Costa Rica Tax Season – Time to File?

Fiscal year 2015 in Costa Rica ends on September 30th 2015, which means that we currently are in the fast lane to file all the tax returns and other forms required by the Tax office.

Let’s review one by one the forms that would, typically, need to be filed:

Costa Rica Tax Form D150

This form is a summary of all the payments and respective retentions or withholdings that an individual or corporation had made during the fiscal year (October 1st to September 30th) such as:

• Salary Income Tax.
• Payments to the members of the Board of Directors (Only for Sociedades Anonimas)
• Payments to foreign individuals or corporations not located in Costa Rica, for concepts such as franchises, interests, fees, movies, international broadcasting, transport, etc.
• Payment of dividends to the stockholders.

The deadline to file this form is November 30th, and its objective is basically to assure the Tax Office that we are playing our role of retention agents on their behalf, which by the way, is mandatory when an individual or corporation makes any of the payments listed above.

Costa Rica Tax Form D151

This is a summary of payments made to vendors, specific expenses and payments from clients during the fiscal year, who are located in Costa Rica, and that meet the following conditions:

1. If one of your clients was billed during the whole year for ¢2,500,000 (around $4,760) or more, you have to report that client in this form.
2. If you’d paid to one vendor during the whole year ¢2,500,000 (around $4,760) or more, you have to report that client in this form.
3. If you’d paid ¢50,000 (around $95) or more to the same individual or corporation in the way of leases, commissions, professional fees or interests you have to include that person or company in this form.
4. The deadline to file this form is also November 30th, this form will be used by the Tax Office as a cross control to know who is getting paid and then double check if that individual or corporation is filing their tax return and how much is reporting. Very similar to the 1099 form in U.S.

This form is so important for the Costa Rican Tax Administration that the late filing fee for this form was last year close to $8,000

Costa Rica Tax Form D101

When it comes to taxes in Costa Rica, this is THE FORM – the annual tax return, and contains summarized information about:

1. Assets
2. Liabilities
3. Equity
4. Itemized Taxable and Non Taxable Revenues
5. Itemized Expenses (write offs)

The revenues and expenses (Sections II and III of the form) is the basis for the Income Tax calculation, therefore, the Tax Office pays more attention to those sections of your tax return. The deadline to file this return is December 15th.

Keep in mind that this form must be filed any corporation or individual conducting business in Costa Rica, for instance renting houses or realtors.

Not to file the D101 form will result in the payment of fines up to $385, plus 1.05% interest if there is any Income Tax liability.

Final Costa Rica Tax Recommendation

If you are business active, which for the Tax Man means you or your corporation are producing revenues and if you’d paid ¢50,000 (around $95) or more to the same individual or corporation in the way of leases, commissions, professional fees or interests you have to include that person or company in the D151 form.

Keep in mind that the recipients of those payments are also required to file the same form, so you want to do your homework properly so you don’t find yourself trying to explain to the Tax Administration why John Doe says you paid to him but you didn’t report that.

Remember also that since the forms D150 and D151 must be filed before or on November 30th, this pushes you to basically have most of the information to be contained on the Income tax Return Form D101 ready by then.