Costa Rican tax authority clarifies tax treatment of crypto-assets

Wednesday, 20 September 2023
The Costa Rican tax authority has issued a private letter ruling giving a general opinion on the taxation of crypto-assets.

The ruling, MH-DGT-OF-0460-2023, comes in response to the General Directorate of Taxation’s request for further guidance on the tax treatment of cryptocurrencies and crypto-assets, although it is issued for informational purposes only.

According to the tax authority, cryptocurrencies should be viewed as virtual or intangible assets, as they are not authorised as legal tender by the Central Bank of Costa Rica. They are, therefore, subject to taxes depending on the type of transaction performed. Virtual assets linked to business activity are subject to corporate income tax. Return on investment on personal virtual asset holdings is subject to the country’s tax on capital income and capital gains. Collection of fees for transactions involving or activities related to the organisation, verification or exchange of virtual assets are subject to corporate income tax and VAT.

The private letter ruling also sets out which individuals and entities are required to comply with these tax regulations. The rules apply to all individuals or legal entities, whether Costa Rica-resident or non-domiciled, that provide third-party services safeguarding private cryptographic keys, maintain, store and transfer virtual assets, exchange virtual assets for legal tender or assist in any of these operations.

If a service provider is resident in Costa Rica, income from the provision of services is considered development of business activity and so is subject to corporate income tax. A non-resident service provider providing services to a Costa Rica-resident individual or entity is subject to the country’s withholding tax for remittances abroad.


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