Friday 9 December 2022

Digital nomads law approved in second debate

Plan gives benefits to foreigners who work in Costa Rica and who provide services for clients in other countries

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9 December 2022 - At The Banks - BCCR

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QCOSTARICA – Legislators approved in a second debate, this Tuesday, the bill to give special benefits to foreign workers who come to Costa Rica to provide international services.

The benefit for digital nomads includes a particular migratory subcategory for up to two years, as well as tax exemptions. Photo: Courtesy ICT

This is the initiative known as “Digital Nomads”, to benefit foreigners who come to the country to do work remotely, for clients outside of our country.

The initiative, presented by Carlos Ricardo Benavides, of the Partido Liberacion Nacional (PLN), basically establishes a special immigration status for these people, as well as exemption from paying income tax.

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Foreigners who want to enter under that category will have to manage it, according to the approved initiative, through the Dirección General de Migración Extranjería, (DGME) – Costa Rica’s immigration service, in order to be able to opt for said benefits.

The objective of the approved law is, as the text reads, “to promote long-stay visitation in Costa Rica and increase the expenditure of resources of foreign origin in the country.”

Basically, the intention is that these foreigners consume in the country and that, with the approved law, there will be an increase in this type of professionals on Costa Rican soil.

For this benefit, only foreigners who provide services to clients outside of national soil could opt, but not Costa Ricans who travel through different regions of the country, providing services for international clients.

The definition of remote service provider explains that these are foreign professionals, who carry out their work using a computer, telecommunications, or similar means, in favor of natural or legal persons domiciled abroad.

These people will have non-resident immigration status. The approved law obliges Migración to establish a digital platform to request the category of a digital nomad.

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Among the requirements to choose this category, the digital nomad must provide proof that they have a stable monthly remuneration, fixed income, or an average monthly income equal to or greater than US$3,000.

The benefit can be for two people who make up the family group, but with an average monthly income equal to or greater than US$4,000.

In addition, the nomad will have to acquire a medical services policy that covers them throughout their stay in Costa Rica.

The DGME will charge the remote worker the payment of a non-resident visa, with an amount that will be determined by regulation.

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According to article 14 of the initiative, people who request the category of digital nomad “may not engage in paid work or services in the national territory other than what is allowed by their immigration subcategory.”  That means you won’t see a digital nomad bagging groceries at your local supermarket.

The term of the immigration benefit will be up to two years: one year extendable for an equal period. To request the extension, the beneficiary must have been on national soil for at least 180 days of the year that it was originally given.

In addition to the exemption in the payment of income tax, digital nomads will also be exempt from the payment of import taxes on basic personal computers, IT, telecommunications, or similar equipment.

The Benavides initiative also allows foreigners to use their driver’s license issued in the country of origin, if it is valid, and to open a bank account in a Costa Rican bank.

According to the legislator, the proposal “will allow receiving thousands of digital nomads who will come for periods of up to one year to telecommute, making use of accommodation, food, internal transport, commercial and professional services.”

He argued that this will contribute to the reactivation of the Costa Rican economy.

After the approval of the initiative, the Costa Rican Tourism Institute (ICT) thanked the legislators for the initiative, arguing that it “strengthens the tourism competitiveness” of the country.

For the bill to become law it requires the signature of President Carlos Alvarado (no objections expected) and published in La Gaceta, the official government newsletter within days of the President’s signing.

As typical with new bills, the government has a reasonable period to publish regulations.

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