Costa Rica has proposed a 15% tax on foreign-source passive income earned by tax residents, including interest, dividends, royalties, rental income and capital gains, potentially expanding the country's tax rules beyond their traditional territorial scope.
Costa Rica’s Ministry of Finance sent a bill to the Legislative Assembly on 22 September 2026. It would tax five types of passive income earned abroad by Costa Rican tax residents at 15%: interest, dividends, royalties, rent and capital gains. The rule would cover individuals, companies, trusts and investment funds, with no minimum amount.
What changes under the bill
Costa Rica has generally taxed income where it is earned. Law 10.381, passed in 2023, reached some foreign passive income, but only for certain entities in multinational groups that failed economic substance requirements.
The bill would repeal those limits and make tax residence the deciding factor for passive income. Active income, such as wages or business profits, would stay under the territorial rule. The finance ministry says the 2023 rules affected very few taxpayers.
How foreign tax would be counted
The ministry says the bill accounts for tax already paid abroad. Specialists read it as a deduction rather than a credit: the foreign tax comes off the income first, then the 15% applies.
Tax lawyer Gabriel Zamora Baudrit gave an example. On USD 100 of US dividends with USD 30 withheld, Costa Rica would tax the remaining USD 70, collecting USD 10.50 and bringing the total burden to 40.5%. A direct credit capped at the Costa Rican amount would leave nothing further due. Zamora argues the formula amounts to a new tax, not a simple 15% rate.
Companies would not pay the flat 15%. They would add foreign passive income to taxable profits, which face rates of up to 30%.
Marianela Masís of PwC Costa Rica says the bill is not a full worldwide income tax. The most affected would be residents receiving passive income from abroad who fall outside the special regime for multinational groups. Retirees living on overseas investment returns could also come within scope. Open questions remain on pension treatment, the double-tax formula and the lack of a threshold.
Central Bank President Róger Madrigal said in October 2026 that the tax could discourage investment abroad, depending on how foreign rates compare with local ones.
