Law 9996, which introduces changes and incentives for those applying for Pensionados, Rentistas, and Investors has now been signed by President Alvarado! Law 9996 and its subsequent ruling will determine how these Residency categories are requested and the perks of securing them.

What does Law 9996 suggest?

The law is heavily focused on the exoneration of taxes for the people who wish to come to Costa Rica and apply for the Residency categories mentioned above. Some of the benefits include, as per the current version of the bill:

a) Exemption for the importation of household goods for the main applicant and their immediate family. What this bill means by immediate family is yet to be determined.

b) Exemption for the importation of up to 2 vehicles. This can be cars, boats, planes, for personal or family use. In case of loss of the vehicle due to theft, destruction by fire, flood, collision or accident occurred during the term of validity of the benefits granted, the person will be able to bring another vehicle free of the aforementioned taxes.

c) The amounts declared as income to become a creditor to the benefits of this law will be exempt from income tax. However, the rent obtained in Costa Rica because of the investments made will be subject to income tax.

d) Exoneration of 20% of the total transfer tax on those real estate transactions that are completed within the period of validity of the law provided that the beneficiary is the registered owner of the property. If the owner decides to transfer the property within the period of validity of this law, the taxes will apply.

e) Tax exemption for the importation of instruments and materials required for the professional or scientific exercise of Investor, Pensionado, or Rentista. This is particularly curious since, per law, Investors, Pensionados, and Rentistas cannot legally work. It remains to be seen if this will be dropped from the ruling.

Regarding Tax Residency

Foreign nationals who acquire residencies as Investors, Pensionados, or Rentistas will not be considered tax residents.

An important note should be made that in case the person decides to cancel their residence or if Immigration cancels their residence for any of the reasons stipulated in the Law, the person would be required to pay all the taxes that were originally exempted.

Regarding the Investors

There is a proposal on this new law to lower the minimum investment from $200,000 to $150,000 to be able to qualify for this category.

In addition, the law opens the possibility to people who invest in venture capital funds or projects of sustainable tourism infrastructure.

Regarding the Processing

Immigration will have a special window for the three categories involved in this new law which will simplify the process.

Falsification of documents

Anyone who alters or falsifies any kind of documents seeking the benefits of this law will be sanctioned with a fine equivalent to 10% of the exonerated taxes. Additionally, this person will have to proceed to pay the full amount of the taxes that were initially exonerated.

Validity of the Law

Those Investors, Pensionados, or Rentistas that opt to enjoy the benefits set upon on this law will have to do so within the first 5 years of validity of the law. The benefits will be granted for 10 years.

What’s next?

The law specifically says that the Government now has 2 months to draft and publish the ruling that will come to determine how this new law is applied. That ruling will certainly answer many of the questions we all have right now. For example, will the law be retroactive (we believe it will), will the basic requirements to apply for Residency change (we believe they won’t), will there be sanctions if Immigration does not comply with the suggested processing times, etc. We need to wait and see.

For now, we welcome this new law with excitement and anxiously wait for the ruling to be ready so that the law can be put into practice.