Inactive Companies & Capital Gains Demystified
The landscape of Costa Rican tax law has shifted dramatically over the past few years, leaving many expats with lingering questions based on outdated information. The confusion surrounding inactive companies and property sales has been particularly widespread.
Let's clear the air. We'll take the most common (and now obsolete) questions and provide the definitive answers and procedures for 2025.
FAQ 1: The Inactive Company Tax Return - The Mystery is Solved!
The Old Question: "What happened to the special tax return for inactive companies? First, it was Form D-135, then a simplified D-101, and then it disappeared. When do we have to file?"
The 2025 Answer: The era of uncertainty is over. The temporary and confusing forms are a thing of the past. The official, permanent filing for all inactive companies is the Form D-195, "Declaración Informativa de Personas Jurídicas Inactivas."
- What It Is: This is an "informative" declaration, not a tax payment. On it, you declare a simple summary of your company's assets (cash, property, vehicles), liabilities, and capital stock.
- The Deadline: The D-195 must be filed annually through the Administración Tributaria Virtual (ATV) portal. The deadline is April 30th each year.
- The Bottom Line: The years of speculation are over. All inactive corporations have a mandatory, non-negotiable filing requirement with a firm deadline. Failure to file can result in significant penalties.
FAQ 2: The Education and Culture Tax (Stamp) - Are Inactive Companies Billed?
The Old Question: "Why am I not being charged the 'Timbre de Educación y Cultura' if my company is inactive? I heard all companies must pay it."
The 2025 Answer: This remains a confusing point for many, but the process has been clarified. While all mercantile companies are technically liable for this annual tax, the billing mechanism has historically been tied to active companies that file income tax returns. However, with increased data cross-referencing, this is changing.
- How it Works Now: Active companies are billed based on the net equity reported in their income tax return. For inactive companies that only file the D-195 (which does not have a specific "net equity" box), the situation is unique.
- How to Pay if You Aren't Billed: If you are not automatically billed via your bank's online payment system, you must proactively pay. The official method is to use the Form D-110 "Recibo Oficial de Pago" through the tax authority's EDDI-7 software tool and then pay it at an authorized bank.
- Deadline: The payment window for the Education and Culture Stamp is between February 1st and March 31st annually.
- The Bottom Line: Do not assume you are exempt just because you don't receive a bill. Proactively checking and paying this small tax (which ranges from ₡5,000 to ₡18,000 based on capital) prevents future penalties.
FAQ 3: Capital Gains Tax - Filing the D-162 & The Primary Residence Exemption
The Old Question: "How do I pay capital gains tax? And more importantly, how do I claim the primary residence exemption if there's no box to check on the D-162 form?"
The 2025 Answer: The process for filing and paying capital gains tax on a property sale is now well-established, and the procedure for the exemption is much clearer.
Filing the Capital Gains Return (Form D-162):
When you sell an asset for a profit, you must file this form through the ATV portal within the first 15 business days of the month following the transaction.
- For Assets Acquired BEFORE July 1, 2019: On your first sale of such an asset, you have a one-time choice:
- Pay a flat 2.25% on the total sale price.
- Pay 15% on the actual profit (Sale Price - Adjusted Cost Basis).
- For Assets Acquired AFTER July 1, 2019: Your only option is to pay 15% on the profit.
Claiming the Primary Residence Exemption:
The confusion on this point has been resolved. You are exempt from capital gains tax if you sell your primary "habitual" residence.
- The Official Procedure: You do not file the D-162 tax return if you qualify for the exemption. Instead, the exemption is formally established within the legal documentation of the sale.
- The Notary's Critical Role: Your closing attorney or notary public must include a specific clause in the public transfer deed (escritura). This clause will state that the property being transferred is the seller's primary and habitual residence, and therefore the transaction is exempt from the capital gains tax as per current law.
- The Bottom Line: There is no form to "apply" for the exemption. The proof is in the legal deed of sale. It is crucial to communicate this to your notary to ensure this clause is included, protecting you from future inquiries from Hacienda.
By understanding these updated procedures, you can confidently manage your assets in Costa Rica and stay on the right side of the tax authorities.
This article is an update to a topic first explored by Garland M. Baker B. in A.M. Costa Rica on June 7, 2021. The information provided is for informational purposes and does not constitute legal or financial advice. Consult a qualified Costa Rican professional for your specific situation. ©2004-2025 Costa Rica Expertise. Free use permitted with attribution (CC BY 4.0). 1210607 ZZ!
