The tax man throws the citizens a curve ball

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

The 2004 tax year was full of surprises.  One major surprise was that the tax filing deadline for Form D.101 Version 2 was Dec. 15 instead of the normal Dec. 31. Tributación Directa, the tax collecting agency, and its parent, the Ministerio de Hacienda, the treasury department, did little to announce the change. The earlier date was not on their Websites, which continue to work erratically.  

Historically, the tax deadline for filing and paying income taxes was Dec. 31. An obscure change in the law moved the date to two and one-half months after the close of a company’s fiscal year.  Most businesses use Oct. 1 to Sept. 30 as the fiscal year.  

The deadline now falls on Dec.15. If that date falls on a weekend, the following Monday is the filing date.  This fact has been published only in obscure places.  For the past two years, Tributación gave extensions to Dec. 31, leaving most filers to believe this is the traditional deadline. 

A.M. Costa Rica has reported the incorrect deadline from time to time based on incomplete information from Tributación Directa. 

The new tax lottery is another major surprise.  The last tax lottery was in 1994.  To participate, one needs to put five invoices in an envelope and deposit it in any Banco Credito Agricola branch.  

The prizes make the process worth the effort.  The top prize is 5 million colons. 

Be sure you don't toy with Tributación Directa

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Can one be thrown in jail for taxes in Costa Rica?  The answer is yes.  Articles 90 and 92 of the Code of Tax Norms and Procedures established jail terms for tax offenders. 

Are many people put in jail?  The answer is no.  The whole process is new to the country.  However, thanks to the International Monetary Fund and the U.S. Internal Revenue Service, Costa Rica is getting better at collecting its taxes and prosecuting those who do not pay. 

The tax department of Costa Rica, Tributación Directa, is still disorganized in many areas, especially with helpful assistance to the taxpayer.  Actually, it can be a nightmare trying to get answers to tax questions or even to find out what one owes.  This reporter waited four hours in one of those musical chair routines made famous at government offices to have someone check a company’s tax records.  

If you do not live in Costa Rica or have not had the pleasure to experience this ritual, it is where 50 or more people are sitting in chairs. As one is called, everyone moves over a chair until one reaches the first chair.  So, this reporter had to move 50 times in four hours as only one person was answering tax lookup queries. 

Should one take advantage of the disorder and not file the proper forms and pay taxes in Costa Rica?  The answer is a big NO.

Tax collector aggressive but not very helpful

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

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This article was very frustrating to write.  Nothing at the Websites of Tributación Directa or Hacienda worked. Tributación Directa is the name of Costa Rica’s tax authority, and Hacienda is the treasury department.  The search engines on both sites are worthless.  

Trying to find a simple schedule of this month's important tax deadlines was fruitless.  One is directed to the same page repeatedly saying the webmaster is sorry nothing works.  A great help when you want to pay your taxes.  

A personal visit to Tributación Directa was just as disappointing. When trying to request a brochure or even a simple sheet of paper with the tax due dates, a woman said: “Come back in December.” 

All this disorganization may be a result of the Tributación Directa’s move to a gorgeous new building in Barrio Don Bosco close to Jardines de Recuerdo, Costa Rica’s most widely known funeral parlor.  This is an appropriate place for a tax authority because death and taxes are the only two things that we can be certain of in this lifetime. 

A surefire way to protect your real estate here

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

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Behind every palm tree, there is someone lingering to steal a property one calls home.  Costa Rica is a win-lose society.  This means to win, someone else must lose.  Surely, this is the reason there is so much corruption in every level of the government.  Two ex-presidents jailed is a prime example of the current state of affairs. 

A common practice among savvy Ticos when investing in real estate is to self-mortgage a purchased property.  Usually, this is done by creating another company apart from the one holding the property and using it to hold a mortgage over the other.  

This practice provides a fail-safe measure over real estate because should some crook illicitly transfer a property to him or herself, the company holding the mortgage executes the document against the crook to regain possession and ownership. 

This custom is well known, commonly practiced but totally illegal, and this method does not guarantee full protection.  

Cremation: A logical choice for an expat here

By: Garland M. Baker B.
Exclusive to A.M. Costa Rica

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Tomorrow is All Souls' Day, a Roman Catholic time to commemorate the departed believed to be in Purgatory. The day purposely follows All Saints’ Day, today, to shift the focus from those in Heaven to those in Purgatory. 

Regardless of how difficult it may be to admit, death is a part of life everyone must face.  How one deals with death is as important as how one deals with life. 

In Guanacaste, Costa Rica, it is a custom of the local people in small towns to have a party for someone who has died. For when that person was considered to have lived a full and fulfilling life and had left no unfinished business behind. 

It is critical to leave a plan for loved ones.  Most people only think about death in terms of a will.  A will is only part of a good succession plan.  Another essential element of a good plan is leaving instructions on one’s preference as to burial or cremation. 

How to protect a real good real estate deal

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

In many places in Costa Rica, property values are moving so fast that a great deal reached Monday could be history Friday.  

Here is the ever-so-common scenario: A dream property is found for only $100K. A deal is struck between seller and buyer, and a firm handshake is exchanged between the parties to clinch it. 

