Mickey Mouse Rumors: Is Costa Rica Going to Tax Your Foreign Income?

Every few years, two stories seem to make their way back into the Costa Rican press.

One is that Disney is going to build a theme park in Guanacaste.

The other is that Costa Rica is about to start taxing the foreign income of people who live here.

I call these “Mickey Mouse rumors.”

The Disney story is mostly harmless. The foreign-income-tax story is different because it can cause real concern among expats, retirees, investors and foreign residents who wonder whether Costa Rica is preparing to tax their pensions, investments or income earned abroad.

And this time there actually is something worth paying attention to.

There Is a Real Tax Proposal

On September 22, 2026, the Ministry of Finance announced a proposal that would change the tax treatment of certain foreign-source passive income.

The proposal is being considered as Bill No. 25.796.

That distinction is important:

It is a proposal. It is not currently the law.

Costa Rica has traditionally operated primarily under a territorial tax system. In general terms, Costa Rican income tax applies to income generated from Costa Rican sources rather than simply taxing residents on all of their worldwide income.

The proposed legislation would modify that treatment in certain circumstances.

This Is Not a General Tax on All Foreign Income

Some headlines and social-media discussions make the proposal sound as though Costa Rica intends to impose a worldwide income tax on everyone living here.

That is not an accurate description of the proposal.

The bill is aimed principally at certain foreign-source passive income, including categories such as dividends, interest, royalties and capital gains, when received under circumstances specified by the legislation.

The proposal contemplates a 15 percent tax on covered foreign-source passive income.

That is very different from saying that Costa Rica is suddenly going to tax every dollar an expat receives from outside the country.

For example, a foreign pension, salary for work performed abroad, business income generated outside Costa Rica, investment income and other types of foreign receipts do not necessarily receive identical treatment.

The exact tax consequences would depend upon the wording of any legislation ultimately enacted and the circumstances of the taxpayer.

Why Is Costa Rica Considering This?

The proposal is connected to Costa Rica's international tax commitments and efforts to comply with international standards concerning preferential tax regimes and foreign-source passive income.

Costa Rica has already modified portions of its tax system in recent years in response to international tax standards.

The current proposal represents another step in that process.

That makes this considerably more substantial than the occasional newspaper story about Disneyland coming to Guanacaste.

There is an actual bill to watch.

But a bill is still not a law.

What About Taxes Already Paid Abroad?

The proposal also addresses situations in which tax has already been paid in another country.

This is an important part of the discussion because one of the obvious concerns with taxing foreign-source income is the possibility of double taxation.

The proposed legislation contains mechanisms intended to recognize foreign taxes paid when calculating the Costa Rican tax obligation.

The precise operation of those provisions is one of the areas that deserves careful attention as the bill moves through the legislative process.

Should Expats Be Worried?

At this point, I would not reorganize your finances because of newspaper headlines.

But I would pay attention.

There is a significant difference between:

“Costa Rica is going to tax all of your foreign income.”

and:

“Costa Rica is considering legislation that could tax certain foreign-source passive income under specified circumstances.”

The second statement is much closer to what is actually happening.

Anyone with substantial foreign investments, dividends, interest, royalties or capital gains should follow the legislation carefully.

If the proposal becomes law, the final text — not the original proposal or the newspaper headlines — will determine who is affected and how.

And What About Disneyland?

I wouldn't start buying property next to the future entrance just yet.

Stories about Disney building a park in Costa Rica have circulated for years. Disney has denied similar Costa Rica rumors in the past, and there is currently no announced Disney theme-park project in Guanacaste.

That rumor makes a good headline.

The foreign-income-tax proposal deserves considerably more attention.

The Bottom Line

Costa Rica has not suddenly adopted a general worldwide income tax.

The country's territorial tax system remains the starting point under current law.

However, Bill No. 25.796 is a real legislative proposal that could change the treatment of certain foreign-source passive income.

That means this is something expats and investors should watch — without assuming that every alarming headline accurately describes what the bill would do.

Costa Rica Expertise will continue monitoring the proposal as it moves through the Legislative Assembly.