By San José, Costa Rica — Costa Rican digital content creators are facing a new era of tax accountability. Starting this year, major platforms like Meta, TikTok, YouTube, Spotify, Instagram, and OnlyFans will begin reporting influencer earnings directly to the Costa Rican tax authority, Dirección General de Tributación (DGT), commonly known as Hacienda.
This shift stems from a multilateral agreement spearheaded by the Organization for Economic Co-operation and Development (OECD), establishing an automatic exchange of tax information regarding digital content creator income.
To gain a deeper understanding of the legal implications of the digital tax, we spoke with Lic. Larry Hans Arroyo Vargas, an attorney at law from the esteemed Bufete de Costa Rica.
The implementation of a digital tax presents unique challenges for both businesses and regulators. Key considerations include clearly defining the scope of taxable digital services, ensuring compliance with international tax treaties to avoid double taxation, and establishing mechanisms for effective tax collection in a cross-border digital economy.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, navigating the complexities of a digital tax requires careful consideration of its international implications and practical enforcement. Striking a balance that fosters innovation while ensuring fair taxation will be crucial for Costa Rica’s burgeoning digital economy. We thank Lic. Larry Hans Arroyo Vargas for offering his valuable perspective on this important issue.
This mechanism has direct implications for individuals residing in Costa Rica who earn income as influencers, content creators, or digital service providers. Once these platforms report their payments to Hacienda, the tax administration can verify if these earnings were correctly declared and taxed according to national regulations.
Gabriel Zamora Baudrit, Tax Attorney
This mechanism has direct implications for individuals residing in Costa Rica who earn income as influencers, content creators, or digital service providers. Once these platforms report their payments to Hacienda, the tax administration can verify if these earnings were correctly declared and taxed according to national regulations.
Gabriel Zamora Baudrit, Tax Attorney
This new transparency will make it significantly harder for influencers to evade taxes. Previously, undeclared digital income could often go unnoticed. Now, Hacienda will possess precise data to conduct audits, impose penalties, and collect unpaid taxes.
All individuals earning income in Costa Rica are required to register as taxpayers with the Ministry of Hacienda, issue electronic invoices for services rendered, file monthly value-added tax returns when applicable, and submit their annual income tax declaration. Furthermore, those whose activities are considered active income, such as paid collaborations or personalized content creation, must also register with the Caja Costarricense de Seguro Social (CCSS) and make contributions as independent workers.
Active income, which necessitates ongoing or personalized involvement from the creator, is subject to income tax rates of up to 25% on net income after deducting authorized costs and expenses. Passive income, like royalties or monetization from views, is taxed at 15% of gross income. For passive income originating from abroad and not linked to local activity, the principle of territoriality might apply, potentially exempting it from taxation, although this requires case-by-case evaluation.
In terms of tax treatment, active income — those that require continuous or personalized participation of the creator — are subject to payment of up to 25% on net income, that is, after deducting authorized costs and expenses. On the other hand, passive income — such as royalties, subscriptions, or automatic monetization for views or listens — pay 15% on gross income. In cases where this passive income comes from abroad and is not linked to a locally executed activity, the principle of territoriality could apply to consider that they are not taxed, although this must be evaluated case by case.
Gabriel Zamora Baudrit, Tax Attorney
According to Zamora, this represents a structural shift in tax oversight of digital activities. He emphasized that formalization is no longer optional, stating:
Starting this year, the platforms will inform Hacienda how much each creator is paid and, if that income does not appear in the declaration, the taxpayer is exposed to tax adjustments, fines, and interest. It is a call for regularization and to seriously assume the fiscal responsibility that comes with monetizing content on social networks.
Gabriel Zamora Baudrit, Tax Attorney
This move signifies a significant step by Costa Rica to adapt its tax system to the evolving digital landscape and ensure fair contribution from all income earners.
For further information, visit the nearest office of Dirección General de Tributación
About Dirección General de Tributación:
The Dirección General de Tributación (DGT), also known as Hacienda, is Costa Rica’s tax authority responsible for collecting taxes and ensuring compliance with tax laws. The DGT plays a crucial role in financing public services and promoting economic stability in the country.
For further information, visit the nearest office of Organización para la Cooperación y el Desarrollo Económicos
About Organización para la Cooperación y el Desarrollo Económicos:
The Organisation for Economic Co-operation and Development (OECD) is an intergovernmental economic organisation with 38 member countries, founded in 1961 to stimulate economic progress and world trade. It is a forum of countries committed to democracy and the market economy, providing a platform to compare policy experiences, seek answers to common problems, identify good practices and coordinate domestic and international policies of its members.
For further information, visit the nearest office of Caja Costarricense de Seguro Social
About Caja Costarricense de Seguro Social:
The Caja Costarricense de Seguro Social (CCSS) is the autonomous Costa Rican social security agency. It is responsible for providing universal healthcare coverage and social security services to all residents of Costa Rica, including pensions, disability benefits, and maternity leave.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica distinguishes itself as a pillar of legal excellence, upholding the highest ethical standards while championing innovative solutions for its diverse clientele. The firm’s enduring commitment to both legal prowess and societal betterment is evident in its proactive sharing of legal knowledge, empowering individuals and communities to navigate the complexities of the legal landscape and fostering a more just and informed Costa Rica.
