Updated on July 25, 2021
New Immigration law to contribute to the country’s economic recovery
On July 13, 2021, the Costa Rican Legislative Assembly voted on the second (final) debate the approval of the bill of law to allow foreigners who provide remunerated services remotely for a legal entity abroad (“Digital Nomads”) to stay in Costa Rica for a year, with the option to extend their stay for one additional year, by creating a new immigration category as remote employee or provider of remote services. The approved bill of law has been transferred to the Executive for the President to sign it as a new Law and will then be published in the Official Gazette.
After the Law has been published in the Official Gazette, the regulation to this Law should be published in, approximately, sixty days, which should include pending details of this new visa and the procedure to apply for it.
To be eligible for the Digital Nomad Visa, the foreign individual must comply with the following special requirements:
The following incentives have been approved by this law, for Digital Nomads:
Regarding fiscal residency, Digital Nomads will not be automatically considered fiscal residents, per specific local laws applicable to the subject matter.
The Digital Nomad awarded these benefits will enjoy them during the term of the visa.
To obtain legal advice on Costa Rican Employment and Labor, Human Resources, and Immigration Law, please do not hesitate to contact us.
Posted on July 21, 2021
July 21-21 Courtesy Cordero and Cordero Legal
The Costa Rican Congress passed a bill creating the Law for the Attraction of workers and remote providers of international services, with special incentives for one year with one year extension.
The new law will enter into effect upon publication in official newspaper, La Gaceta. It is important to indicate this law requires the drafting and approval of an administrative regulation by the Executive Branch to develop the content of the law.
The objective of this law is to promote the attraction of workers and service providers that are carried out remotely, to promote long-stay visitation in Costa Rica and increase the expenditure of resources of foreign origin in the country. Therefore, a new migratory category of non-resident, subcategory of “estancia”, Worker or Remote Service Provider.
The requirements will include:
a) Proof that the person receives a stable monthly remuneration, fixed income or an average monthly income, during the last year, for an amount equal to or greater than US$3000 or its equivalent. If the applicant chooses to request the benefits also for his family group, the amount of income to be demonstrated may be validly integrated by his own along with that of his spouse or any of the other members and must in that case reach the sum of US$4000 per month. In any case, it must be income that can continue to be received even if the person is not in their country of origin. The paid work or services must be allowed by the list to be provided by the Immigration Authority.
b) Obtain a medical services insurance that covers the applicant for the entire duration of their stay in the country. Likewise, all members of the family group must be covered if they choose to request their inclusion as beneficiaries.
c) Make a one-time payment for the granting of a non-resident visa, as a Worker or Remote Service Provider. The amount will be determined through regulations issued by the Directorate, based on objective parameters and service at cost.
d) Any other requirement that derives from the General Law on Immigration and Immigration Law No 8764.
The new migratory category will be granted for one year, extendable for a single period of one additional year. To authorize said extension, the beneficiary must have stayed in the country for a minimum of 180 days during the year originally granted.
Additional incentives are:
- The beneficiaries will have total exemption from the income tax, defined by law. In no case will the beneficiaries be considered as habitual residents of the country for tax purposes, nor will the income they receive from abroad be considered from a Costa Rican source. This benefit will not be applicable to the beneficiary’s family group.
- The beneficiaries will be exempt from paying all taxes on the importation of basic personal computer, computer, telecommunications, or similar equipment, necessary to fulfill their tasks or the provision of their services as long as they meet the criteria stablished by law.
- The driver’s license granted in the beneficiary’s country of origin and that is valid, will be valid for the purposes of driving in Costa Rica.
- The beneficiaries of this law may open savings accounts in the banks of the national banking system, complying with the provisions of Law 8204 and the entire legal framework in force relative to the fight against money laundering. The General Superintendency of Financial Institutions will issue the necessary regulations or guidelines.
Note: The purpose of the present publication is to provide general information on the updates for Immigration regulations in Costa Rica and it is not intended to be legal advice as such. In case more specific information is required regarding these topics, please Cordero & Cordero Abogados at [email protected] or visit our web page at www.corderoabogados.com
Posted on July 15, 2021
Thank you to Outlier Legal Services
Law 9996, which introduces changes and incentives for those applying for Pensionados, Rentistas, and Investors has now been signed by President Alvarado! Law 9996 and its subsequent ruling will determine how these Residency categories are
Law 9996, which introduces changes and incentives for those applying for Pensionados, Rentistas, and Investors has now been signed by President Alvarado! Law 9996 and its subsequent ruling will determine how these Residency categories are requested and the perks of securing them.
