On September 1 of the current year, Law number 10008 finally came into force in Costa Rica, called “Law to attract workers and providers of international distance services”. The regulation aims to promote the attractiveness of this group of people who carry out their work remotely. This, in order to increase both resources of foreign origin, as well as the development of long-term stays on our national territory.
This law is promulgated as part of the economic recovery and in order to attract investment for the country. By attracting employees of foreign entities or independent professionals who provide services to clients abroad.
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The logic of the regulations is to create an attractive environment, from a fiscal and administrative point of view, which, together with the natural beauty of our country, manages to attract individuals to settle for a period of time in Costa Rica. The above in order to generate jobs and consumption.
The law establishes the following aspects in general:
The General Directorate of Migration and Immigration is empowered as an administrative body responsible for carrying out the procedures related to the granting of the “immigration” residence sub-category.
For the application procedure for this category, a specific form must be submitted and the necessary information must be provided to comply with the relevant requirements. Within fifteen calendar days, the aforementioned Directorate must terminate the procedure.
In addition, certain advantages granted by this law are:
– Immigration allowance for a period of one year – extendable to a further period of one year.
– The beneficiaries will benefit from a total exemption from Income Tax.
– Exemption is granted to natural persons who provide their services from Costa Rica, although they meet the criteria for liability established in the income tax law. The exemption is limited to the treatment of income from salaries or services that the interested party receives from his clients or his employer abroad. The exemption would not be extended to other taxes that may apply in cases where the “nomad” decides to invest locally.
– They will be exempt from all import taxes on basic personal computer equipment, telecommunications; necessary for the performance of their duties – when they comply with the directives of the General Directorate of Customs.
The regulations are interesting and allow Costa Rica to compete as a destination for this new type of work with other destinations that have issued similar regulations. From a tax technical point of view, the wording of the standard has certain inconsistencies which, if any, must be resolved by interpretation.
The above, it being understood that initially the rule grants an exemption from income tax to income obtained from procedures carried out in Costa Rica and then indicates that in no case does income received from abroad will be considered as income of a Costa Rican Origin.
The inconsistency lies in the fact that in order to grant an exemption, it is first necessary to be in the presence of a hypothesis of subjugation. That is, an exemption is granted on income which is affected. For this reason, the last sentence of Article 16, which provides that it is in no way assumed that income from procedures carried out in Costa Rica is considered income from Costa Rican sources is contradictory.
However, taking into account the spirit of the legislator and the discussion which took place on the subject of the purposes pursued for the approval of the Law, it can be concluded that the country has chosen to sacrifice the local collection of the tax on salaries or tax on professional activities acquired by natural persons who, within the time limit set by law, perform their services from the local territory. The intention prevails to increase the consumption of goods and services which translates into jobs and higher collection in terms of other taxes, such as value added tax.
The new regulations make it possible to place the country as an interesting destination, however success will depend on the agility of the competent authorities to start up and above all that access is agile.