spanish sources, could still be considered a Spanish tax resident even if they spend fewer than 183 days in Spain.

Risks of dual tax residency

Spain and Costa Rica do not have a Double Taxation Treaty in force. This absence means there is no pre-established mechanism to resolve tax residency conflicts between the two countries, which significantly increases risk and complexity.

Effectively losing tax residency in Spain requires structured planning, documented and executed with absolute rigour.

When can Costa Rica be of interest within an estate-planning strategy?

It is essential to clarify that no jurisdiction is suitable per se for every profile. Costa Rica’s suitability depends on specific personal, family, wealth, and professional circumstances.

Profiles that may consider Costa Rica

Digital professionals with international activity

Individuals who provide professional services to clients or companies located outside Costa Rica through remote work, and whose income comes entirely from foreign sources. In these cases, if it is correctly evidenced that the service is provided from abroad, it could be argued that there is no Costa Rican-source income.

Important nuance: If the service is provided from Costa Rica, even to foreign clients, there are doctrinal interpretations that could consider there to be a Costa Rican source due to the place of performance. This issue must be analysed using rigorous technical criteria.

Entrepreneurs with international commercial activity

Owners of companies operating in international markets, with corporate structures outside Costa Rica, who seek a stable personal residence base without this implying that the business activity is carried out from the country.

Key requirements:

• That the foreign company does not constitute a permanent establishment in Costa Rica
• That effective management is not carried out from Costa Rican territory
• That there is real economic substance in the jurisdiction of the operating entity

Investors with internationally diversified financial assets

Individuals with internationally diversified portfolios (listed securities, investment funds, financial assets) that generate foreign-source income and can legally optimise their overall tax position.

Common requirements for all profiles

1. Real substance: Effective residence with demonstrable personal, social, and economic ties
2. Effective break with Spain: Strictly meet the criteria for non-Spanish tax residency
3. Comprehensive regulatory compliance: Tax, foreign exchange, and immigration obligations in all jurisdictions
4. Valid economic reasons: Legitimate motives beyond tax savings

Critical Warning: No estate planning strategy that involves a change of residence should be implemented without a prior, personalized, and documented legal and tax analysis.

Common risks of poor planning

Conflicts with the Spanish Tax Agency

The AEAT applies strict audit criteria. Poor planning may result in:

Retroactive tax reassessment: If the Tax Agency determines that a taxpayer has remained a Spanish tax resident, it will reassess non-time-barred tax years (generally four years), requiring:

• Taxation on worldwide income in Spain
• Late-payment interest
• Penalties of 50% to 150% of the unpaid tax

Criminal liability: When the evaded tax exceeds €120,000, this constitutes a tax offence (Article 305 of the Criminal Code), punishable by one to five years’ imprisonment.

Issues of effective double taxation

The absence of a Double Taxation Treaty between Spain and Costa Rica means a taxpayer may be required to pay tax simultaneously in both countries without automatic mechanisms to eliminate double taxation.

Banking and financial complications

Automatic exchange of tax information agreements (CRS/FATCA) mean that Costa Rican financial institutions report account data of Spanish tax residents to the Spanish authorities.

How can we help you at IN DIEM Abogados?

At IN DIEM Abogados, we are specialists in Immigration and Foreign Nationals Law. Our team offers a comprehensive service that includes:

• Personalised advice: we analyse your specific situation and explain the most appropriate procedure according to your needs, whether it is buying a home, incorporating a company, investing in Spain, or any other purpose.
• Full management of the procedure: we take care of the entire process, from preparing the documentation to obtaining appointments, submitting applications, and following up until a favourable decision is issued.
• Legal representation by power of attorney: if you live abroad, we can act on your behalf through a notarial power of attorney, avoiding unnecessary travel and speeding up the process.
• Translation and legalisation of documents: we coordinate the sworn translation of your foreign documents and arrange the Hague Apostille when necessary.
• Management of residence permits: we process all types of legal residency: .
• Support in real estate and business transactions: we provide comprehensive advice throughout the entire transaction, ensuring legal certainty and regulatory compliance.

Contact us. We are here to help you.

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We are at your disposal for anything you need. You can reach us via IN DIEM Lawyers Phone (+34) 916 353 892. For urgent cases, you can contact us on IN DIEM 24-Hour Emergency Lawyers Phone: (+34) 610 667 452.