What does Law 9996 suggest?
The law is heavily focused on the exoneration of taxes for the people who wish to come to Costa Rica and apply for the Residency categories mentioned above. Some of the benefits include, as per the current version of the bill:
a) Exemption for the importation of household goods for the main applicant and their immediate family. What this bill means by immediate family is yet to be determined.
b) Exemption for the importation of up to 2 vehicles. This can be cars, boats, planes, for personal or family use. In case of loss of the vehicle due to theft, destruction by fire, flood, collision or accident occurred during the term of validity of the benefits granted, the person will be able to bring another vehicle free of the aforementioned taxes.
c) The amounts declared as income to become a creditor to the benefits of this law will be exempt from income tax. However, the rent obtained in Costa Rica because of the investments made will be subject to income tax.
d) Exoneration of 20% of the total transfer tax on those real estate transactions that are completed within the period of validity of the law provided that the beneficiary is the registered owner of the property. If the owner decides to transfer the property within the period of validity of this law, the taxes will apply.
e) Tax exemption for the importation of instruments and materials required for the professional or scientific exercise of Investor, Pensionado, or Rentista. This is particularly curious since, per law, Investors, Pensionados, and Rentistas cannot legally work. It remains to be seen if this will be dropped from the ruling.
Regarding Tax Residency
Foreign nationals who acquire residencies as Investors, Pensionados, or Rentistas will not be considered tax residents.
An important note should be made that in case the person decides to cancel their residence or if Immigration cancels their residence for any of the reasons stipulated in the Law, the person would be required to pay all the taxes that were originally exempted.
Regarding the Investors
There is a proposal on this new law to lower the minimum investment from $200,000 to $150,000 to be able to qualify for this category.
In addition, the law opens the possibility to people who invest in venture capital funds or projects of sustainable tourism infrastructure.
Regarding the Processing
Immigration will have a special window for the three categories involved in this new law which will simplify the process.
Falsification of documents
Anyone who alters or falsifies any kind of documents seeking the benefits of this law will be sanctioned with a fine equivalent to 10% of the exonerated taxes. Additionally, this person will have to proceed to pay the full amount of the taxes that were initially exonerated.
Validity of the Law
Those Investors, Pensionados, or Rentistas that opt to enjoy the benefits set upon on this law will have to do so within the first 5 years of validity of the law. The benefits will be granted for 10 years.
The law specifically says that the Government now has 2 months to draft and publish the ruling that will come to determine how this new law is applied. That ruling will certainly answer many of the questions we all have right now. For example, will the law be retroactive (we believe it will), will the basic requirements to apply for Residency change (we believe they won’t), will there be sanctions if Immigration does not comply with the suggested processing times, etc. We need to wait and see.
For now, we welcome this new law with excitement and anxiously wait for the ruling to be ready so that the law can be put into practice.
Updated on July 10, 2021
Alejandro ZúñigaJuly 9, 2021
Costa Rica will stop requiring a health insurance policy for minors and for adults who have been fully vaccinated against Covid-19, the country announced Friday.
The measure takes effect starting August 1, 2021. As of that date, minors (under 18) and those who are fully vaccinated can enter Costa Rica as tourists without purchasing a travel health insurance policy.
In order to qualify, adults must:
- Have received an approved vaccine: Moderna, Pfizer, AstraZeneca, or Johnson & Johnson.
- The last dose of the schedule must have been administered at least 14 days before entering Costa Rica.
- Proof must be demonstrated with a document that includes the person’s full name, date of each dose, formula, and lot number.
- For U.S. visitors, the Covid-19 vaccination record card meets the requirement.
A Covid-19 vaccination record card. Photo via Temple Health.
Everyone entering Costa Rica will continue to be required to complete the Health Pass, an epidemiological form. This must be filled out during the 72 hours before arriving in Costa Rica.
Costa Rica will also continue mandating insurance for unvaccinated adults who seek to visit the country. The insurance must meet the following requirements, as detailed by the Tourism Board:
- Valid for the entire stay in Costa Rica (coverage dates).
- $50,000 USD for medical expenses, including those from COVID-19.
- $2,000 USD for lodging expenses in the event of COVID-19 quarantine.
Unvaccinated tourists can also opt for any of the following Costa Rican insurance companies, which sell products that are registered and authorized by the Office of the Superintendent General of Insurance of Costa Rica: INS, Sagicor and BlueCross BlueShield.
