Capital Gains Taxation in Costa Rica
Costa Rica's taxation of capital gains is governed by the Income Tax Law (Ley del Impuesto sobre la Renta), specifically Article 24. This law defines capital gains as the profit obtained from the sale or transfer of assets, including:
- Real estate properties
- Stocks and bonds
- Vehicles
- Intellectual property
- Business assets
Calculation of Taxable Capital Gains
Taxable capital gains are calculated as the difference between the selling price of the asset and its acquisition cost, minus any expenses incurred during the sale. The formula for calculating capital gains is:
Capital Gain = Selling Price - Acquisition Cost - Expenses
Tax Rates
Capital gains in Costa Rica are taxed at a flat rate of 15%. However, certain exemptions and deductions may apply, such as:
- Gains from the sale of a primary residence are exempt up to a certain amount.
- Gains from the sale of assets held for more than two years are eligible for a 50% reduction in the tax rate.
Legal Framework
The legal framework governing capital gains taxation in Costa Rica is outlined in the following articles of the Income Tax Law:
- Article 24: Defines capital gains and establishes the general tax rate.
- Article 25: Provides exemptions and deductions for certain types of capital gains.
- Article 26: Outlines the calculation of taxable capital gains.
Policy Objectives
Costa Rica's capital gains tax system aims to:
- Generate revenue for the government.
- Encourage investment and economic growth.
- Promote fairness in the tax system by ensuring that individuals and businesses contribute their fair share of tax on profits from asset disposals.
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