For decades Costa Rica has been known as a country that only taxes what is earned inside its borders. That is exactly where the government now wants to make a change. On 22 September 2026 the Ministry of Finance submitted a bill to the Asamblea Legislativa designed to capture income from abroad: interest, dividends, royalties, rent and capital gains. The bill carries the number Expediente 25,796, and its official Spanish title is Ley sobre el gravamen de rentas pasivas de fuente extranjera y eliminación de créditos fiscales por la emisión de valores de oferta pública temáticos. That is what the Ministerio de Hacienda's press release of 22 September 2026 says.
If you live in Costa Rica as an expat or retiree, or plan to move there, this is serious news, but it is not yet the law. The bill has been submitted, not passed. What it proposes according to the ministry, what applies today, which steps it still has to go through, and what it would mean for pensions on the one hand and investment income on the other can all be told apart using the primary sources.
What the Ministry of Finance has put forward
Hacienda submitted two bills on 22 September. The first, Expediente 25,797, reorganises tax incentives and removes exemptions from customs duties, VAT, excise tax and vehicle tax, unless they are expressly retained. The second, Expediente 25,796, is the one that matters for newcomers.
According to the press release, it would bring passive income from abroad received by Costa Rican residents into the tax system. Five types are named:
It is meant to cover individuals, legal entities, trusts (fideicomisos), investment funds and other structures resident in Costa Rica, even if they carry on no business activity. The general rate would be 15%. The ministry also mentions the option of crediting (acreditar) similar taxes paid or withheld abroad, to avoid double taxation.
The political framing comes from the Deputy Minister for Revenue, Víctor Julio Carvajal, in the same release. Both bills, he says, are part of the national strategy against smuggling and tax evasion, and they are aimed "above all at some sectors that still benefit from legal loopholes".
The second part of the title, removing tax credits for issuers of so-called thematic securities, concerns Costa Rica's capital market and is of little relevance to private investors living there.
What applies today: the territorial principle, with one exception
The basis is the income tax act, Ley 7092 in its current version. Article 1 taxes the profits of persons carrying on activities from a Costa Rican source. A Costa Rican source is what is earned exclusively within the national territory: services provided here, assets located here, capital invested here and rights used here. That is the territorial principle that made Costa Rica so attractive to people moving abroad. How Costa Rica differs from most of its neighbours here is shown in our overview of territorial tax countries in Latin America.
Since 2023 there has been one narrowly drawn exception. Law 10,381 of 14 September 2023, which according to its title was meant to get Costa Rica off the EU list of non-cooperative tax jurisdictions, added to Article 1; the changes are noted in the current version of Ley 7092. Since then, certain passive foreign income has been taxable by way of exception: dividends, interest, royalties, capital gains, income from real estate and other income from movable capital. But only if it is earned by a company that belongs to a multinational group and at the same time counts as a "non-qualifying entity".
The details are in Articles 2 bis, 2 ter, 2 quater and 2 quinquies:
This income is taxed under Chapter XI of the act, in other words like investment income. The rate is set in Article 31 ter at 15%. Under the same article, the non-qualifying entity may credit foreign tax, that is, set it against the Costa Rican tax, up to the amount of Costa Rican tax on the same income.
For you as a private individual, that means: under current law, the 2023 exception does not apply to individuals. It targets group companies without substance. According to the ministry, bill 25,796 would remove exactly this limitation by applying to all residents.
What would change
The core fits in one sentence: a special rule for group companies would become a general tax on passive foreign income for anyone resident in Costa Rica. According to the press release, the bill extends taxation to determinadas rentas pasivas extranjeras, certain passive foreign income; active income is not mentioned there. For interest, dividends, rent, royalties and capital gains from abroad, however, the territorial principle would be over.
