Tax laws in CR CHANGED recently and Airbnb Hosts here do not know
if IVA (impuesto sobre valor aggregado) applies to airbnb income
Axel, what does your local tax office say?
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Short answer: ‘Yes’
Long answer: “That is the least of any STR or Vacation Rental owner in Costa Rica” worries.
The new law was signed into effect September and the news did not leak out until sometime in October. So right we are still in a little bit of a limbo, but starting May 19th … full force of it.
The STR business is about to get much more complicated and with many, many more strings attached. They were working on this for the better of 3 years and it will kill all Mom and Pop operations. The only ones staying around will be the 100% business run outfits and obviously the large-scale hospitality industry.
(Quoting here from the article linked further below)
Here is what landlords will need to do to comply with the new law:
• Register with the Instituto Costarricense de Turismo (ICT), the organization of Costa Rica that handles all aspects of tourism. Timetable: One year is given to comply once the law is active.
(Sounds easy)
• Register with the tax department. Timetable: Immediately once the law is active.
(Sounds easy)
• Collect 13 percent value-added tax as required by Law 6935 and remit the amount monthly to the government. Timetable: Immediately once the law is active.
• Use the Costa Rica’s electronic invoicing system for all rentals. Timetable: Immediately once the law is active.
(here the pain in the neck starts – hosts will have to invoice every customer electronically. These invoices will all go to Costa Rica’s Uncle Sam. If the host is not a resident, they will have to have an account do this for them as they cannot log into the system themselves.
In addition there are monthly tax declarations to be filed electronically and then the yearly. Off-setting paid IVA is also not so straightforward)
• Adhere to Law 7600, the equal opportunity law for the disabled. This will probably mean some remodeling for most to make rentals wheelchair accessible and up to code for physically challenged individuals. Timetable: Two years to comply once the law is active.
(This is what finally woke Airbnb and they sent out an email to hosts in Costa Rica asking them for their support – up until then – NADA NADA … Zero Support from them for hosts or counteracting in front of legislators against the measures)
I recently saw another article describing these handicapped accessible measures and – crazy. Imagine a Treehouse with a ramp, tiny living with a wide doorway into the bathroom and enough space that a wheelchair comfortably fits in … ah … did I mention sleeping in the loft. Ohhhh … apartments … same stuff … stairs … big no no ….
Another quote: According to Deputy Roberto Thompson, the law represents a major boost to the tourism sector. “There is a very important segment of people who are using this type of accommodation in Costa Rica, through this law, we are trying to regularize and establish taxes and guarantee minimum conditions.”
Actually the ONLY BOOST this will do, is boost the prices UP.
And perhaps boost all STR out of the market in Costa Rica. And before I forget: STR is no defined as anything less than 1 year rental.
http://amcostarica.com/Law%20to%20regulate%20online%20hosting%20to%20be%20effective%20in%20May.html
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Thanks so much for taking the time to be helpful.
Yes friends,there is no way around it
Big danger with Costa Rica is to make sure that you never get squatters. This happened to a friend of ours and they ended up losing their property. Be very careful!