Costa Rica VAT Guide: Rates, Registration & Digital Services

Costa Rica imposes a Value Added Tax (VAT), known as IVA, on most goods and services. The standard VAT rate is 13%. Some items are exempt or zero-rated, such as education, residential electricity and water, and local transport. This guide covers key VAT rates and rules for businesses and foreign digital service providers.

Type of Goods or Services	VAT Rate
Standard goods and services	13%
Airline tickets and certain private medical services	4%
Some medicines and health services	2%
Basic agricultural goods and staple foods	1%
Farming machinery and equipment	0.5%
Education, residential electricity and water, local public transport	0%

Standard VAT Rate in Costa Rica

Costa Rica applies VAT at a standard rate of 13% on most taxable sales. This rate applies to general supplies of goods and services.

Reduced and Zero VAT Rates

Some goods and services use lower rates or 0%. For example:

Airline tickets and certain private medical services have a 4% VAT rate.
Some medicines and health services have a 2% VAT rate.
Basic agricultural goods and staple foods have a 1% VAT rate.
Farming machinery and equipment have a 0.5% VAT rate.
Education, residential utilities (electricity and water), and local public transport are zero-rated (0% VAT).

Digital Services VAT Rules (Foreign Providers)

Digital services sold to Costa Rican customers are subject to VAT. If a foreign (non-resident) company provides digital or electronic services to users in Costa Rica, a 13% VAT applies. Non-resident digital sellers must take action: they can either register for VAT in Costa Rica and charge VAT on sales, or arrange for local payment providers (like credit cards or banks) to withhold the 13% VAT on their behalf. Examples of taxable digital services include streaming media, online advertising, e-learning courses, and other electronically delivered content sold to Costa Rican users.

VAT Registration Rules (Thresholds)

No threshold: Any business that sells goods or provides services in Costa Rica must register for VAT. Even one-time or incidental sales trigger registration.
Simplified regime: Small businesses with low turnover may use the simplified tax regime (Régimen de Tributación Simplificada, RST) for VAT and income tax.
Foreign businesses: Non-resident companies must register if they have a local presence (permanent establishment) or if they supply digital services to Costa Rican customers. Foreign sellers of digital services have the same VAT obligations (register or have payments withheld) as local suppliers.

VAT Filing and Payment Requirements

Filing frequency: Businesses file VAT returns monthly. The return form is D-104-2.
Deadline: Returns and payments are due by the 15th of the following month (or the next business day if it falls on a holiday/weekend).
Online filing: Filing is mandatory online, using the Costa Rican tax portal. Payment is made in Costa Rican colones (CRC) on the same due date.
Penalties: Late filing incurs a fine (50% of a monthly minimum wage) and late payment is charged 1% interest per month (up to 20% total).

Businesses and digital service providers should note these rules to ensure compliance. Always file returns on time and pay the VAT due to avoid penalties.

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