Costa Rican deputies approved, in the first debate, a bill that reduces the minimum amount that a foreign annuitant or pensioner must invest to obtain a ten-year residence in Costa Rica.
The sum will drop from $ 200,000 (¢ 122 million) to $ 150,000 (¢ 92 million).
The bill received the endorsement of legislators on Tuesday, June 8th, with 35 votes in favor and 10 against. In favor, the project obtained 14 votes from the National Liberation Party (PLN), five from the Christian Social Unity Party (PUSC), three from the Citizen Action Party (PAC), five from the National Restoration Party (PRN), four from the New Republic manufacturing bloc , one from the Republican Social Christian Party (PRSC) and three from the independent deputies. Six legislators from the PAC spoke against it, two from the National Integration Party (PIN), one from the PUSC and one from the Broad Front.
The legal initiative says that, to opt for a temporary residence as an investor, the foreigner must demonstrate to Migration a minimum investment of $ 150,000 in real estate, registrable assets, shares, securities and productive projects or projects of national interest.
The proposal, processed under file number 22,156, is from the liberationist Silvia Hernández, the Social Christian María Inés Solís and the restorationist Mileidy Alvarado. The proponents consider that it is an economic reactivation initiative, since the arrival of these people in the country would increase the consumption of the places where they settle, as well as the provision of private medical services, and would generate jobs.
The text approved on June 8th went through some adjustments compared to the one that was ruled by the Tax Affairs Commission on November 17, 2020. For example, the new text specifies that, in addition, “beneficiary investors” may be considered “those who invest in venture capital funds or in sustainable tourism infrastructure projects”. Also, the permanence in the country of those who enter as investors, pensioners or rentiers is extended to 10 years.
The Migration and Immigration Law already allows the entry and temporary stay of these people for a period of between three months and two years, which is extendable. Initially, file 22,156 proposed extending that term to five years, but the approved text extended the benefit to 10 years.
“The investors, rentiers or beneficiary pensioners who opted for said benefits during the first five years of the law, will keep them for a period of 10 years from the date they were granted,” dictates the plan.
Another variant was that, initially, investors, pensioners or rentiers could import a vehicle for personal or family use, free of import and tariff taxes, sales and economic stabilization, which could be sold or transferred to third parties. people, also exonerated.
The benefit was extended to two vehicles, for personal or family use, with the clarification that these can be for land, air or sea transport. Said automobiles are free from “all import, tariff and value-added taxes,” the bill states.
Another novelty of the text is that it includes an article specifying that foreign persons classified as investors, retired residents or rentier residents who invest in Costa Rica will not be automatically considered tax residents.
Tax residence allows countries to collect from their tax residents income obtained anywhere in the world, or, income obtained in the country by non-residents, but never authorizes them to tax non-residents on income obtained outside the country .
Two of the congressmen who spoke out against it – Paola Vega, from the PAC, and the only legislator from the Frente Amplio, José María Villalta – said they are concerned that
Said bill will open gates to allow entry and granting of residences to foreigners who could introduce criminal capital to the country.
Competitiveness in the global market
“Before starting to discuss a project of this type and say the number of fallacies that have been said, I invite you first to read, review and understand the project that is being discussed. The country needs initiatives that favor the real attraction of foreign investment. We are at a very difficult time in the world economy and we cannot legislate with instruments that keep us from competitiveness in the market, ”replied the Christian Socialist Solís.
The bill also regulates the following benefits:
-Exoneration, for a single time, of import customs taxes for the household goods. This would include home furnishings, appliances, decorative items, kitchen and bathroom utensils, and bedding. If the person transfers these assets to another, they must pay the exonerated tax and, in case they lose them, they can also replace them, exempt from tax.
-The amounts declared as income under this rule, for example, the monthly pension received from abroad, is free of income tax. Only the profits obtained in the national territory, product of their investments, would pay that tribute. However, in the event that his residence is canceled, the foreigner must pay all the taxes that the law exempted him.
According to the law plan, whoever alters or falsifies documents in order to obtain benefits from this initiative, must pay the taxes that were exonerated. He would also be sanctioned with a fine equivalent to 10% of the taxes that were exonerated.
Within the adjustments to the text, a section was added to that provision that places in the Ministry of Finance the responsibility of supervising and sanctioning those who commit this crime.