Quick answer: Costa Rica taxes on a territorial basis — only Costa Rican-source income is taxed, at progressive rates from 0% to 25%. If you become a tax resident (generally by spending more than 183 days in-country in a fiscal year) and have local-source income, you file the annual income-tax return, Form D-101, which is due by roughly 16 March for the January–December fiscal year. Foreign pensions, foreign investment income and foreign salary are generally outside the net — but US citizens still file and pay to the US regardless.
Are you even a Costa Rican tax resident?
You are generally a tax resident if you spend more than 183 days — continuous or not — in Costa Rica within a fiscal year; short trips out do not reset the count. Note that immigration residency and tax residency are different: you can hold a DIMEX and not be a tax resident, or vice versa. Establish which applies to you before assuming you must file.
What territorial taxation means in practice
Not taxed by Costa Rica: foreign pensions, US Social Security, dividends and interest from foreign accounts, and salary earned abroad from a foreign employer. Taxed by Costa Rica: income from Costa Rican employment, profits from a Costa Rican business, and rental income from Costa Rican property. Many new residents living on foreign pensions and investments have no Costa Rican-source income and therefore limited local filing — but confirm your specific situation.
The D-101 and the deadline
The D-101 is the annual income-tax return for individuals and entities with Costa Rican-source income. The fiscal year is the calendar year (January–December), and the return is due by around 16 March of the following year; if the date falls on a weekend or holiday it shifts to the next business day. Progressive rates run 0–25%. [VERIFY: exact 2026 filing date and current bracket thresholds on the Hacienda/ATV schedule]
Rental income deserves a note
The most common way new residents generate local-source income is renting out property. Rental income is taxed at 15% on net, with a flat 15% expense allowance available — an effective 12.75% of gross. If you let a property, this is Costa Rican-source and within the D-101/rental regime. For the wider expat tax picture, see Costa Rica taxes for expats.
The US-citizen caveat
The United States taxes its citizens on worldwide income regardless of residence, and Costa Rica has no comprehensive income-tax treaty with the US, so relief generally runs through foreign tax credits rather than treaty provisions. An American resident here still files a US return every year. The territorial system removes a second national layer; it does not remove your US obligation.
Getting it right the first year
- ☐ Determine your tax-residency status (the 183-day test).
- ☐ Identify any Costa Rican-source income (local business, employment, rental).
- ☐ Register with the tax authority and obtain access to the online filing system if you must file.
- ☐ Engage a local accountant for the first D-101 — cheap insurance against errors.
- ☐ Keep your home-country filing separate and current.
A worked picture: the typical retiree vs the local earner
Two profiles cover most new residents. The foreign-income retiree — living on a US or Canadian pension, Social Security and a foreign brokerage — generally has no Costa Rican-source income at all, so under the territorial system there is little or nothing to report locally, and their main filing obligation remains at home. The local earner — someone who buys a rental property, starts a Costa Rican business, or takes local employment — now has Costa Rican-source income and steps into the D-101 regime.
The line between them is simply where the income is sourced, and it is worth being precise because people misjudge it. Renting out your Costa Rican home is local-source; drawing a US pension is not. Running a consultancy billed to foreign clients while physically working from Costa Rica is exactly the kind of grey area where the sourcing analysis does real work — do not assume the favourable reading, and take cross-border advice on it rather than guessing.
Registering and filing in practice
If you do have local-source income, you register with the tax authority and file through the online system. The fiscal year is the calendar year, and the D-101 is due around 16 March of the following year, shifting to the next business day if it lands on a weekend or holiday. Progressive rates run from 0% to 25%. Most residents with any local income engage a Costa Rican accountant for the first return — it is inexpensive relative to the cost of an error, and the accountant will also confirm whether you needed to file at all.
Keep your Costa Rican and home-country filings cleanly separate. For US citizens especially, the two run in parallel every year: the D-101 (if applicable) here, and the full US return there, with foreign tax credits rather than a treaty smoothing any overlap. Trying to collapse them, or assuming one covers the other, is how people create problems.
Get a local accountant for year one
If you have any Costa Rican-source income, the single best move in your first year is to engage a local accountant for the first D-101. It is inexpensive relative to the cost of a mistake, the accountant confirms whether you even needed to file, sets up your registration and online access correctly, and keeps your Costa Rican filing cleanly separate from your home-country return. For US citizens juggling parallel obligations, that separation is worth the modest fee on its own. Once the first year is set up correctly, subsequent years are far simpler.
Frequently asked
Do I have to file if all my income is foreign?
Filing attaches to Costa Rican-source income. Many residents on foreign pensions have little or no local filing, but confirm with a local accountant, especially if you hold local structures or rent property.
When is the D-101 due?
Around 16 March for the prior calendar year, shifting to the next business day if it falls on a weekend or holiday. Confirm the exact date for the year.
Does moving here reduce my US taxes?
Not the US obligation itself — US citizens are taxed worldwide. It removes a second Costa Rican layer on foreign income and lowers your cost base, but you still file at home.
How is rental income taxed?
15% on net with a 15% expense allowance — effectively 12.75% of gross. Rental income is Costa Rican-source and within the local regime.
Do most retirees actually file a D-101?
Many do not, because they have no Costa Rican-source income under the territorial system. Confirm with a local accountant, especially if you hold local structures or rent property.
What tax do I pay on a local business?
Costa Rican-source business income is taxed on the progressive 0–25% scale via the D-101. A local accountant should handle the first filing to get the setup right.
Do I need a Costa Rican accountant?
If you have local-source income, yes for the first return — it is cheap insurance, confirms whether you had to file at all, and sets up registration correctly for future years.
How do I keep my two countries’ taxes straight?
File them separately and keep records apart. For US citizens, foreign tax credits rather than a treaty manage any overlap — an accountant on each side prevents confusion.
Need a hand with this step?
This is exactly the kind of task our client-services team handles day to day for people relocating to Costa Rica. If you would like us to walk you through it — or take it off your plate entirely — request concierge support and we will pick it up from wherever you are.
This guide is general, practical information, not legal, immigration or tax advice. Costa Rican procedures, fees and thresholds change and are applied to individual circumstances; details here are current as of July 2026 and should be confirmed with the relevant authority or your advisor before you act.