If you are going to live or retire in Costa Rica, it is best to do everything by the book

As I have stated in many past articles, the best candidates for living in Costa Rica are those with a pension, a fixed income like an annuity or a steady stream of money from some other type of investment. Unfortunately, a large number of foreigners who reside here don’t fit into any of these categories and have to work . In order to work here legally you have to have a special type of residency called “Residencia libre de conditions.” If you work here and don’t have a work permit issued by the government or residency with permission to work you are in violation of the country’s labor laws. What can happen? If caught you run the risk of being deported and not being allowed to return for ten years. I know of several cases where this happened to Americans. A couple of the people were perpetual tourists who never even took the trouble to acquire legal immigration status.


There are also some foreigners who have certain types of residency that does not permit them to work. If caught working, they run the risk of having their residency revoked and may even be deported in some cases.

Furthermore, those without papers who work here illegally also face tax problems for not having paid taxes on the income they earned while living here. Costa Rica’s equivalent of the IRS which is called La Tributación Directa is getting much better at catching tax evaders. I am a Costa Rican citizen and business owner and therefore have the right to work here legally. Every year I am very punctual when it comes to making my quarterly tax bill. The last thing I want is to have the local tax guys on my back, so I adhere strictly to the country’s tax laws.

Just imagine if you get caught working here illegally because you don’t have papers and on top of that you haven’t paid your taxes. Believe me, you do not want to find out.

However, there is a loophole even if you do not have permission to work and are not a resident. You can run an Internet-based business that generates income outside of Costa Rica. For instance, I have an acquaintance who works for an American company and can do so anyplace in the world. People in a similar situation can work in Costa Rica without the fear of breaking the country’s immigration policy or labor and tax laws as long as they are paid in the country where they are employed.

The bottom line is that if you move here, you should do everything by the letter of the law so as to not get into trouble and be forced to leave. There have some people who brought property here and who did not play by some of the rules the rules I mention above and who were deported and consequently had no access to their property for many years. Remember expats are guests in Costa Rica and have to obey the law or face the consequences!

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