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2020 Municipal Elections

Evidence of Costa Rica´s solid Democracy

Last Sunday, February 2nd, 2020 local government elections were held in Costa Rica. Such local administrative units are known as Municipalities. The mayor of a total of eighty-two Municipalities as well as other political positions within them, were elected by direct voting of citizens living in each territorial subdivision known as ¨Cantones¨.

This was the fifth election process since a legal reform launched in 1998 which granted more responsibility and direct control over territorial, political and administrative matters to local governments. The process was a success.
Historically, since the Spanish colonial period, local governments were important administrative entities throughout Latin America. In Costa Rica, within most of the twentieth century, the tendency evolved into a centralized government based in the Central Valley. Politicians in the late 1990´s realized that territories far away from the country´s capital city of San José, and with such heterogeneous characteristics among them, demanded that several administrative matters were handled inhouse.

The decision proved to be the right way to go. Even though Costa Rica does not have an enormous extension or population, the eighty-two ¨Cantones¨ have such a varied geographical, economical, and demographic reality, that it makes a lot of sense that they are administered locally. Some are urban, densely populated, others are rural with different agricultural activities going on, some have coastline, ports, airports, important infrastructure facilities, boundary with neighboring countries, industries, etc.

Perhaps the main highlight is that these elections, just like the national elections held every four years, are a benchmark of democratic processes, just like Costa Rica is an example itself as one out of two or three of the longest continuous democracies along Latin America. Everything related to the elections is transparent and closely supervised. Every actor handles its role with responsibility: from the media that covers and informs the population about the process itself and the political alternative voters have prior to election day, up to the citizens that volunteer that day to do the leg work assuring a fair and organized event.

The results delivered a few hours after ballot boxes were closed by the electoral authority (Tribunal Supremo de Elecciones) were very diverse. Some mayors were reelected (eight out of the eleven Cantones in Guanacaste for example), traditional nation-wide parties won most Cantones, and even new and local parties were successful in specific Municipalities. Santa Cruz, Tamarindo´s local administrative government will have as new mayor Jorge Arturo Alfaro from the local party Auténtico Santacruceño.

The new representatives will be holding office starting May 1st, 2020 for four years. This could be a new beginning for the communities, where the recently elected governments have the responsibility to prove themselves worthy to the voters that elected them by performing well.

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Property Tax & Garbage Collection

Luxury Beachfront Home in Tamarindo - Front view

Due: March 31stof each year.

Property owners must pay Property Tax (Impuestos Bienes Inmuebles) and garbage collection fee (recolección basura) to the Municipal Government where the property is located.

Amount: The property tax is 0.25% of the registered value of the property, which is either the purchase price paid or the value assigned by the Tax Office.

The garbage collection fee is a fixed amount, adjusted yearly, that must be collected along with the property taxes. The municipality determines the fee based on location and on whether the property is used for residential or commercial purposes.

This property tax and garbage collection fee can be paid a year in advance or quarterly. However, if paid quarterly, you must pay before the end of each quarter to avoid interest charges. The first quarter of the year ends on March 31stof each year.

Owners must fill out a form to update the value of the real property every five years. Failure to do so can lead to a Municipality assessment and fines to the real estate owner. Please verify the last time you filed the form, in case of any doubt, better verify with the Municipality. The Municipalities are already notifying appraisals and fines for people haven’t done the update.

NOTE:
The Municipalidad de Santa Cruzdoes not always charge both in the same statement and this can cause confusion and problems to owners. The municipality has attributed this to “lack of updated records and/or to administrative errors within the system”. Therefore, please review your statement carefully to avoid unpleasant surprises.

Credit to: GM Attorneys, a premium boutique Law Firm with offices in Flamingo Beach, Tamarindo, Nosara and San Jose.

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Luxury Tax 2020

Luxury Beachfront Home in Tamarindo - Fountain

Due: January 15 of each year.

The Luxury Tax (Solidarity Tax for the Strengthening of Housing Programs) only applies to houses, condos, or apartments over a certain construction value (133,148,400.00 colones for 2020, approx. US $237,765K – this amount is adjusted each year).

Amount: The amount of tax to be paid is on a scale from 0.25% to 0.55% per year, depending on the value of the property. This tax is due for all applicable properties from 2019 and forward.
Those liable for this tax shall fill out the form called “Formulario Único de Inscripción, Declaración y Pago Impuesto Solidario para el Fortalecimiento de Programas de Vivienda, Ley 8683” every 3 years. Next time to file it will be on or before January 15th, 2022, as the previous one was on January 15, 2019. The Tax Office publishes the parameters to apply for the following year sometime in late December each year.

Credit to: GM Attorneys, a premium boutique Law Firm with offices in Flamingo Beach, Tamarindo, Nosara and San Jose.

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It’s annual Tax Time

Like in other global markets, Costa Rica also has its share of annual taxes. This article will be discussing the annual taxes due for anyone who is an owner of real estate or has a Costa Rican corporation. Not all taxes are applicable to everyone. We will discuss each type below.

 

Luxury Tax

Due: January 15 of each year.

The Luxury Tax (Solidarity Tax for the Strengthening of Housing Programs) only applies to houses, condos, or apartments over a certain construction value(131,000,000.00 colones in 2019, approx. US $232K – this amount is adjusted each year). The amount for 2020 will be available in December and we will update this article with the 2020 amount.

 

Annual Corporation Tax

Due: January 31stof each year.

All corporations, subsidiaries, and limited liability companies that are currently registered before the National Registry will be subject to pay an annual tax. (Law # 9428: “Tax over legal entities”)

NOTE: The “annual corporate tax” is aside from the VAT Tax, or Income Tax, the corporation is subject to those indicated in the event the corporation is active and is registered as a tax payer.

 

Property Tax & Garbage Collection

Due: March 31stof each year.

Property owners must pay Property Tax (Impuestos Bienes Inmuebles) and garbage collection fee (recolección basura) to the Municipal Government where the property is located.

The garbage collection fee is a fixed amount, adjusted yearly, that must be collected along with the property taxes. The municipality determines the fee based on location and on whether the property is used for residential or commercial purposes.

 

Credit to: GM Attorneys, a premium boutique Law Firm with offices in Flamingo Beach, Tamarindo, Nosara and San Jose.