In the days of chivalry, when a person’s word was as good as gold, that would be enough. This in not true today. If the seller finds a better offer before money changes hands and before the property is legally transferred at the National Registry, the great deal sometimes fizzles out. 

It happens every day in Costa Rica. One needs more than a handshake to protect an offer and acceptance. 

Constitutional court ducks key decision on rights-

By: Garland M. Baker B 

Exclusive to A.M. Costa Rica

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The Sala IV, the supreme court of Costa Rica, had a chance to decide who will be protected in real estate fraud cases. Much to the amazement of some in the Costa Rican legal community, the court decided not to decide.  

By deciding that two potentially landmark legal cases are "sin lugar," or without merit, magistrates have left the country hanging as to whom to protect, the crooks or the innocents.  

Beach land can be a legal swamp-

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

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Costa Rica has one of the best legal structures in Central America.  There are rules to protect the rights of the people in almost all areas.  However, these laws because of their comprehensiveness end up protecting the crooks, too. 

One subject of special interest to investors and purchasers of property is the Maritime-Terrestrial Zone.  In the last five years, land close to the ocean has increased in value astronomically, giving those in the fraud business more bait for their hooks. 

The law of the Maritime-Terrestrial Zone was published in 1977, and the zone is composed of the first 200 meters starting from the high tide line. The zone is divided into two areas: 

Tax, court and register workers improving-

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

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What do entropy and the Big Bang Theory have to do with the Registro Nacional, Costa Rica’s public registry center, Tributacion Directa, the country’s tax authority and other public institutions in Costa Rica?

Entropy is a measure of the disorder or randomness in a closed system, and The Big Bang Theory is the dominant scientific theory about the origin of the universe. According to the big bang, the universe came into existence from a cosmic explosion that hurled matter in all directions.

In the simplest of terms, some theorizers believe order comes from disorder, as with the universe.

This may also be true at the Registro Nacional, and in other government offices. Order may be finally coming from all the disorder caused by the introduction of computers into the country.

Officials have to answer your applications-

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

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Have you ever felt helpless in front of a government office in Costa Rica?  There are ways you can fight back. 

Costa Rica currently has approximately 200 public institutions. They are probably the No. 1 cause of frustration for those living in this country.  

The number of requirements to most procedures seems sometimes like a never-ending story, turning even simple requests into huge challenges. 

Easements can let you retain your lifestyle-

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Costa Rica is growing fast. Much of the growth is uncontrolled and can trample you if you’re not careful. Costa Rica has strong laws to protect intrinsic property rights, many of which are unknown and thus go unused here.

Powerful, little-known easement laws protect property owners, so they can control what is built around them. Much like the property rights law, certain easement rights can be acquired over time, like the easements of right-of-way, right-of-view and right-of-illumination. These and other important legal easement rights can also be transferred to another person acquiring a property, making real estate much more valuable in the right situations.

The right of easement is the real power a property owner has over someone else’s property to make a specific use of it. From the point of view of a real estate owner, an easement constitutes a lien that restricts its property rights.

Superfast Internet fails to meet its promise.

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

When it comes to Internet, ADSL is incredibly fast. It will give you a whole new world of content at your fingertips — quickly. Whether it’s the latest music, a CNN news video, or a streaming movie, ADSL will beam it to you at lightning speed.

The only thing that isn’t fast about it is its rollout in Costa Rica. It is discussed much like the new highway from San José to Orotina which has been "just about done" for over 20 years.

Believe it or not, the problem started some 80 years ago — way before the Internet.

Evictions, now permitted, change face of nation-

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

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Many lawyers have made a fortune over the last year desalojando, or evicting people from their happy homes and businesses because of a change in the rental laws which happened over eight years ago.

Much of the tearing down of buildings you see throughout Costa Rica, especially in the older communities, are also due to these events.

Development in high gear at the Pacific beaches.

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

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Everyone up and down the coast of Guanacaste is getting ready for the real estate boom, all except maybe the Costa Rican government. 

With few exceptions, most of the important thoroughfares are in terrible condition. As one traveler put it, "car-sized potholes" are everywhere. 

After one gets used to the "bumpy bump" of the roads and seeing car parts falling from their vehicle like in an old Charlie Chaplin movie, one notices all the new real estate offices, which are everywhere. This is especially true in Nosara and Sámara.  

The new Puente de Amistad bridge built by Taiwan and the Daniel Oduber Airport in Liberia are the major reasons for this land explosion.  

Now tourists can pop on a plane in the United States and land in Liberia, Costa Rica. In a matter of hours they are surfing on one of the great Guanacaste Pacific surfing spots.  One such surfer was overheard last week talking to a buddy on Wall Street via a local phone, saying he left New York in the morning and was surfing in Nosara before sunset. 

In addition to real estate offices, beautiful houses are growing out of the jungle like trees.  Land is being subdivided and condominiums are being built for those who gravitate to Costa Rica.  They range from the plain old naturalists to the yoga meditation set. 

