U.S. citizens working overseas receive a major income tax break.

Costa Rica opens up for foreign digital workers

By Jay Brodell

Work online and want to beat U.S. taxes? Tropical Costa Rica has just made this easy.

The Central American country has just authorized a special visa for those whom officials call digital nomads. The new law gives employed foreigners a full year to live in the country without periodically renewing their visas. Previously the time limit was 90 days, after which foreigners had to leave the country and return to obtain a new visa as a tourist.

Casa Presidencial, the country’s White House, announced that President Carlos Alvarado had signed the new legislation into law. It will become effective shortly.

The new law also exempts foreign online workers from some national taxes. U.S. citizens who remain outside the United States for at least 330 days also receive a $107,600 exemption from U.S. taxes on wages and salaries earned in 2021, according to federal law. The amount increases slightly each year.

Foreigners in Costa Rica have long urged the central government to take such action because the longer visa also prolongs the use of a foreign driver’s license, allows the foreigners to open bank accounts and participate in local medical insurance and care.

Costa Rican officials said the country might benefit to the tune of $600 million a year as foreign transplants obtain housing, food, rental vehicles, medical service and even education. The government also expects the visitors to take tours and establish their offices on the beaches, in the mountains and the various ecosystems of Costa Rica.

The catch is that single online workers must show at least a $3,000 monthly income or $5,000 a month for a family, according to the legislation. Such an income would provide an upscale life in Costa Rica.

Thousands of individuals, online workers and others, have lived in Costa Rica for long periods in what officials considered abuse by repeatedly renewing a tourist visa. Technically, foreign tourists were not allowed to work in the country, even online, although many did. The new foreign worker visa can be renewed once for one more year, the presidential office said.

The law also exempts import tax on equipment, such as computers, cameras and other devices used in digital work.

A description of the new law can be found in English at the website of A.M. Costa Rica, the country’s English-language daily newspaper.

Brodell is the founder and editor emeritus of A.M. Costa Rica, the online daily newspaper. Published Aug. 12, 2021.

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Brodell is a long-time daily newspaper owner, editor and reporter as well as a tenured college professor. Email him at jbrodell@jamesbrodell.com

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Jay Brodell

Jay Brodell

Brodell is a long-time daily newspaper owner, editor and reporter as well as a tenured college professor. Email him at jbrodell@jamesbrodell.com

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