Taxes in Costa Rica for American Retirees
Taxes in Costa Rica
When Costa Rica starts taxing you, how it treats a U.S. pension, and what the United States still expects from you regardless.
When you become tax resident
Costa Rica operates a territorial tax system. Income earned outside Costa Rica is generally not taxed, regardless of how long you live there.
How your foreign pension is treated
Foreign pensions, U.S. Social Security, foreign dividends and foreign rental income are generally outside the Costa Rican tax net under the territorial principle. This is one of the strongest features of Costa Rica for a retiree.
The U.S. tax treaty position
There is no comprehensive U.S.-Costa Rica income tax treaty. Because Costa Rica does not tax your foreign income, this matters less than it would elsewhere, but it does mean there is no treaty tie-breaker if a residence question ever arises.
Wealth tax
No general wealth tax. There is a luxury home tax on higher-value residential property.
Other taxes and reporting
Property tax is low, around 0.25 percent of registered value. A corporate franchise tax applies to Costa Rican companies, including the holding companies many foreigners use for property. Income from a Costa Rican business or Costa Rican rental property is taxable locally.
Remember the U.S. side
The United States taxes its citizens on worldwide income wherever they live. Moving does not end your filing obligation, and FBAR reporting is triggered by an aggregate of 10,000 dollars across foreign accounts at any moment in the year.
Taxes in Costa Rica: common questions
When do I become tax resident in Costa Rica?
Costa Rica operates a territorial tax system. Income earned outside Costa Rica is generally not taxed, regardless of how long you live there.
Will Costa Rica tax my U.S. pension?
Foreign pensions, U.S. Social Security, foreign dividends and foreign rental income are generally outside the Costa Rican tax net under the territorial principle. This is one of the strongest features of Costa Rica for a retiree.
Do I still file a U.S. return?
Yes. The United States taxes its citizens on worldwide income wherever they live, and moving does not end the obligation. You get an automatic extension to June 15, the Foreign Tax Credit usually prevents genuine double taxation, and FBAR is a separate filing triggered by an aggregate of 10,000 dollars across foreign accounts at any point in the year.
Verified Sep 7, 2026 Primary sources: www.migracion.go.cr, www.ccss.sa.cr, arcr.cr
This resource is provided free by Federal Apostille as an educational tool. It is not legal, tax, immigration or financial advice, and no attorney-client relationship is created by using it. Immigration rules, income thresholds, fees and processing times change frequently and often without notice, and consulates apply them differently. Always confirm current requirements with the official government source and the specific consulate that has jurisdiction over your U.S. state of residence before you act. Every figure on this site carries the date we last verified it and a link to the primary source.