The minimum coverage for policies sold by Costa Rican insurance companies is $20,000.
Posted on July 5, 2021
A project that will lower the minimum required investment to obtain Costa Rica residency has been signed into law by President Carlos Alvarado.
Project 22.156 will reduce the minimum capital investment for Costa Rica residency from $200,000 to $150,000.
In addition, the law includes incentives such as the tax-free importation of vehicles for personal or family use and a one-time tax exemption for importing household goods.
People who qualify can import “up to two land, air or sea transportation vehicles, for personal or family use, free of all import, customs and value added taxes,” the text reads.
Money earned abroad (e.g. a U.S. pension) would not be taxed by Costa Rica.
“What this law achieves is to create the conditions so that these rentiers can come to the country, bring their investments and we can generate employment. It is one more step in the direction of recovery, which we all must continue to push in the country,” said President Alvarado.
Outlier Legal translated a draft of the bill to English. You can read that here; note that some details have changed since their publication. The final version of the bill (in Spanish) can be found here.
While the law will produce changes to the Costa Rica residency process, “we must also wait for the ruling that will come to dictate how the law is actually applied to be prepared and published,” Outlier notes.
Updated on July 5, 2021
Playa Hermosa, Costa Rica, is a little-known gem about 15 minutes north of Coco, and it’s great for what it is as much as for what it isn’t. When we first visited Costa Rica in 1999, Playa Hermosa was the first beach we visited and we fell in love with the place returning at least once per year if not more often till 2007 when we moved to Costa Rica. Over the years we have made many friends and enjoyed this beautiful piece of paradise.
Playa Hermosa is the biggest little beach town between Playas del Coco and Nicaragua. Playa Hermosa is not a town overrun by tourists. It’s almost a secret, except to those in the know.
The crescent-shaped beach at Playa Hermosa.
Playas del Coco is far more famous, with all its hotels, restaurants, bars and nightlife. And if you’re staying in Hermosa, Coco is a convenient place to gas up your car, go to a bank, visit a doctor, find stores that sell just about everything or enjoy a late-night party. Conveniently located on 10 minutes from Playa Hermosa one can enjoy the party life in Coco and be safely home in Hermosa is short order. Perfect combination!
But Hermosa is sort of an anti-Coco, with its small-town charm, relaxed pace and transcendent peace and quiet. (Quiet, that is, except for all the howler monkeys scaring the heck of you with their howls in the early morning and late evenings.) And the beach is beautiful, looking out on the headlands that enclose it, with the Papagayo Peninsula in the distance.
Playa Hermosa is a paradise everywhere you turn — so watch out you may visit fall in love and buy a place!
However, if you’re looking to shred some waves, don’t confuse this town with the Playa Hermosa surfing mecca south of Jacó. There are four beaches in Costa Rica called Hermosa, but this one has no surfing. Great for families of all ages. Never a worry about a riptide and under tow which are found at surf beaches.
Getting around Playa Hermosa
There are basically three roads in Hermosa, so be careful not to get lost. The main highway through the center of town connects to Coco in one direction and to Liberia in the other. The international airport in Liberia, in fact, is just 25 minutes away. There is no population center on any beach in Costa Rica that you can get to faster from an international flight.
The Hotel El Velero (left) is a nice place to have a beachfront drink, and the dense green forest is never far away. BBQ nights on Wednesday and Saturday should not be missed – best ribs in Costa Rica!
Along this main road you’ll find a few hotels, apartments, restaurants, a couple of smallish shopping centers, the excellent Luperón grocery store and even a movie theater. If you haven’t spent much time in beach towns in Costa Rica, you’d have no idea how unusual movie theaters are — and this one actually serves beer.
From the main drag, two perpendicular side roads lead to the beach, and whichever one you take, you can’t go wrong. There are two entrances to the beach – Primera Entrada (First Entrance) and Seconda Entrada (Second Entrance). Both are lined with hotels, vacation rentals, restaurants and shops — not too many, but not too few.
Playa Hermosa, Costa Rica: Where to eat and where to sleep
Ginger, is a well known restaurant serving excellent Asian-inspired tapas — in a treehouse. There’s also great food at the Villa del Sueño Hotel, and Aqua Sport is a terrific beachfront bar. Hotel El Velero is another nice spot to have lunch or a drink, right in front of the ocean, and La Casita del Marisco is another beachfront venue known for its seafood.
