Deductible expenses in Costa Rica

In one sentence: an expense is deductible if it is necessary, pertinent, useful and proportional to generating taxable income, and if it is supported by a proper document in the taxpayer's name with any withholdings made. Fail any one of those and it does not deduct.

The four substantive conditions

Condition	What it means
Necessary	The most important one. “Convenient” is not enough
Pertinent	A causal relationship with the activity
Useful	It generates or maintains the source of income
Proportional	Reasonable, balanced against the income

Necessary is the one most arguments are lost on. It does not mean useful and it does not mean convenient: it means that without that expense the taxable income is not generated. A gratuity, something done because you felt like it, does not pass that test however good the invoice is.

The formal requirements, where expenses fall silently

A simplified receipt does NOT work for deducting. It is the most expensive and most frequent slip. The document has to be a proper one: an electronic invoice in the taxpayer's name and dated within the period. A simplified receipt does not identify the buyer, so it supports nothing.

The document must be in the taxpayer's name and dated within the period.
For services from abroad, a purchase invoice you issue yourself.
Any applicable withholdings must have been made. No withholding, no deduction.
And the expense must be incurred in the period and recorded in the accounts.

The numeric limits worth remembering

Expense	Condition or limit
Wages and salaries	Only those subject to social security, with the salary tax withholding made
Christmas bonus	Up to one twelfth of annual salaries
Donations	To authorised entities, and up to 10 % of gross income
Payments to a parent company	With withholding, and up to 10 % of gross sales
Severance and benefits	Up to three times the Labour Code minimum
Independent professional's fees	Real expenses, or a single 25 % deduction of gross income with no proof
Organisation costs	All in the period, or amortised over five
Bad debts	From the ordinary course, with judicial collection efforts, or after 24 months with no payment
Low-value assets	If unit cost does not exceed 25 % of a reference wage, it all goes to expense in the period

A deduction many independents never use. An independent professional can choose between deducting real expenses or applying a single 25 % deduction of gross income, with no proof required. If your real expenses do not reach that 25 %, the second option is better and saves you keeping paperwork. More on invoicing as an independent.

Per diems no longer have the 1 % cap

That cap was declared unconstitutional by the Constitutional Chamber (ruling no. 2003-02349). Today there is no fixed percentage: representation expenses and per diems are deducted subject to reasonableness and necessity.

It is a fact that still circulates wrongly in older accounting material. No cap does not mean open bar: you still have to justify that the expense was necessary and proportional.

Provisions are not deductible until they are paid

This is where accounting and tax separate the most. An accounting provision is not a deductible expense. It deducts when it is paid. That applies to the Christmas bonus, severance, notice pay, unpaid holidays and benefits.

In your books you provision every month — and rightly so, because the expense accrues. For tax, that expense enters when the money leaves. The law requires recording expenses incurred but unpaid in a special account and attributing them at the moment of payment.

That difference is exactly what generates deferred tax in the accounting standards. It is not an error: it is the reconciliation between two ways of measuring the same thing.

Interest has its own limit

Non-bank interest is limited: deductible net interest is capped as a proportion of the result before interest, tax, depreciation and amortisation. It is the rule that most often surprises a company financed by its own shareholders.

If you rent out property

None of this applies under the default rental regime. There, a flat 15 % deduction replaces every real expense — the platform commission included. Real expenses only come into play if you moved to the profits regime, which has its own conditions. The two regimes compared.

From Ticuenta

The expense that does not qualify, separated from the entry

Better to keep it apart from the moment it is recorded than to go looking for it in March. It can have its own account and show separately in the income statement.

See how it works

About this article. The four conditions and the limits come from article 8 of the Income Tax Act and its regulation; the removal of the per-diem cap, from Constitutional Chamber ruling 2003-02349; the treatment of provisions, from the same article 8. The single 25 % deduction for independent professionals is its paragraph s).

Verified as of 24 September 2026. Tax rules change. This is information, not tax advice — whether a specific expense is necessary is exactly the kind of question to take to your accountant.

Sources: Current legal texts (Sinalevi) Ministry of Finance

Deductible expenses in Costa Rica: the requirements and the exact limits