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Costa Rica VAT on foreign digital services extension to house sharing platforms

E-services by non-residents subject to 13% VAT collections – house sharing platforms added November 2022

The Ministry of Finance has confirmed an extension of VAT to services provided by major home-sharing electronic platforms, including Airbnb, Homeaway and VRBO.  These three e-service providers are now added to the list of 136 providers subject to VAT collections.

VAT on digital services since October 2020

The Central American country of Costa Rica implemented Value Added Tax on non-resident providers and intermediaries of digital or electronic services from 1 October 2020. The includes an option to VAT register to collect VAT, or face Withholding VAT when payments are made through credit cards.  VAT applies on both B2C and B2B transactions, with not option to reverse charge on the latter. There is no VAT registration threshold or requirement to appoint a Fiscal Representative.

Update: Costa Rica extended VAT to home sharing platforms November 2022.

The current VAT rate in Costa Rica is 13%. VAT Calc’s global VAT and GST on digital services blog keeps a live update on how countries are imposing indirect taxes on non-resident providers and electronic marketplaces.

Withholding VAT on digital services

Since October 2020, resident payment providers (credit card, bank transfers, e-wallets, online payments etc)  in Costa Rica are obliged to withhold VAT on payments made to unregistered foreign digital service providers. The payment provider effectively becomes a withholding agent for VAT. The General Directorate of Taxation regularly publishes a list of foreign digital providers that are subject to withholding VAT. There are currently 70, and growing. If VAT is incorrectly deducted by a payment provider for a VAT-registered provider, they may reclaim it back.

What digital services are liable to Costa Rica VAT?

Income from the following electronic services is liable to VAT:

  • Streaming music and video
  • Rights to the use of software via the internet
  • Apps
  • E-learning
  • E-books and online journals or newspapers
  • SaaS and cloud-based software, data storage or processing
  • Advertising and online listing of goods or services
  • Auction websites
  • Internet domain name acquisition and support
  • Gaming
  • Ride sharing platforms
  • Accommodation letting, house sharing (Nov 2022) with platform acting as withholding agent

VAT registration and returns

A voluntary VAT registration is possible via a simplified online VAT registration process. Once VAT registered, electronic returns are filed on a monthly basis. Returns should be filed by the 15th of the month following. There is no obligation to appoint a tax or VAT agent. Accounting records related to supplies of digital services subject to VAT in Costa Rica would need to be kept electronically for five years, in either English or Spanish. These records could be requested at any time by the Costa Rica tax authorities.

Non-resident are exempted from the now mandatory e-invoice regime of Costa Rica.

Marketplaces and intermediaries

Cross-border digital services provided via an intermediary, or platforms, become the responsibility of the intermediary for VAT collections and reporting.

Central and South America VAT on digital services

Comments (click for details) Rate Date Threshold Comments
Argentina 21% Apr 2018
Aruba 4% Jan 2023 -
Bahamas 10% Jan 2015 BSD 100,000
Barbados 17.5% Dec 2019 BBD 200,000
Bolivia 13% Nov 2022 -
Brazil 26.5% Jan 2026 n/a Regulations in parliament
Chile 19% Jun 2020 Nil
Colombia 19% Jan-18 Nil
Costa Rica 13% Oct 2020 Nil Withholding VAT option
Dominican Republic 18% 2023 Nil Currently withholding VAT
Ecuador 12% Sep 2020
El Salvador 13% 2022 - Replace Withholding VAT
Guatemala 12% TBC
Honduras 15% 2022 HNL 250,000
Panama 10% 2022 Withholding VAT
Paraguay 10% Jan-21 Nil Withholding VAT; 4.5% DST
Peru 18% 2022 Nil Withholding VAT
Puerto Rico 10.5% Jan 2020 $100,000; or 200 transactions Marketplaces
Suriname 10% Jan 2023 SRD 500,000
Uruguay 22% Jan 2018 Nil VAT and Withholding Tax


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