Saturday 15 May 2021

Residential Landords Must Provide Electronic Invoices Starting September 1

Property owners renting a room, an apartment or a house, even if it is for a low amount, should start to issue a “factura electrónica” (electronic invoice) to their tenants starting September 1 of this year.

Tax experts say starting in September, taxpayers who have not been registered in the electronic invoicing system must begin to do so according to resolution number DGT-R-012-2018 de la Dirección General de Tributación (General Taxation) published in La Gaceta on March 20, 2018.

- Advertisement -

The application of the factura electrónica to residential rents was confirmed by Taxation. In addition, Dunia Zamora, legal advisor to the Association of Public Accountants; Alan Saborío, Tax partner of Deloitte and German Morales, Tax partner of Grant Thornton Costa Rica, confirmed that this resolution covers residential rents.

According to Zamora, the start date will depend on the last digits of the person’s cedula.

Persons with cedulas ending in 1, 2 and 3 must start issuing electronic invoices on September 1, those with cedulas ending in 4, 5 and 6 must start on October 1, and those with cedulas ending in 0, 7, 8 and 9 on November 1.

Saborío argued that every individual who rents a property must register as a taxpayer of income tax, either as an individual or create a legal entity (such as a corporation) that engages in that activity.

- Advertisement -

In addition, they must file an income tax return even if what they earn does not reach the minimum amount to start paying income tax.

Zamora clarified that the Ley de Inquilinato (Tenancy Law) says that for legal purposes, the tenant can defend themselves by way of the bank deposit receipt when making the rental payment, but that is only for the tenant, whoever rents is obliged to issue a factura electronica (electronic invoice).

Not issuing a factura electronica, not registering as a taxpayer and not submitting a tax return has penalties.

For example:

  • Not registering as a taxpayer, the sanction is equivalent to one half of a base salary (a base salary is currently ¢431,000) per month or fraction of a month, without exceeding three basic salaries (¢1,239,000).
  • Not issuing a facura electronica, the sanction is two base salaries (¢862,000).
  • Not filing a tax return the penalty is 2% of the gross income, to a maximum of one hundred base salaries (¢43.100.000).
  • Filing a return with errors, 1% of a base salary (¢4,310) for each error.

Of concern is that many people do not know this and it has become customary to rent without fulfilling these duties.

Who pays the tax?

- Advertisement -

Saborío that according to the current table for fiscal year 2018 (from September 1, 2017, to October 30, 2018), net income (income minus expenses) of up to ¢3,549,000 are exempt, on the excess of ¢3,549,000 and up to ¢5,299,000 the tax payable is 10%. For higher amounts, there is an escalating tax rate.

Thus, for example, if a person rents an apartment at ¢150,000 monthly, that is a gross income of ¢1,800,000, subtracting expenses such as painting and maintenance of ¢200,000  the remainder is aa net income of ¢1,600,000. As that amount is less than ¢3,549000 there is not tax payable. However, a factura electronica must be issued and a tax return filed.

The factura electrónica or electronic invoice is an electronic receipt generated when the sale of goods or services is made. That voucher/invoice reaches the consumer also by electronic means.

For example, if you subscribe to a Quickpass issued by a bank, notice that each month the bank sends you a receipt for the US$1? That is the factura electronica.

The factura electrónica became obligatory at the beginning of this year. The introduction was graduated, starting with professional services and the health sector in January; accounting and financial sector in February; lawyers in March; engineers, architects and IT in April; and on May 1 for all other service sectors.

Source (in Spanish): La Nacion

This article is not intended to be legal or accounting advice. Please consult with a professional on your particular case with respect to filing and paying income tax and the issuing of a factura electronica.

 

- Advertisement -

FACT CHECK:
We strive for accuracy in its reports. But if you see something that doesn’t look right, send us an email. The Q reviews and updates its content regularly to ensure it’s accuracy.

Ricohttp://www.theqmedia.com
"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

Related Articles

If your monthly income exceeds ¢683 thousand, you would have to pay income tax

QCOSTARICA - The potential development of the global income tax may...

Distrust of sectors complicate signing an agreement with the IMF this year

QCOSTARICA - Reaching a structural adjustment agreement with the International Monetary...

MOST READ

Protesters tried to block roads, but Police prevented closures

QCOSTARICA - Small groups of protesters tried to block several routes in the country on Monday, but the Fuerza Publica (National Police) managed to...

Three thousand hospitalized by the end of May, UCR projects

QCOSTARICA - On Monday, the Ministry of Health reported 1,280 people in hospital with covid-19, of which 466 of them in an ICU, aged...

Today’s Covid-19 News: New infections continue over 2K daily, despite drop in R rate

QCOSTARICA - The Covid-19 infection rate in Costa Rica dropped, but not enough to reduce the rate of infection. While the indicator stands at 1.32,...

72 cantons on orange alert due to high risk of COVID-19 contagion

QCOSTARICA - The National Commission for Risk Prevention and Emergency Attention (CNE) has increased alerts for another 7 cantons, bringing the total to 72...

Nicaragua, the safest country to travel in the region despite Covid-19: Study

TODAY NICARAGUA – A study based on data from the WHO and the University of Oxford placed Nicaragua as one of the “10 safest...

Space tourism is here – 20 years after the first stellar tourist, Jeff Bezos’ Blue Origin plans to send civilians to space

For most people, getting to the stars is nothing more than a dream. But on May 5, 2021, the 60th anniversary of the first...

Why Colombian protesters are taking to the streets

QCOLOMBIA – For the past two weeks, mass protests that started on April 28, have rocked Colombia, leaving at least 42 people dead and hundreds...

These are the new sanitary measures that will be applied in May

QCOSTARICA - At the press conference from Casa Presidencial that started more than 15 minutes this afternoon, the government announced new sanitary measures that...

Rodolfo Méndez will complete the Circunvalación, a work that he started in 1978

QCOSTARICA - It's been almost 43 years since the Circunvalación (Ruta 39) project, to provide the capital with a peripheral ring road, was started,...

WANT TO STAY UP TO DATE WITH THE LATEST!

Get our daily newsletter with the latest posts directly in your mailbox. Click on the subscribe and fill out the form. It's that simple!

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.