Income tax return in Costa Rica: tips and guide.

The income tax return is one of the most important tax processes for individuals and companies that generate income in the country. It is essential to understand how to make this declaration in order to comply with tax obligations and avoid penalties. In this article, we will explore the key aspects of the income tax return in Costa Rica, including its definition, who is obliged to file it and how to prepare it correctly.

What is the Costa Rican Income Tax Return?

The income tax return is a process through which individuals and legal entities inform the Ministry of Finance about their income and expenses, and calculate the income tax they are required to pay.

This process is essential, as the Government can verify whether the proper tax obligations have been met.

Who is obliged to file a tax return?

In Costa Rica, taxpayers who must file income tax returns are divided into two main categories:

Individuals:
- Professionals.
- Self-employed workers.
- Employees who receive income above the tax-free threshold established by law.
Legal entities:
- Companies and corporations operating in the country and making a profit.

How is the tax return prepared?

Preparing a tax return varies depending on whether you are an individual or a company and the amount of income you have. The general steps are described below:

1

Determine your gross income: Includes all income earned during the tax year.
2

Identify deductible expenses: These may include operating costs, salaries and other expenses related to the income-generating activity.
3

Calculate net income: Subtract the deductible expenses from the gross income.
4

Use form D-101: This form is available in the ATV (Administración Tributaria Virtual) system.

Income tax deadlines and rates

Income tax returns must be filed by the deadline set by the Ministry of Finance, usually in the first few months of the following tax year. The applicable tax rates vary from year to year and depend on whether the taxpayer is an individual or a legal entity. It is important to check the updated tables to ensure the correct calculation.

Practical tips for filing your income tax return

Keep detailed records: Document all income and expenses related to your business.
Consult a professional: An accountant can help you optimise your return and ensure compliance.
Keep abreast of changes: Tax laws can change, so it is important to keep abreast of changes.

In order to keep your business and finances sound and legal, it is important to remember to pay these obligations. Buying a new property or investing in property can be part of your income tax declaration, at Nativu our advisors can help you find the property that suits your needs and budget.

Contact our advisors