Essential Updates for Property Owners and Businesses
For many years, it was common practice in Costa Rica to set up an "inmobiliaria" (a company holding real estate) to facilitate property transfers. This allowed for faster sales and often bypassed real estate transfer taxes. However, a significant number of these entities never properly registered with the Tributación Directa (the tax department). With an estimated 308,000 companies at the Registro Nacional (national registry) and far fewer registered for tax purposes, the government has been on a mission to rectify this to boost tax collection and align with international standards.
The Current Landscape: Inactive Companies and New Requirements
The days of operating an inactive company without tax obligations are largely over. While historically, many inmobiliarias didn't need to file tax returns because they weren't engaged in active business, that has changed.
Key Update: Informative Declaration for Inactive Entities (Form D-195)
As of 2025, all inactive legal entities in Costa Rica are required to file an Informative Declaration for Inactive Entities (Form D-195). The annual deadline for this crucial filing is April 30th. This form requires companies to detail any recorded and unrecorded assets, cash balances, and explain why they are not performing economic activities. Failing to file this can result in significant fines and restrictions.
The initial "special one-time fiscal tax" mentioned in the old blog (Form D-175) has evolved into a more systematic approach to track and regulate these entities. The focus is now on ensuring all legal entities, active or inactive, are properly accounted for and compliant.
Why the Increased Scrutiny?
The heightened focus on tax compliance in Costa Rica isn't arbitrary. The International Monetary Fund (IMF) has been pushing Costa Rica for over a decade to improve its tax collection mechanisms. Strengthening the tax system is vital for the country's economic stability and securing future loans and guarantees. While Costa Rica has made significant strides, bringing inmobiliarias onto the tax books is a critical step to complete this process.
While the immediate impact might not be substantial tax revenue for all inactive companies (only those with equity exceeding certain thresholds will pay a small tax), the long-term goal is clear: to broaden the tax base and implement additional taxes. For instance, once registered, these companies may become subject to taxes like the Timbre de Educación y Cultura (Stamp of Education and Culture), an annual fee for all registered companies. Furthermore, the Tributación Directa regularly proposes new tax laws, indicating a continued trend towards more comprehensive taxation.
Crucial Deadlines for 2025 Tax Compliance
Staying informed about Costa Rican tax deadlines is paramount for property owners and businesses. Here's a general overview, but always consult with a local tax attorney or accountant for personalized advice:
Note on D-175: The D-175, mentioned in the original blog, was a specific special tax. The current framework for inactive companies revolves around the annual D-195 filing and the corporate tax.
The Consequences of Non-Compliance
The fines for not filing required forms or paying taxes in Costa Rica can be substantial. For the D-195, expect a fine of around 76,500 colons (approximately $185 USD, though this amount can fluctuate with the exchange rate and updates to the base salary).
However, the most significant sanction for companies that fail to comply, particularly with the D-195 and corporate tax, is the inability to perform movements at the National Registry. This means you won't be able to:
- Transfer property when you want to sell it.
- Change the company holding the property, such as adding, amending, or deleting partners.
- Change powers of attorney or directors.
Essentially, your Costa Rican real estate investment can become frozen and unsellable until you resolve your tax obligations.
Wise Moves for Property Owners and Businesses
As Benjamin Franklin wisely observed, "In this world, nothing is certain but death and taxes." Given the evolving tax regulations in Costa Rica, the smartest move for any property owner or business owner is to ensure full tax compliance. This includes:
- Registering all legal entities with the Tributación Directa, even if they are inactive.
- Filing the annual D-195 for inactive companies by April 30th.
- Paying the annual corporate tax by January 31st.
- Keeping up-to-date with all other relevant tax deadlines based on your specific activities (e.g., rental income, VAT).
- Consulting with a qualified Costa Rican attorney or accountant to ensure your entity's status is correctly registered, and all obligations are met.
By proactively managing your Costa Rican tax obligations, you can avoid costly penalties, ensure the liquidity of your real estate assets, and navigate the country's evolving financial landscape with confidence.
This article is an update to a topic first explored by Garland M. Baker B. in A.M. Costa Rica on November 10, 2003. 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). 1031110 ZZ!
