Incentives for Foreign Nationals

In Immigration
August 23, 2020
Rafael Valverde
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39 comments

A few months ago, the CR Government announced in a press conference the intention to attract more expats to Costa Rica. People have asked frequently about the status of the proposal. On August 19th, three representatives from CR Congress put a bill on the floor under file number 22.156 with the name of “Law to

A few months ago, the CR Government announced in a press conference the intention to attract more expats to Costa Rica. People have asked frequently about the status of the proposal. On August 19th, three representatives from CR Congress put a bill on the floor under file number 22.156 with the name of “Law to Attract Investors, Rentistas and Retirees.

Objective of the Law

The main objective of the bill is to create incentives with the intention to attract more foreigners coming to Costa Rica under those three categories. Namely, investors, rentistas and retirees. The Introduction of the bill lays out the background to justify it. Some arguments include the necessity for Costa Rica to compete with other countries when it comes to being destination for expats as well as the current economic environment requiring foreign investment to the country.

Incentives

The bill proposes some incentives for foreign nationals with the intention to make Costa Rica more attractive as a destination.

Tax exemptions
1. 100% tax exemption for the importation of household goods.
2. 100% tax exemption for the importation of vehicles.
3. 20% tax exemption for the transfer of property.
  These exemptions will be applicable to all foreigners and dependents applying under one of those three categories.
Reduction of minimum capital required for investors.
Currently, the law requires a minimum capital investment of $200,000 USD to qualify for this category. The bill proposes to reduce the amount to $150,000 USD.

My opinion

While it is a good start to create some incentives for expats to relocate to Costa Rica, a lot more should be done.

From an immigration perspective, the government can create other incentives and/or adjustments to make it more attractive for foreign nationals to relocate to Costa Rica. Some of them are:

Simplify the residency process for people applying as self employed or with a small business. Currently, the requirements and the process to obtain this category makes it virtually impossible to obtain this category.
Grant estancias (a lesser immigration category) for people who do not want residency or do not meet the investment amount but have property in Costa Rica. There are thousands of people who have a second home in Costa Rica and spend a few months a year in Costa Rica (more than 90 days, and less than six months) just to avoid winter.
Digital nomads. Make more flexible regulations for digital nomads. They can also get an estancia for one year. If they want to stay longer, they can get residency.
Make driver’s licenses more accessible to foreign nationals.
Create a tax exemption to all start ups (regardless it is an expat or a tico) for income taxes during a period of three years from the moment of incorporation.

Of this options, only the fifth one will require a law, the other options can be passed via executive order. Just my thought.

I am sharing the bill for you to review. The translation may not be perfect.

39 comments

Rafael Valverde

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39 Comments

Sandy
August 23, 2020, 8:21 pm

One item the CR Government could consider is to create a category of immigration/residency for the foreign nationals that are and have been in the country during the pandemic and have had their Visa extended. For example, create a $1500 law firm submitted application that includes finger prints/birth certificate and expedited process and approval. $1500 is allocated to CR government and a portion to law firm. The price could help recoup lost revenue on past and future exit taxes. Just a thought and probably needs to be modified but it could generate revenue quickly.
- Rafael Valverde@Sandy
  August 30, 2020, 4:59 pm
  
  Sandy,
  
  That is a good idea.
Rob
August 24, 2020, 6:25 pm

How about us ‘tourists’ who stayed, weathered the pandemic and made a positive impact on the local economy?
Maybe some sort of reduced residency requirements as a tank you?
- Rafael Valverde@Rob
  August 30, 2020, 4:58 pm
  
  Rob,
  
  What would you recommend? What your proposal would look like?
  - Jayson@Rafael Valverde
    October 5, 2020, 9:38 am
    
    It could be likely that those that will be here +1 year should be able to make a humanitarian claim for temp residency if having established roots during that time. Is that possible under the existing Humanitarian category? International law could support this , such as right of return to “my country” which includes where you were allowed to legally live for an extended time (there is more to it than that, but something out there might support this). Would your law firm be willing to try a case such as this?
    - Rafael Valverde@Jayson
      October 5, 2020, 9:26 pm
      
      Jayson,
      
      I would not like to say that is not an option. Currently, it will be difficult, but is possible to make the case.
Walter Freeman
August 25, 2020, 7:49 am

Also under recent possibilities being considered is the taxation of all residents worldwide income. If that were to happen, you can expect these modest measures to be futile and out-migration to start rapidly. The typical response to that is to enact currency controls. Resulting in zero new investment capital and the currently issued securities becoming near-worthless – there is little internal demand for them now and the foreign market would evaporate overnight. The history of how this plays has been written too many times to expect a different outcome this time. Show me where that’s wrong.
Tary B
August 25, 2020, 2:57 pm

Great now this is the first real step to encourage retires to look at CR again. But I agree another crucial items is a speedy path to residency. An office or path with simplicity as to not have additional costs due to the complexity of the process and requiring an attorney to get things done.
John Senior
August 26, 2020, 9:06 pm

Thank you this information. How long do you think it will be for this bill to be passed into law? We are hoping to relocate to Costa Rica in the near future.
- Rafael Valverde@John Senior
  August 30, 2020, 4:55 pm
  
  John,
  
  We cannot anticipate how long it will take. It could be the case that it is not approved. We will have to wait and see.