Benefits For New Costa Rican Residents: How To Obtain The Tax Benefits Created By The Government?

In July 2021, the Costa Rican Government issued Law 9996 to “Attract Investors, Pensioners and Rentistas”, creating benefits for a five-year period to all foreigners that applied and received a Costa Rica residency. The purpose of the law was to contribute to the country’s post-COVID-19 economic recovery. The law declared of public interest the creation of benefits for all foreign citizens obtaining the lawful immigration status of Investor, Pensioner or Rentista under the Costa Rican residency categories. It also established the General Directorate of Immigration as the overseer of the law’s enforcement.

Later, on February 2022, the Government finally issued the regulations to Law 9996 under decree 43926-MGP-H-TUR to enforce Law 9996 and set the ground rules to receive the benefits. Better late than never!

1. What are the benefits created by Law 9996 in favor of the Costa Rican Residents?

• The benefits created are the following: a) one-time exoneration of import fees on household goods, including new and used items in a reasonable amount and proportion to cover personal and family needs. The law expressly references furniture, appliances, decor, kitchen and bathroom accessories and linens; b) exoneration of import fees on up to two air, land and/or sea vehicles. In case of the destruction, loss or theft of a vehicle, the beneficiary will be entitled to import another vehicle; c) all sums of money declared to obtain the benefits will be exonerated from paying income tax; d) exoneration of twenty percent of transfer fees on all real estate acquired during the law’s effective period if the person is the recorded owner of the asset; e) exoneration of import fees on all materials and instruments directly related to the beneficiary’s profession or economic activity.
• The beneficiaries will not automatically be considered taxpayers.
• The law reduced the minimum investment amount for the Investors category to US$150,000.00 dollars legal tender of the United States of America, in any form of real estate, registered assets, stock, securities, economic projects or projects of national interest.

2. When are the benefits received?

• This is the most common question we get asked as there is a lot of confusion on the moment in which these benefits are accessible to the foreigners. Therefore, we will start here. To receive the benefits described above, it is necessary to apply for a Costa Rica Residency in any of the mentioned categories and have a resolution from the General Directorate of Immigration approving the new immigration status as an Investor, Pensioner or Rentista. This means you will get the benefits when you become a Costa Rican resident. The resolution should be valid and contain the approval of the residency application and mention expressly that the applicant has the ability to receive the benefits. This resolution will be notified to the General Tax Directorate.

In this blog, we will address the process to receive the following benefits:

“a) One-time exoneration of import fees on household goods, including new and used items in a reasonable amount and proportion to cover personal and family needs. The law expressly references furniture, appliances, decor, kitchen and bathroom accessories and linens; b) Exoneration of import fees on up to two air, land and/or sea vehicles. In case of the destruction, loss or theft of a vehicle, the beneficiary will be entitled to import another vehicle.”

3. How does the process to get the benefits work?

• The only beneficiaries that can apply for the benefits are foreigners who have received a Costa Rican residency approval as an Investor, Pensioner or Rentista. Therefore, the applicant must have the approval resolution within its validity period and confirm it contains an express reference of the benefits.
• The application can be done personally but also an appointee can be named for the process of receiving the benefits. In this last case, a power of attorney in compliance with Costa Rican Law will be required from the new Costa Rican resident to the appointee.

4. What are the general requirements for the application of the benefits?

• Copy of the residency approval resolution within its validity period that expressly references the benefits and confirms to have been received by the resident.
• The applicant shall comply with all tax obligations before the General Tax Directorate.
• The applicant shall comply with all social security obligations pertaining universal insurance before Caja Costarricense de Seguro Social.
• The immigration status of Investor, Pensioner or Rentista shall have been expressly declared in the residency approval resolution.
• The applicant shall present a list of all the items that shall be subject to the tax exoneration. There should be full compliance with the proportionality principle, meaning, the quantity and quality of the items to be imported tax free shall be in accordance with the economic, professional, and family status.

5. What assets and goods can be imported using the tax exemption benefit?

• Personal housing goods: new or used items can be imported as personal housing goods as long as their nature and quantity is reasonable, proportional, and sufficient to serve the beneficiaries and family nucleus needs. Furniture, fixtures, decor, art, appliances, kitchen and bath utensils, bedding, etc. are acceptable. It is important to clarify the importation of personal goods can be done only one time and all items shall be imported at the same time.
• Vehicles: up to two new or used vehicles can imported. The vehicles can be terrestrial, maritime, or aerial, for personal or family use. The importation shall be free of all importation taxes and customs duties as well as added value taxes.

6. How long are the benefits for?

• The benefits can be requested only during the first five years counted from the day of enactment of the law.
• In case the importation process is initiated all assets and goods must be withdrawn from Customs within 6-months.
• All beneficiaries shall maintain possession and ownership of all assets and goods for a term of 10-years.
• In case of transfer of an imported vehicle after the 10-year term have expired a request shall be filed via EXONET to request the transfer to be tax free. We will explain what EXONET means on the lines below.

7. How long does the exoneration process take?

• The Customs Directorate has 2-months to resolve the exoneration process considering all documents, information and assessments are filed in full compliance. If all documents are not filed in time, the process may take additional time to be processed and approved.

8. What happens if a good or goods are lost or stolen?

• In case the imported assets or goods are destroyed, lost, or stolen, it is possible to do a reposition process before the Customs Directorate complying with the requirements indicated above and import new ones in their place.
• In case of stolen assets or goods, a formal claim (denuncia) shall be provided describing the facts and listing the stolen assets or goods.
• In case of destruction, a sworn statement shall be provided describing the facts surrounding the destruction of the assets or goods.
• In case of vehicles, if the loss, theft, or destruction is caused within 5-years of their importation, a another vehicle may be imported in its place.

9. What happens if the Costa Rican Residency that generated the benefits is canceled or renounced?

• If a Costa Rica resident beneficiary of the taxes renounces the residency or it is canceled by the General Directorate of Immigration, the beneficiary shall be obligated to pay all tax exemptions received as well as any interests and penalties applicable.

10. How is the application for the tax exoneration benefits presented to the Customs Directorate?

• According to resolution RES-DGH-007-2018 passed by the General Tax Directorate on January 19th, 2018, all exoneration beneficiaries must abide by the Manual and Guide of the Beneficiary for the Exonet System and be filed before the Exemptions Management Department.
• Exonet System is an information electronic system for filing tax exemptions and related matters.
• All beneficiaries must go to https://exenciones.hacienda.go.cr/exenciones/exsolbnf.aspx?INS,0 and file the beneficiary application registration. The form shall request the beneficiary information for physical or judicial entities.
• When the information is approved, the system shall display a page with the beneficiary data and the application number for the applicant’s review.
• The Exonet System shall validate all the information, it shall send an automatic email with a registration link to generate a password and access to initiate the exemption process.

If you want to know more about these benefits and how to take advantage of them or apply for your Costa Rican residency, don’t be shy and reach out to us. We will be glad to assist you! GONZALO ROJAS – grb@quatro.legal