If you own vacation rental property in Costa Rica you need to be aware that the Costa Rica Department of Revenue (Tributacion Directa) is expecting registration and payment of a sales tax on the rental income.
Costa Rica has a sales tax of 13% which is applicable to selected goods and services. Pursuant to Article 1 of the Sales Tax Law all hotels, motels, and short term housing is subject to the sales tax. Although this law has been in effect for many years many vacation rental property owners have ignored it. However on July 31, 2014 the Costa Rican Treasury Department testified before the National Congress in relation to new proposed regulations to enforce the collection of the sales tax for vacation property rentals that it’s current position is that the 13% does apply to vacation property rentals that are for periods of less than 1 month and that it will begin enforcing it. The government wants to incfrease collection of the sales tax on rental properties which have evaded payment of the tax for many years.
In order to identify potential taxpayers of this tax the Ministry of the Treasury will start reviewing web advertising, newspapers and specialized magazines as well as additional measures that may be necessary.
As such property owners that have short term vacation rental property should ensure that they register and comply with the payment of the sales tax to avoid back taxes and fines being imposed upon them.