The most beautiful hotel in town is the seaside Bosque del Mar, with its signature lattice work, red paint and trees sticking through balcony floors. There are two larger, resort-style hotels on the north end of town, the Villas Sol and the Condovac La Costa.
Villas Sol is one of the larger, resort-style hotels in town.
You can rent a car (or even a golf cart) and explore the coastline to the north or south. To the south, you have the shopping and nightlife of Coco, the biggest town on the Guanacaste coast after Tamarindo. To the north, you have … resorts, resorts and more resorts. The Four Seasons Papagayo, the finest hotel in Central America, is not far away, but don’t drive north looking for a town, because there isn’t one.
Sunset in Playa Hermosa is always a delight for the senses.
If all this sounds too good to be true, it’s because it almost is. Playa Hermosa offers everything you need, or possibly a little bit less … but in this case, less is more.
Updated on June 9, 2021
An excellent article by a young couple who have lived in both countries:
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Updated: May 22, 2021
Costa Rica vs Mexico: An Honest Comparison
The biggest question all Expats around the world have is which country should we retire to; Costa Rica or Mexico?
We’ve lived in both countries for a long amount of time to judge for ourselves and have come to an honest conclusion. Both countries are fantastic options for living abroad depending on your particular needs.
Each country is filled with its own unique culture, weather, food, cost of living, and famous tourist attractions. Costa Rica and Mexico both have major downfalls that we will point out without mercy.
We’re not going to be nice so it’s time to show you the good, the bad, and the ugly. Let’s honestly compare and decide which country is better for living; Costa Rica vs Mexico.
Costa Rica vs Mexico: Cost of Living
You save a mass amount of money while living in Mexico. Other than electronics, everything is cheap in Mexico! Cheap homes, food, tours, clothes, gasoline, cars, and more. There are only 5 things cheaper in Costa Rica than in Mexico.
Even where we lived in Monterrey, the most expensive city in Mexico was extremely affordable due to the proximity of the United States. We paid less than $400 a month for rent, bought six bags worth of groceries for under $100, and used Uber as our mode of transportation for less than $3 or less to ride across the city.
In Costa Rica, everything is expensive. It’s the exact opposite of Mexico. Cars are double the price, gasoline is $5 per gallon, and living in Costa Rica is almost like living in the United States when it comes to prices.
Unless you want spiders and snakes in your home, you’ll have to pay between $700- $1,500 for rent, groceries are expensive so we shop at farmers markets and Pricesmart and still pay over $100 for just three bags of groceries, and Uber fares are $3 just to ride to the nearest bank.
Mexico is so much cheaper and we loved it! We never worried about money in Mexico, but in Costa Rica, we have to be extremely careful and only spend money on things we need.
Costa Rica vs Mexico: Safety
Costa Rica is much safer than Mexico, especially since Costa Rica doesn’t even have a military. There is a problem with petty theft, especially when tourists are occupied at the beach or at some hot springs. If you don’t park your vehicle properly and pay, it can be broken into, especially Jaco, a popular beach town in Costa Rica.
Other than those incidents, nothing happens in Costa Rica. In fact, we lived in San Jose, the main city in Costa Rica, and there were zero issues with theft or sketchy situations. We always feel safe and regularly walk at night. We often see joggers, dog walkers, and drivers enjoying a nighttime stroll.
Mexico is widely known for its bloody cartel battles. The cartel fights for control over who smuggles drugs into the United States and makes the most money. We lived in China, Nuevo Leon for over a year and it’s a border town which means it’s extremely dangerous.
We’d often lock our doors at night because the cartel blocked the roads with stolen busses, trucks, and cars to catch unsuspecting drivers, steal their money and vehicle, and sometimes kill them on sight.
Near our town, people who betrayed the cartel would either be eaten alive by dogs, cut up into pieces and thrown into an acid barrel, set on fire while being hung, or have their hearts cut out of their chest. Afterward, the cartel posts these videos online for locals in Mexico to view so they won’t make the same mistake.
We have seen these videos and they’re beyond gruesome. Women and children even get shot if they’re caught in the crossfire of a battle. It’s an extremely sad situation, so it’s never safe to walk or drive late unless you’re living at an Expat location or safe neighborhoods in Mexico.
Winner: Costa Rica
Although petty theft and robberies can still occur in Costa Rica, it’s not even close to the violence, shootings, and kidnappings that happen in Mexico.
