Thursday 25 February 2021

Legislators open the way for venture capital investors to arrive in Costa Rica

Legislative Commission welcomes CINDE's recommendation to include other types of investments within the bill that aims to promote the arrival of foreign rentiers

QCOSTARICA – Legislators adjusted the bill that aims to encourage the attraction of rentier pensioners to the country, to include among its beneficiaries those foreigners who invest in venture capital funds or in sustainable tourism infrastructure projects.

The Tax Affairs Committee of the Legislative Assembly began to review the text of the law to attract investors, pensioners, and rentiers that was introduced two months ago.

This amendment to the text was approved last Wednesday, January 20, in the Tax Affairs Committee of the Legislative Assembly in response to a suggestion from the Costa Rican Coalition of Development Initiatives (CINDE).

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PLN legislator Silvia Hernández, one of the promoters of the bill, along with PUSC legislator María Inés Solís and the PRN legislator, Mileidy Alvarado, confirmed the legislative committee’s acceptance.

Henández commented that CINDE’s recommendation was to add other investment modalities to the initiative that provide the opportunity for different types of investors to come to the country.

Another proposal of CINDE that was accepted by the legislative commission was to include within the benefits enjoyed by these investors exemptions on the importation of instruments or materials for professional or scientific practice.

Henández explained that the intention of this adjustment is to attract investors in specialized scientific or technical investments.

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The bill, introduced two months ago, proposes to reduce to US$150,000 the minimum amount of capital that an investor, annuitant or foreign pensioner must contribute to opt for temporary residence.

Currently, the regulations of the Ley de Migración y Extranjería (Immigration Act) requires a sum of US$200,000 free of income tax from foreigners to obtain temporary residency in Costa Rica.

The text indicates that the sum includes investments in real estate or registrable assets, shares, securities, and productive projects or projects of national interest and that the tax exemptions will have a duration of five years, the same period of validity of the initiative.

Hernández explained that, despite the five years of validity of the law, if a foreigner, for example, enters the fifth year of implementation of the regulation, the benefit begins to run from that moment until the five-year period is completed.

The initiative is part of the plans to reactivate the economy.

The proponents had presented another initiative that established that beneficiaries could import up to two vehicles for personal or family use, free of all import, customs and value-added taxes.

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The proposal indicated that, in case of loss of the vehicle due to theft, total destruction by fire, flood, collision or accident, occurred during the period of validity of this law, the owner may import another vehicle free of the taxes.

If the person sells the car to a third person they must pay the corresponding taxes.

However, Hernández asked to reject the motion because the wording presented errors in a way that could mislead its interpretation, following questioning by the Comptroller General for using vehicle exemption in plan to attract foreign pensioners

Legislator Hernandez commented that the correction is expected to be introduced possibly next week during the second day of discussion of adjustment motions.

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