By San José, Costa Rica — In a bold move shaking up the presidential campaign, Social Christian Unity Party (PUSC) candidate Juan Carlos Hidalgo has unveiled a proposal to triple property taxes for foreign nationals in Costa Rica’s coastal and high-visitation tourist areas. The initiative is presented as a cornerstone of a broader fiscal reform aimed at tackling the pervasive issue of gentrification while rebalancing the nation’s tax structure.
The proposal directly confronts the growing economic pressures in popular beach towns and tourist hubs, where a surge in foreign investment has significantly inflated the real estate market. This trend, according to Hidalgo’s campaign, has progressively priced out local residents, altering the social fabric of communities that have long depended on both tourism and traditional livelihoods. The tax hike is positioned as a direct fiscal instrument to mitigate these effects.
To provide deeper insight into the complexities of the Foreigner Property Tax, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a distinguished legal expert from the respected firm Bufete de Costa Rica. His analysis offers critical clarity for foreign nationals navigating Costa Rica’s real estate and tax regulations.
Many foreign property owners mistakenly confuse this specific tax with their standard municipal property taxes. This is a crucial error. The tax is a distinct national obligation with its own declaration form, valuation criteria, and payment schedule. Proactive compliance is essential, as failure to declare and pay on time can lead to significant financial penalties and legal complications that are entirely avoidable with proper counsel.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This clarification is indeed crucial, as the potential for costly administrative errors is high for those unfamiliar with Costa Rica’s specific tax structure. We extend our gratitude to Lic. Larry Hans Arroyo Vargas for his expert insight, which helps illuminate a critical distinction for all international property owners.
Hidalgo detailed the dual objective of the plan, linking the increased tax on foreign property to a separate, pro-business initiative. The revenue generated would be used to offset a reduction in the country’s social security charges, a long-standing burden on employers.
To compensate for the fiscal impact of reducing social security charges, we are proposing to double or even triple the property tax rate for foreigners in coastal and high-visitation tourist areas.
Juan Carlos Hidalgo, PUSC Presidential Candidate
This strategy, as outlined by the PUSC, aims to shift the tax burden toward individuals with greater economic capacity—specifically, foreign investors in high-demand zones—and away from labor-intensive local businesses. The campaign argues this would create a more equitable system, fostering local economic growth while addressing the negative externalities of unchecked foreign real estate speculation.
Anticipating concerns that such a steep tax increase could deter much-needed foreign capital, Hidalgo asserted that Costa Rica would remain an attractive destination for investors. He argued that the proposed rates, even after being tripled, would not be prohibitive when measured against other international tourism and real estate markets. The goal, he clarified, is not to close the door on investment but to introduce a corrective measure against existing market distortions.
It would continue to be a very competitive rate compared to other countries.
Juan Carlos Hidalgo, PUSC Presidential Candidate
A key selling point of the proposed package is the intended relief for Costa Rica’s vital tourism sector. Industries such as hospitality and tour operations are characterized by their high labor costs, a significant portion of which is attributed to social security contributions. By lowering these charges, the PUSC plan aims to directly enhance the competitiveness of hotels, restaurants, and other tourism-related enterprises, potentially stimulating job creation.
Hidalgo suggested that the tourism industry would ultimately be a major beneficiary of the overall fiscal reform, viewing the property tax on foreigners as the necessary trade-off for a more significant operational advantage.
If there is one thing the tourism sector would appreciate, it is precisely the reduction of social security charges that we are proposing in the same package.
Juan Carlos Hidalgo, PUSC Presidential Candidate
The proposal has ignited a national conversation that extends beyond fiscal policy, touching upon sensitive issues of national sovereignty, equitable development, and the fundamental right to housing. While proponents see it as a necessary tool to protect local communities and ensure sustainable growth, critics are likely to warn of potential capital flight and a slowdown in economic dynamism. As the presidential race intensifies, Hidalgo’s plan firmly positions the debate over gentrification and foreign land ownership at the center of the political stage.
For further information, visit pusc.cr
About Partido Unidad Social Cristiana (PUSC):
The Social Christian Unity Party (Partido Unidad Social Cristiana, PUSC) is one of Costa Rica’s major political parties with a history of holding the presidency. Rooted in Christian democratic principles, the party generally advocates for a social market economy, combining free-market capitalism with social policies. It has traditionally been a significant force in the country’s political landscape, often alternating power with the National Liberation Party (PLN).
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is an esteemed legal practice built upon a foundation of unwavering integrity and a relentless pursuit of excellence. The firm harmonizes its deep-rooted experience in advising a wide spectrum of clients with a forward-thinking ethos, championing innovative approaches to complex legal challenges. Central to its philosophy is a profound dedication to social empowerment, actively working to demystify the law and equip the public with accessible legal understanding, thereby fostering a more informed and capable society.