Costa Rica vs Mexico: Air Quality
Costa Rica is filled with rainforests and jungles that contain exotic flowers, animals, waterfalls, and volcanoes. Even the main city San Jose has extremely clean air! Cars in Costa Rica go through a rigorous inspection to ensure it’s not polluting the air more than it should.
Tourists are only allowed to stay in Costa Rica for 3 months (90 days) to prevent overcrowding and pollution. There are also restrictions on driving at night to reduce the amount of air pollution. Costa Rica takes its air quality to the next level and we appreciate it.
Mexico’s air is extremely polluted with little concern about the environment. When living in Monterrey or traveling to Mexico City, we could hardly see the buildings and the mountains due to the heavy pollution.
Factories pay off the police to let them pollute the air without any expensive filtration systems or restrictions so they can produce more products and make more money. It’s a very corrupt system and Mexico cares more about making money than their own environment. Locals in Mexico don’t support pollution, but it’s not always up to them.
Tourists are allowed to stay in Mexico for 6 months (180 days) which means more people, more resources used, and more pollution. Although we enjoyed the long amount of time allowed in Mexico, it harms the environment in the long run.
Winner: Costa Rica
When it comes to air, Costa Rica is the clear winner in this battle due to its strict concern for the environment.
Costa Rica vs Mexico: Culture
Mexico’s culture includes colorful fiestas, worldwide known holidays, and fun festivals. People from across the world travel to Mexico just to enjoy Dia de Los Muertos in October and the parades we saw in Oaxaca were incredible!
Even in small towns, Mexico hangs up colorful flags and hosts live concerts with mariachi bands to celebrate basically anything! Special vendors will travel around Mexico to sell unique items specifically for the festival.
On Birthdays, holidays, Christmas, and New Years’, they’re always piñatas being cracked with carne asada cooking on the grill. Locals drink and dance on the weekends without a care in the world.
Costa Rica also has plenty of holidays, but they’re not as fun or popular. The biggest holiday in Costa Rica is Semana Santa (Easter week or Holy week) which doesn’t host any exciting festivals. In fact, stores and restaurants close down for the weekend and each Catholic church in the towns will organize an event to celebrate the resurrection of Jesus Christ.
Other than that, locals travel to the beach during Semana Santa to spend time with their family. There’s nothing wrong with this holiday, but from a tourist’s perspective, there’s not much to do other than go to church or to the beach.
Costa Rica does have two popular festivals; Fiesta de Palmares and Fiestas de Santa Cruz. These festivals consist of traditional bloodless bullfights, tons of beer, concerts, carnivals, and fireworks.
Mexico has incredibly colorful holidays packed with endless activities. There are hardly any large celebrations in Costa Rica and tourists visit Costa Rica for its nature, not its festivals.
Costa Rica vs Mexico: Nature and Beaches
Costa Rica may be smaller, but its volcanoes, hot springs, mountains, jungles, and exotic wild animals dominate Mexico.
In Costa Rica, the beaches are equally amazing, especially since it’s surrounded by lush jungles and wild monkeys. All beaches in Costa Rica are very clean, although to avoid any dangerous aquatic animals, it’s recommended to stick to the touristy beaches.
Mexico has jungles, deserts, mountains, beaches, plains, and volcanoes, but it still doesn’t compare to Costa Rica’s rainforest scene. No matter where we traveled within Mexico, it was always dry with yellow and brown grass surrounding pyramids or other tourist attractions.
Mexico’s beaches were stunning with crystal blue water and breathtaking sunsets. It’s only recommended to visit tourist beaches like Cancun since local beaches could be heavily polluted.
Winner: Costa Rica
Resorts in Mexico are massive and impressive with easy access to food and drinks, but when it comes to nature, Costa Rica wins due to its clean air and its tropical rainforest.
Costa Rica vs Mexico: Food
Mexico surpasses Costa Rica’s food when it comes to variety and flavor. Mexico has the best tacos, sweet bread, and other flavored food in the world! Street food can be found all over the country which makes it easy to grab a quick bite.
The food in Mexico isn’t always the healthiest option, but every restaurant has multiple salsas, cheap desserts, a large variety of powerful alcohol, and restaurants stay open late at night
Costa Rica has much healthier food options, and every restaurant serves a large variety of fruit drinks, but the food is extremely expensive. Unless you dine at a high-end restaurant, it won’t compare to Mexico’s food. Also, restaurants close earlier in Costa Rica so if you’re hungry late at night, you better start searching the trees for some fruit.
