Companies as well as private persons only need to pay taxes on the part of their income that was generated in Costa Rica, earnings from abroad are therefore "for free". Concerning the taxation of capital, the tax rates here are far below the ones you need to pay in Europe or the US. Yes, Costa Rica is a tax paradise and is suitable for pensioners, drop outs, but also for entrepreneurs and investors. As a matter of fact, Costa Rica is looking for and canvassing investors mainly in the tourism and agriculture sectors.
Officially Costa Rica was never said to be an absolute tax paradise, but for a long time the tax burden could be kept relatively small. Nowadays the tax rates are still quite moderate, but more focus is put on tax collection, nevertheless it is still very common to adjust especially private income downwards. The legal accounting regulations have always given leeway to the taxpayers and this has been used extensively, so tax authorities experienced loss of income on a regular basis.
In 1995 the government finally drew conclusions after having had to face severe problems in their finances and so enacted new laws. Especially the accounting rules were tightened as well as imminent penalty in case of violations of the new tax laws. Besides high administrative fines, tax sinners could also be criminally prosecuted and it could even happened, that the government liquidates a company by force. But in practice only the quantity of handed in tax declarations have been risen. Nevertheless, in Costa Rica the taxes are still not taken too seriously yet.
All individual as well as legal persons have to pay taxes for the part of their income that was generated in Costa Rica. Income achieved abroad, no matter how and where it was realized, is not subject to taxation in Costa Rica. Because of this limited tax liability, there is no double taxation in the point view of Costa Rica. There is an existing double tax agreement for example between Costa Rica and Germany, but it hasn't been ratified by neither one of those two parties yet.
The taxable income is being calculated from a gross income minus the legally defined charges (such as allowances for children and spouses, insurance premiums, operating expenses and sundry business expenditures, and so on).
The gross income contains all earnings and profits generated in Costa Rica in a fiscal year. It therefore also includes income from capital assets, real estate business and all other operations that produce any kind of revenue. No-taxable are legacies, donations and lottery winnings! http://www.costa-rica-immo.com/en/costa-rica-...
See also: http://www.costaricaweb.com/business/cindetax... http://dgt.hacienda.go.cr/tiposdeimpuestos/Pa...