Foreign companies who supply digital services to buyers in Costa Rica will have to charge 13% Costa Rica VAT on all digital sales from August 1 2020.
Who will have to register for VAT in Costa Rica?
The Costa Rican tax authority has provided a list of digital platforms and thus transactions that will be subject to VAT (See the list here). Transactions of digital platforms that are not listed will not be subject to VAT.
Costa Rica VAT Registration Options
Two options for vat registration in Costa Rica has been identified for those companies who have been mentioned on the list:
Option 1 – Direct VAT Registration
Companies selling or trading digital services or intangibles via electronic means will be able to register as taxpayers. Vatglobal is able to offer assistance with this process. There will be no additional obligations other than paying VAT charged. The registered will have no right to apply for VAT credits.
Option 2 – Participation Via Credit and Debit Card Issuers
Companies will apply VAT on the transactions of their cardholders in the digital platforms listed (and only those platforms).
It’s important to note that Registration will not create a Permanent Establishment. Likewise, registration will not open up foreign digital service providers and intermediaries to any new Costa Rica taxes.
Costa Rica VAT Payment Obligations:
VAT Payments will be made via a new Virtual Tax Administration (ATV) platform. VAT is to be paid on a monthly basis and must be received within 15 days of the end of the month following the tax period. For example, for August 2020 – payment must be received by September 15, 2020.