Also, street food does not exist in Costa Rica! Once in our life, we found street food at the plaza in Alajuela that sold grilled chicken on a stick. To find food on the go, you must find a local soda that serves Gallo Pinto, but there’s zero variety since it’s always just rice and beans.
Ticos don’t like spicy food so their salsas are weak! We ask for their spiciest salsa, and it always tastes sweet. If you enjoy spicy food, bring your own bottle of salsa from the store, or learn to make it at home because it’ll be difficult to find in Costa Rica.
Mexico has some of the best salsas in the world along with street food, desserts, and overall affordable prices at restaurants that won’t destroy your wallet.
Costa Rica vs Mexico: Weather
Costa Rica has the same weather year-round between 72 and 82 °F. There are only two seasons in Costa Rica; the dry season and the rainy season. National Geographic even named Atenas, Costa Rica as having the best weather in the world due to its near-perfect climate.
The days are warm and the nights are cool. Combined with a light breeze, fresh rain, and green trees surrounding every corner of the country, Costa Rica is a safe haven for those who dislike icy cold winters.
We lived in Mexico for over 3 years and it’s so hot! By the beaches, it’s extremely humid. States in Mexico like Guanajuato or Oaxaca had fantastic weather, but most of the state’s weather wasn’t the best.
Monterey, Mexico is on a whole new level. Their summers reach 120 °F and the winters can go below freezing! The weather was extremely bipolar in Monterrey, and with little trees and parks in many parts of Mexico, it takes more effort to go outside with extra pairs of clothes.
Winner: Costa Rica
The weather in Costa Rica is unbeatable! It’s similar to the weather of Hawaii but with more tropical nature. Overall, Mexico is dry and hot with extremely flat landscapes.
Costa Rica and Mexico are both extremely unique countries that provide quality resources for travelers and Expats. Although both countries serve their purposes, we moved from Mexico to raise our family in Costa Rica.
For our lifestyle, Costa Rica was the perfect country to raise our children surrounded by nature and a safe environment. Even so, it’s so expensive in Costa Rica that we often miss the amazing affordability in Mexico.
For some people, they’d rather live like kings with plenty of money in Mexico, and others are okay with sacrificing their money to live in a jungle paradise. We wish we had both, but you must decide what fits your lifestyle.
We didn’t sugarcoat a single detail so we hope you enjoyed this honest comparison of Costa Rica and Mexico. Good luck with your move and let us know which country stole your heart! ♥ Fun and Popular Bl
Posted on May 28, 2021
After repeated visa extensions throughout 2020 and 2021, June 2, 2021 (coming up soon) is the last extension date on visa expiries if you are here in Costa Rica on a tourist visa alone.
As a reminder, tourists who enter Costa Rica with a passport from the U.S, Canada, and EU, plus several other countries in the approved country groups, automatically received a 90-day visa stamp when entering or re-entering Costa Rica. (For clarity on which group your country falls under, check with your nearest Costa Rica Consulate or here:
In 2020 and for the first half of this year, 2021, considering COVID’s severe impacts on movement, Costa Rica extended the visa expiry dates several times, the last being up to June 2, 2021, on tourists. (September 1 for others with certain qualifying situations.)
This last visa extension date is definitely June 2, 2021, for foreigners who arrived in Costa Rica as tourists after December 17, 2019. There will be no more extensions.
Therefore, some of you will have to do a border run by June 1. Most of you in this category have waited until this coming week to maximize the 90-day visa stamp you will receive. (IE: It will get you valid out to late August.)
For an easy to read, comprehensive outline of entry, exit, or re-entry requirements, link to:
Please take your time and read this carefully. The extra 10 minutes you take can save you a world of grief.
For those of you under the following situations, your visas are extended to September 30, 2021:
1. Submitted your residency application and are awaiting approval. Always carry your Plantilla A.K.A. your Expediente, which is proof of your submission.
2. Have been approved for residency and are completing the final steps and, or awaiting your DIMEX card issuance.
3. Have an appointment for the submission of your residency applications. Always carry proof of that appointment with you.
Foreign Drivers License Validity
The validity of foreign drivers’ licenses expires on September 30, 2021 if you are awaiting approval on a submitted residency application as er Resolution 2021-000196: (Translation) GRANT A PERIOD OF GRACE to foreigners whose condition migratory can be classified as “regular”, due to the application process forchange of immigration category or extension, whose final resolution is pending resolution by the General Directorate of Migration and Foreigners; and that have also been seen affected by the implications that the Covid-19 disease has caused in servicesinstitutional public, so that they can travel through the roads with their licenses issued abroad are valid or expired as of March 20 of 2020; as long as they meet the condition established in article 33 below and concordant with Law No. 8764 “General Law on Migration and Aliens.” This period of Grace will run until September 30, 2021.