The Asamblea Legislativa keeps the submitted text in its SIL information system, which the ministry also points to. Three points deserve particular attention:
A simple calculation shows how big the difference between a credit and a deduction is. Say you receive a dividend of USD 1,000 on which USD 150 of withholding tax was deducted abroad. With a credit, Costa Rican tax would come to USD 150, against which the USD 150 paid abroad would be credited: nothing would remain to pay. With a deduction, the USD 150 would be deducted from the tax base, and 15% would be due on the remaining USD 850, an extra USD 127.50. In total, USD 277.50 of tax would then fall on a USD 1,000 dividend. The figures are assumed; they only show the mechanics.
The road to becoming law
In Costa Rica, a submitted bill is still a long way from law. The Constitution sets out the stages:
How long this will take cannot be predicted, and the final text may differ from the one submitted. For planning purposes, then: until 25,796 is passed and published in the official gazette, Article 1 applies in its current form. In the SCIJ legal database it stands in its 2023 version.
Pensions and investment income: two different questions
For retirees this is the most important distinction, and it needs careful reading.
The press release does not mention pensions. The list of income covered includes interest, dividends, royalties, rent and capital gains. Retirement pensions are not on it. In the current act, pensions sit elsewhere anyway: Ley 7092 deals with them in a separate Title II, the tax on employment income, which under Article 32 also covers jubilaciones y pensiones de cualquier régimen. The investment income the bill is about, by contrast, sits in Chapter XI. Whether the final version of 25,796 touches pensions can only be answered from the text of the law. On everything the ministry has described publicly so far, they are not the subject of the bill.
Investment income, on the other hand, very much is. If you live in Costa Rica and hold a brokerage account abroad, earn interest on a term deposit or rent out a flat back home, you would have exactly the income the bill names. Gains from selling securities also fall under ganancias de capital as described. For many retirees this is the real point: the pension itself is often not the problem, but the capital sitting next to it is.
What Costa Rica looks like for retirees overall, with Pensionado status, costs and healthcare, is covered in our article on retiring in Costa Rica.
Double taxation: it depends on your home country
Whether you end up paying twice depends not only on Costa Rican law but also on whether your home country has a tax treaty with Costa Rica, what that treaty allows each side to tax, and how it deals with Costa Rica's territorial system.
Where there is no treaty, there are no treaty caps on withholding tax at source and no treaty obligation on Costa Rica to give a credit. Whether and how foreign tax would be taken into account would then depend solely on the rule in the Costa Rican law, which according to KPMG's analysis is a deduction from the tax base. Which treaty position applies to you depends on where you come from:
What you can do now
Don't rush. The bill is not law, and its text can still change in parliament. Selling investments or property now means acting on the basis of a press release.
Sort your income. Separate your pensions cleanly from interest, dividends, rent, royalties and capital gains. The ministry names only the second group. For each item of income, note in which country it arises and how much tax is withheld there.
Collect the paperwork. Whether it ends up as a credit or a deduction, in both cases you will need proof of the tax paid abroad. Your bank's tax certificates and tax assessments belong in an organised file, not a cardboard box.
Check your residence. Whether the new law catches you at all depends on whether you count as resident in Costa Rica. Which residence permits exist and what they require is covered in our article on residency in Costa Rica. The permit alone does not settle the tax question, though.
Follow the process. The status of Expediente 25,796 is kept in the Asamblea Legislativa's information system. It gets interesting once a committee examines the bill and amendments are tabled.
Take advice before you restructure. If you receive larger amounts of investment income from abroad, have the effect calculated by a tax adviser who knows both legal systems, once the text is settled.
Our broader look at Costa Rica, with pros, cons and the cost of living, is in the article on moving to Costa Rica, and the key facts are on the Costa Rica country page.
For active income, Costa Rica remains a territorial country for now, and for pensions the bill so far names no change. For investment income from abroad, however, the government has announced what it wants. Whether and in what form it becomes law will be decided by the full chamber of the Asamblea Legislativa.
Carpe Diem. Life is short and fleeting. One shot. Make it count.