Guanacaste is becoming like Aspen, Colorado, but for the summer set.  Those who love to grab a plane to go skiing in one of the world’s most popular spots, also are coming to Costa Rica for its natural beauty.  Many speculative investors can see the writing on the wall, and that is why there are so many of them in Guanacaste building houses for those yet to arrive.  

The Costa Rican government seems to have left Guanacaste without a development plan, except for the Papagayo Project in the far northwest. 

One of the major problems seems to be that there is no realistic property tax base.  Taxes are hated by all, but they are a necessary evil in development. Taxes are currently 2,500 colons (about $5.90) for every million in tax value.  There are properties worth $200,000 whose owners pay $50 a year or less because of the way such values are calculated.  

Slowly this is changing. The municipalities are trying to update their records, but many factors stand in the way: Lack of personnel, lack of computers, lack of correct information from the Registro Nacional, Costa Rica’s countrywide public records center. But most importantly, the municipalities lack money.  This results in a vicious circle because the money comes from the tax value, and this value is underreported deliberately by everyone who prepares a property sales contract in Costa Rica. 

All the progress in Guanacaste is really sweet sorrow.  This area of Costa Rica 30 years ago was really the paradise everyone talks about, untouched and undeveloped. The boom happening on the Pacific coast today will be great for the economy of the country, as well as very beneficial for the little communities in that area. But progress without a development plan could be a disaster waiting to happen.

Article first published in A.M. Costa Rica on June 7, 2004.

Consumer protection law is a valuable weapon-

1995 law finally having impact

By: Garland M. Baker B. 

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

The consumer protection law in Costa Rica, a model law for Latin America, works well if you know how to use it.

On July 1, 1996, the consumer protection law was published in La Gaceta, Costa Rica’s public records bulletin. Before that date, any consumer who had a problem with a private or public company that sold products or services had few rights. The administrative and judicial processes to complain were very complicated.

The consumer law prohibits acts that cause damage or threaten to cause damage to consumers by creating confusion or making false allegations. It prohibits the improper use, reproduction, or imitation of trademarks, commercial names, advertising, packaging or any other means of identification that are the property of others.

Most importantly, the new law included two new defense systems for consumers:

Landmark decision due in property fraud cases.

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

There may be good news for those who have lost their property or other assets to fraud in Costa Rica.  

Believe it or not, the courts are divided on who should be protected.  Here is a little informational background: 

Country's legal system has rules for complaints.

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

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Attorneys are not too well thought of anywhere in the world.  Costa Rica is no exception. 

One dictionary tongue-in-cheekly defines a lawyer as "One who defends your estate against an enemy, to appropriate it to himself."  

There are many cases in Costa Rica where attorneys do just that, manipulated paperwork, so their clients lose assets they have acquired after they use legal services.  Furthermore, conflict of interest is not policed here as strongly as in other parts of the world.  Lawyers in Costa Rica can be representing themselves in cases where they are the bad guys. 

The question is what can be done about it.  Here is how the system works: 

Possession is more important than ownership.

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Owning property in Costa Rica is much more than just having a deed. Possession is nine-tenths of the law in this country. 

Most people believe it is a simple procedure to buy a piece of land in Costa Rica. One just needs to have an attorney check to see if the catastro, or plat plan, exists in the Registro National, Costa Rica’s national registry of properties. Check to see if the property is free and clear of liabilities and other encumbrances, then sign a legal sales document to transfer the property from the seller to the purchaser. 

Unusual property tax system hurts newcomer.

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

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First there was arithmetic, and then came new math, and now Costa Rica has introduced tax math. 

Aristotle, the Greece philosopher, was the first ever to theorize this kind of geometric mathematics in his book The Physics. So, no one should be surprised Tributacion Directa, the Costa Rican tax authority, much like the IRS in the United States, and Hacienda, the Costa Rican treasury, has decided to use it in calculating tax values on property. 

Legal manipulations can protect property here.

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

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With so many people, ranging from the common property thief to the tax man, trying to take your property away from you, why not fight back and protect yourself with legal fences to keep the bad guys out.  

Here are a few ways: 

Registry law creates chance to steal property.

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

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Most people are unaware of the changes to the property registration laws at the Registro Nacional or National Registry, which were modified last year. However, these changes have opened the doors to shysters preying on the innocent.

Costa Rica’s registry laws are over 100 years old. This means they were written before computers existed. Because of this, no registration was ever deleted, even if it was full of mistakes.

Don't Lose Your Pura Vida: A 2025 Guide to Property Due Diligence in Costa Rica

By: Garland M. Baker  

Exclusive to CostaRicaExpertise.net

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Horror stories abound of property owners not doing their homework or, expressed in legal terms, their due diligence and losing their property to the unscrupulous third parties, including squatters and the tax authorities.  

The correct registration of a property is the most important element in land ownership and not the deed in Costa Rica. Just because someone appears to be the legal owner of a piece of real estate does not necessarily mean they are.

Big Guanacaste bridge has long-term implications

By: Garland M. Baker

Exclusive to AMCostaRica.com

Editor's Note: The foundation of this warning was first published in an article on AMCostaRica.com on October 14, 2003. Given the time-sensitive nature of property laws, this post has been significantly updated for 2025 with the most current information and guidance. Find the new article here: