Costa Rica: Tax incentives to attract “digital nomad” workers

Measures intended to encourage individuals working remotely to select Costa Rica as a location where to establish their offices

Measures intended to encourage individuals working remotely to select Costa Rica

New legislation establishes a framework of incentives—including an income tax exemption—in an effort to attract "digital nomads" to relocate to Costa Rica.

The legislation (“Ley para Atraer Trabajadores y Prestadores Remotos de Servicios de Carácter Internacional” referred to in English as the “Law to Attract Workers and Remote Service Providers of an International Nature") was published in the official gazette on 1 September 2021, and includes measures intended to encourage individuals working remotely to select Costa Rica as a location where to establish their offices.

Among the incentives under the new law are the following:

  • The migratory status benefit will be available and granted for a period of one year, subject to being extended for an additional one-year period. 
  • There is an exemption from the payment of all taxes on imports of “basic personal equipment” necessary to fulfill certain tasks or services, according to criteria to be established by customs authority.
  • An exemption from income tax is available; and furthermore, income obtained from sources abroad does not constitute income from a Costa Rican source.

Individuals who are eligible for the benefits under the new law cannot engage in paid work or services in Costa Rica other than what is allowed by their migratory status as an international worker or remote service provider.

KPMG observation

The new law does not address the following points:

  • There is no mention of social security in Costa Rica; therefore, it is possible that the digital nomad could be exempt from income tax in general but subject to social contributions, at least as an independent worker.
  • If the person works from Costa Rica, this relationship could be subject to Costa Rican labor law, thereby generating costs or risks of non-compliance if the employer does not take the issue into account before the individual begins working in Costa Rica.
  • Individuals coming to Costa Rica will probably travel with data. Costa Rican data protection legislation is much stricter than that of several of other countries; thus, businesses must exercise caution when transferring to or from Costa Rica.
  • Working from Costa Rica could give rise to the possibility of a dependent agent permanent establishment (PE). If an individual who comes to work from Costa Rica under this law signs contracts on behalf of an employer, or carries out negotiations of substantial parts of contracts, this could possibly create a PE in Costa Rica.

The law is being viewed as one way to contribute to the economic reactivation of economy and the tourism sector in Costa Rica and to promote long-term visits and increased spending in the country. Still, it will be necessary to analyze the potential risks for employers and companies when their employees relocate to Costa Rica to work.

Read a September 2021 report (Spanish and English) [PDF 469 KB] prepared by the KPMG member firm in Costa Rica

For more information, contact a KPMG tax professional in Costa Rica:

Sergio Garcia |

Cristina Sansonetti |

Mariela Castro |

Vanessa Vega |


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