How do I rent short term? This are the ABC’s of the law for short term rentals.

by Quatro Legal Real Estate Team | Jan 25, 2024 | Article, Real Estate

Many investors and expats want to buy property to enjoy Costa Rica but also turn it into a rental business and take advantage of Airbnb, VRBO and other similar platforms. With the entry into force of the “Law for the Regularization of Non-Traditional Lodging and its Intermediation through Digital Platforms and its Regulations”, the “Framework Law”, there are new rights and obligations for property owners, service providers, users and marketing or intermediary companies that want to be in the short-term rental business. Below the basic Q&A’s on this law.

What is considered Short-Term Rental or Non-Traditional Lodging? The law establishes this should be understood as renting houses, apartments, villas, chalets, bungalows, rooms, or any other similar construction for periods of no more than one year and no less than twenty-four hours.

The law estates that individuals or companies commercializing, or intermediating short-term rentals must register before the Registry of Providers and Non-Traditional Lodging Service Commercialization or Intermediary Companies, created by the Costa Rican Institute of Tourism (ICT), which is the government agency responsible for promoting sustainable tourism.

Are there benefits to complete this new registration? Yes, there are several benefits granted by ICT for those who complete the registry, such as: a) Authorization to freely exercise the short-term rental activity; b) Obtain a Certificate for Sustainable Tourism (CST); and c) Gain access to the promotion activities organized by ICT. We must say these benefits are on diapers, so let’s see how they unfold over time.

What are the legal requirements to complete this new registration? Applicants must fill out an electronic form (in Spanish only) available at www.ict.go.cr and include the following information: a) Name of the person or legal entity; b) Identity card number or corporate identification number; c) Name and identity card number of the corporation’s legal representative; d) Legal domicile of the service provider; e) Province, canton and district where the property is located; f) Exact address of the property; g) Number of rooms; h) Maximum number of guests; i) Electronic means to receive notifications; j) Web page or similar for the property and k) Phone number.

The information must be filled out accurately and correctly, for the process to be approved promptly as it will be subject to revision. Prior to the completion of the form, user registration is required. Keep in mind this is a legal administrative process subject to formal approval; hence, appeal recourses may need to be filed. Don’t let just anyone process it for you.

What are the minimum conditions short term rental services must comply with? To operate the following conditions must be met: a) Periodic cleaning of the facility; b) Provide sanitary services for personal hygiene, including at least a bathroom and toilet; c) Maintenance of the facilities; d) Minimum sanitary and hygienic conditions and e) Provide the necessary containers for the separation and management of solid waste

Are there any tax obligations derived from the enactment of this new regulation? It is necessary and mandatory to register as a tax contributor with the Tax Ministry, issue electronic invoices and retain monthly accounting services for payment of taxes and filing tax returns as a requirement to obtain the short-term rental license.

Are there any zoning restrictions to operate short term rentals? Non-traditional lodgings and short-term rentals will be able to operate in residential zones, eliminating the commercial license requirement. However, it is always better to consult with the local municipality the property or properties are located to find out if they special regulations that may be applicable.

Are there any legal repercussions to not comply with this newly created regulation? Pursuing this business activity without being duly registered before the Registry of Borrowers and Non-Traditional Lodging Service Commercialization or Intermediary Companies, is illegal. The Tax Ministry, Municipalities, and Health Ministry will intervene, and sanctions will be imposed for non-compliance even though the Framework Law does not add much to it.

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