All other licenses for those here as tourists and even those with an appointment for submission of applications will see their visas expire June 21, 2021. So for those of you who wish to drive legally in Costa Rica, it is essential that you leave Costa Rica on a flight out or do a border run for a fresh 90-day visa stamp. As in the past, the validity of your foreign drivers’ license will remain tied to that visa stamp. I remind you that the 90-day visa stamp is not automatic as it was pre-COVID. The number of days issued on your visa stamp is determined by the number of days of COVID insurance your purchase.
Posted on May 20, 2021
- By Allan Garro – May 17, 2021
The current pandemic affecting the world generated an unexpected effect on the real estate market in Costa Rica. Despite travel restrictions and new requirements for tourists such as negative Covid-19 test or insurance with sufficient coverage in case of requiring extended stay due to illness; the truth is that the sale of properties has increased in recent months, especially in the areas near the coasts. In these areas it is said that it is currently a Seller’s Market considering the number of interested buyers.
The issues that become particularly important are: a. What are the costs involved in buying real estate property? b. What items should the buyer cover and what should the seller cover? c. What steps must be followed to achieve a secure transaction? d. Who chooses the lawyer-notary who will prepare the documents for the closing? e. How is the payment of the sale price made? f. What is required to carry out an adequate due diligence? This article is intended to provide a guide to help clarify those doubts and questions.
Real estate agent commission. The first thing to consider is the amount of the commission if there is a real estate agent involved. There is no specific amount set by law. However, in practice the amount that is generally used is 5% of the sales price, plus 13% VAT Tax. The commission payment is normally the responsibility of the Seller. In some cases, a higher rate is negotiated, which can reach up to 10%, when it comes to properties located in areas with little demand or that are difficult to access.
Transfer Taxes and Notary fees. There is a transfer tax equivalent to 1.5% of the sales price as well as registration stamps that add another 0.85% so both amounts add up to 2.35%. The Notary fees have a variable rate but in general terms it adds up to 1.25% of the sales price, plus 13% VAT Tax. That covers the transfer deed that is signed at closing. These amounts are usually paid by the Buyer, but nothing prevents the payment of transfer expenses and Notary fees from being negotiated differently.
In Costa Rica, the figure of the Notary Public is different from that of countries such as the United States of America and others governed by the common law system. In Costa Rica only a lawyer can be a notary public and for that reason both terms are often used as equivalents. If the buyer is paying in cash, then he or she decides which attorney to use. If buyer is obtaining financing from the Seller, then the Seller selects the lawyer, and if the buyer is obtaining a bank loan, then the Bank selects the professional.
Capital gains tax. Since July 1st, 2019 there is a capital gains tax on the sale of real estate property. Seller is responsible for the payment. The tax will be the one that results from applying the 15% rate, to the amount obtained when the initial acquisition value of the real estate is subtracted from the sales value. However, if the property was acquired before July 1st, 2019, for one time only the seller can apply a 2.25% tariff on the total sales price, which is more beneficial.
If the Seller’s personal home is being sold, that transfer is exempt from capital gains tax, even if it is registered in the name of a corporation in which the seller is the legal representative. Nor does this tax apply to donations or inheritances. If the person who is selling has the property registered in his or her name and does not have resident status, the Notary is obliged to withhold 2.5% of the sale price as partial withholding of that tax and pay it using the D-162 form available for this purpose.
Purchase agreement and due diligence. Both Seller and Buyer normally begin by signing a purchase agreement describing the conditions of the negotiation prior to closing, as well as the specific obligations of each party and the procedures in the event of non-compliance or any conflict arising. For this work, separate fees must be paid to the lawyers, which are negotiated according to the required work. There are also very experienced real estate agents who are able to provide such agreements at no additional cost.
It is also especially important to have a reasonable period of time to carry out a due diligence that allows a secure transaction. The cost of the due diligence is also negotiated separately according to the work required; the cost is usually assumed by the Buyer. The Buyer also assumes the extra costs that an inspection of existing buildings may generate, or carry out a survey of the property, the existing boundaries and if it conforms to the recorded plot map.
Some points that are usually part of due diligence are:
A. If Seller is a corporation, check that is up to date with annual tax on corporations, the final beneficiary report due to Central Bank and the local municipal property taxes.
