No Longer The Top Overseas Retirement Destination
About three decades ago, this country decided to make a business of the foreign retiree. The Costa Ricans invested in a formal and successful advertising campaign, targeting Americans primarily. Tens of thousands of would-be retirees from the States took up the invitation and relocated to this beautiful land teeming with rainforests.
The benefits were terrific: tax breaks, special retiree discounts, great weather, and, especially, the super-cheap cost both of living and of owning beachfront real estate.
Fast forward a couple of decades, and, thanks to investors and speculators, Costa Rica wasn’t so cheap anymore, neither its cost of living nor its beachfront real estate. Meantime, while prices had risen dramatically, the infrastructure hadn’t improved at all. The infrastructure in Costa Rica today is, by all accounts, no better than the infrastructure in Costa Rica when it rolled out the foreign-retiree welcome mat all those years ago.
Worse still, after working so hard to woo American and European retirees, Costa Rica seemed to change its mind. The Costa Ricans didn’t eliminate their famous pensionado program; they simply eliminated most of the tax breaks it had promised, as part of a deficit-reduction austerity package. And they didn’t grandfather existing pensionados. So those who’d chosen Costa Rica for the retiree benefits it offered were surprised and disappointed to find that those benefits existed no more.
Now the Costa Rican government is considering a further pensionado program adjustment. They’re talking about increasing, maybe substantially, the minimum monthly income requirement to qualify. And, again, if the change is made, existing pensioandos won’t be grandfathered. To renew your status, you’d have to qualify under the new requirements.
We’ll keep you updated on all developments related to the Costa Rican residency changes in the Overseas Opportunity Letter.
|Population||4,576,562 (July 2011 est.)|
|Gross Domestic Product (GDP)||$51.17 billion|
|GDP Per Capita||$11,300|
|Inflation Rate||5.7% (2010 est.)|
|Currency||Costa Rican colón|
|Exchange Rate Versus U.S. Dollar||513 (2010) Costa Rican colones (CRC) per US dollar|
|Language||Spanish (official), English|
|Population of Capital City||2,081,284|
|Time Zone||UTC/GMT -6 hours|
|Seasons||dry season (December to April); rainy season (May to November); cooler in highlands|
|International Dialing Code||506|
|Electricity||120 V, 60 Hz|
|System of Government||Democratic republic|
|Name and Party Affiliation of Current Leader||President Laura CHINCHILLA Miranda (since 8 May 2010) from PLN|
|Income Tax Rate for Residents||0-15%|
|Property Tax||0.25% of appraised value|
|Capital Gains Tax||Capital gains are exempted unless the gains are derived from the habitual activity of the seller or the assests sold are tangible and can be depreciated. Such gains are taxed at 30%|
|Inheritance Tax||Inheritance and gifts are not specifically taxed in Costa Rica.|
|Real Property Tax||1.5% transfer tax and 0.25% municipal tax on real property apply. And annual “luxury house tax” also apply depending on the value of the asset|
|Sales Tax||13% (no tax on groceries)|
|Restrictions on Foreign Ownership of Property||No|
|Local Chamber of Commerce||http://www.camara-comercio.com/|
|American Chamber of Commerce||http://www.amcham.co.cr/|
|Primary Exports||bananas, pineapples, coffee, melons, ornamental plants, sugar; beef; seafood; electronic components, medical equipment|
|Residency and Visa Requirements||Generally, citizens of the United States, Canada and the European Union countries do not require a visa to enter Costa Rica. Those citizens can enter Costa Rica with their valid passport and remain in the country for up to a maximum of 90 days.|
|Special Benefits for Foreign Residents or Retirees||Pensionados (retirees with pensions) only need to have a $600 USD pension per month to qualify for retirement Visas. These must be renewed every year and proof must be . Anyone over the age of 45 can apply for retirement resisdency. No taxes on retirement income. Foreigners living in CR do not have to pay taxes on money earned abroad.|