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President signs law that seeks to attract investors, rentiers and pensioners

This Monday, July 5, 2021, President Carlos Alvarado signed into law the bill to attract foreign investors, rentiers and pensioners, which establishes tax exemptions for the entry of foreign capital into the country.

This legislation creates the regulatory framework to encourage the attraction of investors, rentiers and pensioners, protected in law, to contribute and promote the necessary economic reactivation of the country in the post-pandemic period of Covid-19.

The initiative seeks, according to the proponents, to attract investors to “contribute to the Costa Rican economic reactivation in the post-COVID-19 pandemic period,” according to the text.

The plan establishes a series of exemptions in the payment of all import taxes for household goods and dependents.

See also: Costa Rica passes law to attract foreign pensioners and rentiers with $150K capital

“The investors, rentiers or beneficiary pensioners who opted 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 new legislation.

Also, it is exempt from import taxes of up to two land, air and sea vehicles, for personal or family use. Nor, upon entering the country, would they have to pay customs duties or the Value Added Tax (VAT).

Similarly, if the vehicle is lost due to theft, destruction by fire, flood, collision or accident during the period of validity of the incentives, they will receive the benefit of importing another vehicle totally free of taxes.

On the money that the rentiers, investors and pensioners declare, to access the benefits of that law, will not have to pay income tax, but the income on the investments they make in Costa Rica will be taxed.

The fourth exemption with which it is sought to attract the income of these foreigners is the reduction by 20% of the tax on the transfer of real estate that they obtain during the validity of the law.

Finally, they may import instruments or materials for their professional or scientific practice without paying the respective taxes. The person must demonstrate, before the Ministry of Finance, that what is imported corresponds to their economic activity and has criteria of proportionality and reasonableness.

The initiative considers that a person can obtain the category of investor for a capital of at least US$150,000, according to the exchange rate determined by the Central Bank of Costa Rica (BCCR), whether in real estate, registrable assets, shares, securities, and productive projects or of national interest. Previously, it was US$200,000.

On the other hand, the law considers “beneficiary investors those who invest in venture capital funds or in sustainable infrastructure projects”.

The term to request the benefits as an investor, rentier or pensioner is five years and, once these incentives are obtained, they can be kept for ten years.

“What this law achieves is to create the conditions so that these rentiers can come to the country, bring their investments and generate employment. It is one more step in the direction of recovery, which we all must continue to push in the country,” said the president during the morning signing ceremony at Casa Presidencial, with the presence of the Ministers of Finance and Tourism, Elian Villegas and Gustavo Segura.

Costa Rica president Carlos Alvarado (center) holds the bill signed into law this Monday morning, July 5, 2021, at Casa Presidencial. On his left is the Minister of Finance, Elian Villegas and to the right, Gustavo Segura, the Minister of Tourism.

For his part, the Minister of Tourism, Gustavo Segura pointed out: “This law will create a 25% decrease in investment so that a foreign person is granted the category of resident as an investor, including their dependents. In this way, it is intended to produce a necessary revitalization of the economy and a recovery of the levels of foreign investment of a decade ago (close to 7.8% of GDP and which today represent only 3.5%)”.

This legislation creates the regulatory framework to encourage the attraction of investors, rentiers and pensioners, thus protected in Law 8764, General Law of Migration and Foreigners, of August 19, 2009, to contribute and promote the necessary economic reactivation of the country in the post-pandemic period of Covid-19.

Written by Q COSTARICA

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