B. If the house happens to be a luxury home subject to the Luxury Home Tax or Impuesto Solidario, confirm that is up to date with the payment.
C. Check the title with the National Registry and the recorded plot map.
D. If the property is located within a Condo project, obtain a letter from the management indicating the property is current with all HOA fees. It is also important to obtain copy of the recorded by-laws to see if there are any restrictions of importance that might affect the final decision of the Buyer.
E. In case of a lot or land without construction, obtain a letter of water availability. Depending on the area, service might be provided by AyA, the local Municipality or an ASADA association. Also, obtaining an USO DE SUELO certificate issued from the local Municipality to confirm what can be developed and any zoning restrictions that might apply.
F. It is important to have an architect or engineer performing an inspection of the constructions and disclose any potential risks or repairs needed.
G. A surveyor can be hired to verify that the existing boundaries match with the recorded plot map or plano de catastro. Also, to verify that the plot map is not overlapping another recorded property or invading special areas like indigenous reserves or the restricted zone f the maritime terrestrial zone. This last part might be skipped in case the title reflects the property is located on a scanned area, for which the wording FINCA UBICADA EN ZONA CATASTRADA will appear on the title.
This list is just a guide. Depending on the case, other things might be required to be reviewed.
Escrow agents and direct payments among the parties. Since many foreigners coming to the country to buy real estate property do not have any bank account in the country, the best tool available to send the purchase price is to use an escrow agent, duly authorized by a government entity named SUGEF. For this the parties proceed subscribing an escrow agreement with the selected agent. Next, Buyer needs to provide proper information about the origin of the funds according to a list provided by the escrow agent.
Once everything is cleared, Buyer can proceed wiring funds to the escrow agent account, including initial deposit, final purchase price, transfer taxes and legal fees. When closing takes place, the escrow agent proceeds disbursing the funds accordingly to the Seller, real estate agent, the notary and any other party involved. The cost of the service varies depending of the transaction amount, but in most cases the payments are in the range of US $1,000 – US $2,000. The cost normally is split among the parties.
The sales price money should never be sent to the bank account of the lawyer-notary selected, except if is authorized to handle funds from third parties by SUGEF. Also, if the parties agree to transfer the purchase price straight from Buyer’s account into Seller’s account, then the Buyer needs to subscribe an affidavit explaining the origin of the funds and supplying backup copies supporting that. In this case, the transfer taxes and fees can be wired straight to the bank account of the selected notary.
Paperwork required after closing. After closing takes place the notary proceeds with the registration of the title transfer in favor of the Buyer, something that normally should be completed in the following 10 – 15 days. Seller needs to keep a certified copy of the transfer dee in order to proof the origin of the transaction in front of Seller’s bank. Notwithstanding the foregoing, it is important to note that once the transfer documents are registered with the Land Registry, there are other tasks for the Buyer.
The first thing a Buyer, or their representative, should do is go to the local Municipality where the property is located and request a change of ownership in their records. This requires filling out a form updating the value of the property as well as providing other documents, such as a certificate of ownership, a copy of the plot map, and a copy of the new owner’s identification document (cedula or passport.) Thus, the tax payment receipts, and other services will show the name of the new owner.
The same procedure is required to update the owner’s name on the accounts of the utilities, such as water, electricity, cable, and the like, who provide services to the property. The new owner’s information must be filed with each separate institution providing the services by completing documents that are similar to those to be provided to the local municipality. Usually, private companies tend to ask for fewer requirements and are more flexible than public institutions to record the changes. This is the usual way things are in Costa Rica.
If the property is located within a condominium, it is important to deliver a set of the documents that prove the ownership change to the Condo Management offices. This is important not only to ensure that future bills/receipts will appear under the new owner’s name, but also so that the new owner will be informed of all meetings scheduled by the Homeowners Association, where each owner has the right to participate and have a vote in making decisions relevant to the condominium.
Well, here is a guide for buyers and sellers of real estate property in Costa Rica. There are other issues that are not included here, such as the purchase of properties located in the maritime zone, for which a Concession is required; and properties that do not yet have title, requiring a special judicial process called Possession Information. In those cases, being very careful in reviewing documents and due diligence is necessary
About the Author: Allan Garro was incorporated as a lawyer and public notary in 1996. He specializes in Litigation, Corporate, and Real Estate Law. He has also acted as an external legal consultant to Congress. He has been the author of more than 100 published English Language articles and can be reached at [email protected] or by visiting his website here.