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Taxes

Costa Rica — Tax: Double Tax Treaties

The AI draft's claim that Costa Rica has treaties with 'the US, Canada, and several European nations' was incorrect — Costa Rica has signed and ratified double tax treaties with only four countries: Germany, Spain, Mexico, and the United Arab Emirates. Notably, Costa Rica has NO double tax treaty with the United States or Canada, despite large numbers of US/Canadian expats and retirees living there. Because Costa Rica's income tax is territorial (only Costa Rican-sourced income is taxed — see Tax Residency page), the practical need for a DTT to avoid double taxation is reduced for most individuals with only foreign-sourced income, but it matters for cross-border business income and withholding on dividends/interest/royalties between Costa Rica and treaty countries.

VerifiedInternational tax treaty summaries (osapropertymanagement.com, Lowtax.net, Grant Thornton Costa Rica expatriate tax guide), corroborated across multiple independent sources listing Costa Rica's ratified double tax treatiesLast reviewed: 2026-08-29

Why this matters

This corrects a real factual error: US and Canadian citizens relocating to Costa Rica — the largest expat groups — cannot rely on a bilateral double tax treaty between Costa Rica and their home country, since none exists; any double-taxation relief for them depends instead on Costa Rica's territorial system (foreign income generally untaxed locally) and, for US citizens, on US foreign tax credit/exclusion rules rather than a treaty.

Key facts

  • Costa Rica has signed and ratified double tax treaties with exactly four countries: Germany, Spain, Mexico, and the United Arab Emirates.
  • Costa Rica has NO double tax treaty with the United States, Canada, or the United Kingdom, despite these being major source countries for expats and retirees.
  • Because Costa Rica's income tax system is territorial, most individuals relying only on foreign-sourced income (pensions, foreign investments, remote salary) face limited double-taxation exposure locally regardless of treaty status — the treaties matter more for cross-border business structures and withholding rates on dividends/interest/royalties with the four treaty countries.
  • US citizens specifically must rely on US domestic mechanisms (Foreign Earned Income Exclusion, Foreign Tax Credit) rather than a US-Costa Rica treaty, since none exists, to manage their separate US worldwide-income tax obligation.

Steps

  1. Check whether your home country is one of Costa Rica's 4 treaty partners — Only Germany, Spain, Mexico, and the UAE have a bilateral double tax treaty with Costa Rica — most other nationalities, including US and Canadian citizens, do not have one.
  2. Understand that territorial taxation, not a treaty, is what protects most individuals — For most relocating individuals with foreign-sourced income, Costa Rica's territorial tax system (not a DTT) is what limits double taxation locally; consult a cross-border tax professional for business income or treaty-country-specific situations.

Required documents

  • Cédula/DIMEX or taxpayer ID (for those with Costa Rican-sourced income affected by treaty provisions)

Common mistakes

  • Assuming Costa Rica has a double tax treaty with the US or Canada — it does not; only Germany, Spain, Mexico, and the UAE have ratified treaties
  • Not realizing that territorial taxation, not a DTT, is the main protection against double taxation for most individuals with foreign-sourced income
  • Assuming treaty benefits (reduced withholding on dividends/interest/royalties) apply outside the four treaty countries

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