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New Digital nomads law approved in second debate

Written by Marisol

A New Pensionado law is also ready to be approved whereby residents have the right to import their household goods with exonerations

QCOSTARICA – Legislators approved in a second debate the bill to give special benefits to foreign workers who come to Costa Rica to provide international services.

The benefit for digital nomads includes a particular migratory subcategory for up to two years, as well as tax exemptions. Photo: Courtesy ICT

This is the initiative known as “Digital Nomads”, to benefit foreigners who come to the country to do work remotely, for clients outside of our country.

The initiative, presented by Carlos Ricardo Benavides, of the Partido Liberacion Nacional (PLN), basically establishes a special immigration status for these people, as well as exemption from paying income tax.

Foreigners who want to enter under that category will have to manage it, according to the approved initiative, through the Dirección General de Migración Extranjería, (DGME) – Costa Rica’s immigration service, in order to be able to opt for said benefits.

The objective of the approved law is, as the text reads, “to promote long-stay visitation in Costa Rica and increase the expenditure of resources of foreign origin in the country.”

Basically, the intention is that these foreigners consume in the country and that, with the approved law, there will be an increase in this type of professionals on Costa Rican soil.

For this benefit, only foreigners who provide services to clients outside of national soil could opt, but not Costa Ricans who travel through different regions of the country, providing services for international clients.

The definition of remote service provider explains that these are foreign professionals, who carry out their work using a computer, telecommunications, or similar means, in favor of natural or legal persons domiciled abroad.

These people will have non-resident immigration status. The approved law obliges Migración to establish a digital platform to request the category of a digital nomad.

Among the requirements to choose this category, the digital nomad must provide proof that they have a stable monthly remuneration, fixed income, or an average monthly income equal to or greater than US$3,000.

The benefit can be for two people who make up the family group, but with an average monthly income equal to or greater than US$4,000.

In addition, the nomad will have to acquire a medical services policy that covers them throughout their stay in Costa Rica.

The DGME will charge the remote worker the payment of a non-resident visa, with an amount that will be determined by regulation.

According to article 14 of the initiative, people who request the category of digital nomad “may not engage in paid work or services in the national territory other than what is allowed by their immigration subcategory.”  That means you won’t see a digital nomad bagging groceries at your local supermarket.

The term of the immigration benefit will be up to two years: one year extendable for an equal period. To request the extension, the beneficiary must have been on national soil for at least 180 days of the year that it was originally given.

In addition to the exemption in the payment of income tax, digital nomads will also be exempt from the payment of import taxes on basic personal computers, IT, telecommunications, or similar equipment.

The Benavides initiative also allows foreigners to use their driver’s license issued in the country of origin, if it is valid, and to open a bank account in a Costa Rican bank.

According to the legislator, the proposal “will allow receiving thousands of digital nomads who will come for periods of up to one year to telecommute, making use of accommodation, food, internal transport, commercial and professional services.”

He argued that this will contribute to the reactivation of the Costa Rican economy.

After the approval of the initiative, the Costa Rican Tourism Institute (ICT) thanked the legislators for the initiative, arguing that it “strengthens the tourism competitiveness” of the country.

For the bill to become law it requires the signature of President Carlos Alvarado (no objections expected) and published in La Gaceta, the official government newsletter within days of the President’s signing.

As typical with new bills, the government has a reasonable period to publish regulations.

New Pensionado law

Costa Rica is in the process of passing a law (Project 22.156) to attract foreign pensioners and rentiers with $150K capital. The government maintains that the bill  will help to reactivate the economy through the investment of foreigners, who will be granted residency for ten years. Current expats contribute millions of dollars to Costa Rica’s economy in the form of real estate investments, using local products and services and creating jobs for Costa Ricans, so it comes as no surprise that the government is keen on attracting more foreign residents. 

“The new bill will drop from a minimum of US$200,000  to US$150,000, in real estate, registrable assents, shares, securities, and productive projects or projects of national interest, that the foreigner must demonstrate to immigration to opt for a temporary residency as an investor.”

“Costa Rica has the necessary conditions to attract people with healthy capital to invest or retire in the country, generating greater opportunities for employment and consumption. It is a one-off action to generate more dynamism in the economy that also translates into job opportunities for Costa Ricans,” stated an official from the government.

The text approved on Tuesday (June 8) went through some revisions compared to the original one that was ruled by the Tax Affairs Commission on November 17, 2020.

For example, the new text specifies that, in addition, “beneficiary investors” may be considered “those who invest in venture capital funds or in sustainable tourism infrastructure projects”.

Also, the permanence in the country of those who enter as investors, pensioners or rentiers is extended to 10 years.

Costa Rica’s immigration law already allows the entry and temporary stay for a period of between three months and two years, which is extendable.

Initially, the proposed bill extended that term to five years, but the approved text extended the benefit to 10 years.

“Investors, rentiers or beneficiary pensioners who opt for said benefits during the first five years of the law, will keep them for a period of 10 years from the date they were granted,” reads the text.

Another variant was that, initially, investors, pensioners or rentiers could import a vehicle for personal or family use, free of import and tariff taxes, sales and economic stabilization, which could be sold or transferred to third parties, also exonerated.

The benefit was extended to 2 vehicles, for personal or family use, with the clarification that these can be for land, air (plane), or sea transport. (boat).

Said automobiles are free from “all import, tariff and value added taxes,” the bill states.

Another novelty of the text is that it includes an article specifying that foreigners classified as investors, retired residents or rentier residents who invest in Costa Rica will not be automatically considered tax residents.

Tax residence is typically linked with worldwide taxation, allowing countries to collect from their tax residents income obtained anywhere in the world.

Other benefits

The bill also regulates the following benefits:

  • Exoneration, for a single time, of import customs taxes on household goods. This would include home furnishings, appliances, decorative items, kitchen and bathroom utensils, and bedding. 

If the person transfers these assets to another, they must pay the exonerated tax and, in the event that they lose them, they may also replace them, exempt from tax.

  • The amounts declared as income under this rule, for example, the monthly pension received from abroad, is free of income tax. Only the profits obtained in national territory, a product of their investments, would pay tax. However, in the event that his residence is canceled, the foreigner must pay all the taxes that the law exempted him. 

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