Importing a car into Costa Rica is an expensive endeavor. Buying one is expensive as well. Either way, be prepared to pay a lot if you want a car. And trust me, there is no way around it. Many think they can drive their vehicle into the country and get around the tax issue. That’s impossible. In fact, if you don’t do your homework, you may purchase a car from someone who did just that and never paid the import tax. Now you’re stuck with an $8000 tax bill to make the car legal. I know someone this happened to.
Many are hearing about the new law (Costa Rica Law N. 9996) that was passed, giving expats the ability to import two cars and household items, tax-free. There is a lot of confusion about this, so allow me to clear some things up.
- This bill was only for people who are applying for residency. Residency can take upwards of a year. Perhaps longer. This is not an option for perpetual tourists or for people applying for the Digital Nomad Visa.
- No one is quite sure when, or if, the government will enact this.
Things move slowly in Costa Rica. And often, a law is passed that is later rescinded. Here is my take on things.
When the pandemic hit, Costa Rica wanted to entice more expats. But the strangest thing happened: they didn’t have to. Thousands of people moved to Costa Rica, flooding the tourist towns and buying up real estate.
I think I can speak for many Ticos in that Costa Rica looked drastically different pre-pandemic. At least from the perspective of living in or near a tourist town. And with that, I’m not sure what will happen to this new law. If everyone is coming anyway, why offer this tax break when the country desperately could use these tax dollars?
This is what I would do. If your heart is set on moving to Costa Rica, just do it. I wouldn’t wait around to see when this law takes effect. The Costa Rica Escape Manual 2023 is loaded with useful information, especially on how to get residency. And that is the first step if you want to qualify for this tax exemption.
Many times we wait to begin our adventures. And sometimes, we wait too long. So, if you want to live the pura vida lifestyle, start today. Take a vacation and travel the country. Talk with expats and investigate if it’s right for you. Maybe the pull will sweep you off your feet like a riptide. “We’re definitely moving!” you say to your wife. Or perhaps the trip was just that, a delightful way to get away from it all. And getting away is often the best thing to do when we need to recharge our batteries. And there is no better place to do that than Costa Rica.
**Find out more about buying a car, paying import taxes, and applying for residency in The Costa Rica Escape Manual 2023.
A comment on laws.
The US Constitution specifically prohibits ex post facto laws. That is, this year, the government cannot pass a new law to tax an income from last year. France has no proscription against ex post facto laws. In France, the Parlement imposed licenses on activities as far back as seven years before the law passed.
I do not know if Costa Rica prohibits ex post facto laws, but it is worth looking into.
It’s less of a ex post facto law as it is Costa Rica simply changing its mind. Different government agencies have to work on this, which only complicates things. It would be a big win for expats if it ever happens. The law includes a shipment of household goods as well, so the savings is HUGE!
Your comments are right on. Buying a car vs. brining your own was our most difficult decision, and I’m still not sure we made the right one.
My advice is to bring your own, if you meet the following criteria:
1. You love your current car, it has relatively low mileage, it is in excellent operating condition, AND, it is a car that is sold in CR (if it isn’t sold here, parts will be very difficult if not impossible to obtain when you badly need them, and you may not be able to find a mechanic who knows how to work on it.)
There are so many other factors to consider, so I recommend the prospective expat to read your new Escape Manual for studying this very important question.
So true. There are many pros to importing your car. But like you said, it must be a model where you can find parts. The import tax really surprises people, and everyone had high hopes for this new law. But as we know, Costa Rica rescinds things as fast as they enact them. So time will tell.