One important thing for expat taxes is that the United States and Costa Rica do not have an agreement on income tax, although they have an agreement in which they exchange information. The United States has agreements with several nations, the so-called totalization conventions, in order to avoid double taxation of income in relation to social contributions. These agreements must be taken into account in determining whether a foreigner is subject to the U.S. Social Security Tax/Medicare or whether a U.S. citizen or resident alien is subject to the social security taxes of a foreign country. No, the United States currently has no tax or totalization agreement with Costa Rica. It is more difficult than before to open a bank account in Costa Rica. (From our experience, we have found that American citizens living in Costa Rica have the best happiness with LAC San Jose or Banco Promerica). If you live here for any time, you should jump through the tires to make sure you can open an account. A list of countries with which the United States currently has totalization agreements and copies of these agreements can be accessed under U.S. international social security agreements.
If you have any questions about international social security agreements, please contact the Office of International Social Security Programs at 410-965-3322 or 410-965-7306. However, do not call these numbers if you want to inquire about a right to an individual benefit. Costa Rica, a breathtaking country, is attracting more and more American expatriates. It is often referred to as the “Central American Switzerland” because it has long been known as a tax haven because of its low tax systems and tax rates. We have described the 8 things you need to know as an expat living in Costa Rica. Tax agreements and totalization agreements have been saved Costa Rica has signed the income tax contracts of Germany (1993) and Spain (2004) and is currently negotiating with Mexico. The contract with Spain came into force on 1 January 2011. However, the income tax agreement with Germany was signed by Costa Rica but has not yet been ratified and is awaiting signature and ratification in Germany. Since 1990, an information exchange agreement has been concluded with the United States, Argentina, Canada, France and the Netherlands since December 12, 2011, with Mexico since May 25, 2012 and with Central American countries since August 14, 2012. Costa Rica has also signed 13 information exchange agreements with Australia, South Korea, Denmark, Finland, Greenland, India, Indonesia, England, Iceland, the Faroe Islands, Norway, South Africa and Sweden.
Costa Rica has been described as “Central American Switzerland” because of its reputation as a tax haven, due to its simple tax systems and low income tax rates. But living in Costa Rica does not exempt you from the obligation to file your tax return abroad. Fortunately, we`ve sketched out the eight things you need to know as an American living in Costa Rica. To qualify, you must either spend 330 full days outside the United States or be a good faith resident of a foreign country. To learn more about the good faith residence, click here. Expats moving to Costa Rica should prepare for a fiscal year that runs from October 1 to September 30. Your tax return in Costa Rica is due on February 15 of each year.