Exclusion of Costa Rica from the list of non cooperative jurisdictions of the European Union

On September 26, 2023, with the support of 38 legislators, the Legislative Assembly resealed Legislative Decree #10,381 (the Law), which seeks to reform the Income Tax Law, to ensure that the country is excluded from the list of non-cooperative jurisdictions of the European Union. 

In order to comply with the necessary requirements to leave the list of non-cooperative jurisdictions of the European Union, the reform includes a new tax treatment for income generated abroad with respect to: 

• Dividends 
• Interest 

• Royalties 
• Capital gains 
• Real estate capital income 
• Other income from movable capital from foreign sources, from assets located or rights used outside the national territory. 

In these cases, such income would only be taxed when obtained by an entity that does not have an adequate substance in Costa Rica (non-qualified entity) or what could be called a “paper company”, which is also part of a multinational group.  Read more