Employment in Costa Rica has two sides from a taxation point of view: the first one is that of the employer, and the second that of the employee. Both categories of taxpayers must pay an income levy as well as various social security contributions. Together, these form the payroll in Costa Rica.
Below, our specialists invite you to discover some of the key Costa Rican payroll taxes, as well our services related to them. We are also at your disposal with immigration and company formation support in Costa Rica.
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Income taxes under the payroll in Costa Rica
The income tax is one of the most important levies imposed in Costa Rica. Employees must pay it from the earnings they make from the wages, which comprise the salary, bonuses, plus other income. It is imposed at rates ranging from 0% to 25%. Employers, namely Costa Rican companies, must pay the corporate tax which is levied at a 30% rate.
Apart from these, there are specific Costa Rican payroll taxes associated with social security contributions that are directed to the Social Security Fund.
Employer payroll contributions in Costa Rica
When it comes to the social contributions to be paid by employers in Costa Rica, here are the main payroll taxes:
- health and maternity leave are subject to a 9.25% contribution of the base wage;
- 5.25% of the salary must be directed to the pension contribution;
- 3% must be directed to the Labor Capitalization Fund;
- another 5% must be diverted for family support.
Apart from these, there are also other levies that must be considered by companies in relations to payroll in Costa Rica. It should be noted that the amounts related to each payment must be withheld by the employer before making salary payments to employees’ bank accounts. If you need payroll and accounting services in other countries, such as UAE, we can put you in touch with our local partner-accountants in Dubai.
Employee contributions for Costa Rican payroll payments
If the employer must pay more than 26% as Costa Rican payroll taxes, the burden on employees is lower, as their contribution for social securities is a little over 10%. Here are the main levies workers must pay here:
- 5.50% must go to the health and maternity leaves;
- 1% must be directed to the Workmens Savings Banks.
- 4% must go to the Social Security Fund for disability, pension, but also for death benefits.
In the case of Costa Rican companies hiring foreign employees, the social contributions are the same, however, it is important to note that residence permits must be obtain on their behalf by the employer.
If you are interested in immigration to Costa Rica, our lawyers here can help you.
We are also at your disposal with company registration services in Costa Rica.
Payroll setup in Costa Rica
The setup of payroll in this country falls on the employer. This means that upon creation, a Costa Rican company must register with the Social Security and National Insurance Funds falling under the supervision of the Ministry of Labor and Social Security. Then, it must pay social contributions according to the following calendar:
- reports must be filed before the 15th day of each month;
- payroll taxes must be paid between the 26th and 6th of next month.
Also, the enrollment of any new employee for payroll in Costa Rica must be made within maximum 8 days from employment.
If you find it difficult to set up the payroll for your company, you can rely on our accountants in Costa Rica who are at your service with various services, including handling this important part of a business.
Feel free to contact us and find out more about Costa Rica’s payroll taxes and we can help you navigate these accounting requirements.