Costa Rica is indeed a popular country within Central America, having been voted numerous times as one of the happiest countries on earth and the best places to travel. Its progress in environmental policies, such as the ban on single-use plastics by 2021, and having run its country on renewable resources starting as of January 2017, it is not the first time they have made headlines.
Back in 1948 they abolished their army and allocated the budget towards education. And it is this type of forward-thinking that has attracted international investors, particularly in real estate, where foreigners can receive the same rights as citizens with regards to land ownership. Having a stable government, one that invests in the future of the country time after time, it’s appeal only increases. Case in point, has been this last year where we saw major improvements in paving roadways across the country, even our small towns of Dominical, Uvita and Ojochal are now all paved. Big moves were made making headway in ease of travel for their most important industry with investments being made renovating the International Airport and building a new National Airport. And with more daily flight capacity, travel just got a whole lot easier, and affordable as more flights are being offered.
That being said, with the increase of flights from the US and Europe there has been a spike in the value of properties in Costa Rica. Nonetheless, the market is still very much a buyer market allowing for excellent opportunities for buyers who have the money readily available. Financing in Costa Rica is expensive and hard to get making it a cash money market. There are developing markets that have not yet peaked, mainly those in the Osa Peninsula, starting South of Quepos.
The market isn’t expected to peak for several years as infrastructure needs to be created and laws enforcing the proper management of resources are yet being discussed. Last year changes in policy enforcement around local water permitting came under scrutiny. Now, the law is being applied in a more strict manner and building permits are no longer issued without a legal water source.
The adverse effect is that the land sales have taken a bit of drop and home sales have surged. Other changes in taxation and corporate law have also affected the real estate market and how businesses are run. Now more than ever it is important to have a trustworthy team of professionals to help navigate the terrain.
Taxation Law Changes
Replace the current sales tax law with a value-added tax VAT (IVA) 13%. Main services affected are professionals. Amendments to the current income tax law, including a new capital gains tax a rate of 15%.
An important change that was required as of October 2018 was all invoicing is to be made through electronic billing.
All corporate entities require a “Firma digital” and only residents can hold one. Contact a lawyer as they can help with this process. The current fiscal year is established from October 1st to September 30th and the new period proposed will apply, starting next year from January 1st to December 31st.
