Pictured: Casa Monasita
You can own the dream villa in Costa Rica, have a full reservations calendar, strong reviews, and a polished presence across OTAs and your own direct-booking channels. From the outside, your rental business may look exactly as it should.
Behind the scenes, though, there’s another side to owning property in Costa Rica as a vacation rental: the regulatory one.
Costa Rica already has a legal framework governing short-term vacation rentals, officially referred to as “nontraditional lodging,” as well as the digital platforms through which many of those properties are marketed and booked. Add tax registration, electronic invoicing, property-level operating standards, condominium regulations, and the particular requirements created by your ownership structure, and there are quite a few moving pieces behind a successful – and legal – rental operation.
For international owners, the challenge is often less about understanding that those responsibilities exist and more about knowing which professional should be handling what.
Your Costa Rican attorney interprets the law and advises you on your legal obligations. Your accountant handles the tax and financial side. And as your Costa Rica property management team, Luxury Villas in Costa Rica helps keep your day-to-day operations organized, documented, maintained, accurately represented, and functioning the way it should.
In other words, there’s an entire team behind the villa. Or at least, there should be.
Note: This article is intended as a general overview of Costa Rica’s short-term rental regulatory environment based on information current as of publication. It is not legal, tax, or accounting advice. Laws, regulations, administrative practices, and the circumstances of your individual property and ownership structure can all affect which requirements apply. Your qualified Costa Rican attorney and tax/accounting professionals should always confirm the obligations applicable to you, with additional advice from professionals in your home country where appropriate.
First, a little terminology.
Costa Rican law generally refers to short-term vacation homes as nontraditional lodging, or hospedaje no tradicional. The definition can include houses, condominium residences, villas, apartments, bungalows, rooms, and similar accommodations offered commercially for stays ranging from 24 hours up to one year. It isn’t limited to properties listed on Airbnb. Direct bookings and reservations made through any digital platform can fall within the same general framework.
For owners, there are three legal pieces worth having on your radar:
Costa Rica’s Framework Law for the Regulation of Nontraditional Lodging and Its Intermediation Through Digital Platforms is the principal legislation governing this category of accommodation.
Among other things, it establishes the framework for registration, taxation, guest services, operating responsibilities, and digital-platform intermediation. It is the starting point for understanding how Costa Rica treats commercially operated short-term vacation rentals.
Executive Decree No. 43154-H-TUR
This is the regulation that puts Law No. 9742 into practice, including the procedures surrounding Costa Rica’s registry for nontraditional lodging and the information providers submit about their properties and operations.
Legislative File No. 24.061
Costa Rican lawmakers have also considered reforms intended to simplify and clarify portions of the existing framework. File No. 24.061 is a proposed reform, not a replacement for the current law as of publication. But its existence is a useful reminder that the regulatory environment surrounding short-term rentals can evolve. Your Costa Rican attorney should always confirm which rules currently apply to your property and ownership structure.
For most owners, you don’t need to become an expert on any of these documents. You do, however, want the right professionals around you to know when one of them affects the way your villa is being operated.
Pictured: Villa Naabo
Under Costa Rica’s current framework, nontraditional lodging providers are subject to registration with the Costa Rican Tourism Institute, better known by its Spanish initials, ICT (Instituto Costarricense de Turismo).
The ICT maintains a specific registry for nontraditional lodging, and the information associated with that registration includes details about both the provider and the property, such as its location, number of bedrooms, guest capacity, and contact information.
For you as an owner, the useful takeaway isn’t the mechanics of completing the registration form; the broader point is that operating a short-term rental creates an administrative record around your property, and that record needs to correspond to the villa you’re actually operating.
That’s where an experienced Costa Rica property management team becomes part of your larger support structure. At Luxury Villas in Costa Rica, we’re working with your property every day. We know its configuration, guest capacity, services, booking activity, and operational details, and we maintain the records and property information that help your professional advisors do their jobs accurately.
Registration may begin with a filing, but keeping the information behind that filing organized is an ongoing part of operating your property professionally.
ICT registration is only one part of the picture. Law No. 9742 also addresses tax registration, electronic invoicing, the services promised to guests, property maintenance, cleaning, hygiene and sanitation, security and privacy, accurate information about the accommodation, and compliance with applicable condominium regulations.
In practice, a lot of that overlaps with professional Costa Rica property management. Your home has to be maintained throughout the year. What guests find on arrival should match what they saw and booked online. Housekeeping and property care have to happen consistently, and the services included with a stay need to be delivered. To us, these are baseline standards.
That’s why we see our role at Luxury Villas in Costa Rica as going beyond marketing and reservations. We’re your property manager, certainly, but we’re also your local property custodian. We know your home, oversee its ongoing care, coordinate the people working in and around it, and stay close enough to its day-to-day operation to recognize when something needs attention.
Your attorney advises you on the legal requirements themselves; our role is helping make sure the property operation behind them is being handled professionally.
Costa Rica’s IVA, or Impuesto al Valor Agregado, is the country’s value-added tax. The general rate applicable to lodging is currently 13%, set by Costa Rica’s Ministry of Finance.
The distinction here is important: IVA isn’t simply an expense that comes out of your rental income; it’s generally charged as part of the taxable transaction, collected from the guest, and then accounted for and remitted according to Costa Rican tax rules.
Exactly how that works for your property can depend on your taxpayer status, ownership structure, booking channels, and the way payments are processed, so your Costa Rican accountant should advise you on your specific obligations.
What we can do is make their job considerably easier. Good accounting starts with good information, and your reservation history, rental revenue, owner statements, expenses handled through management, and other operational records shouldn’t require forensic accounting at the end of every tax period. That’s the LVCR difference.
Pictured: Casa Palma
IVA and income tax are two separate conversations.
Costa Rican-source rental income can also create a Costa Rican income-tax obligation. Under the current real-estate capital-income framework, rental and subrental income falls within Costa Rica’s taxation of rentas de capital inmobiliario. Hacienda currently publishes a 15% tax rate for this category, applied to taxable income after the statutory deduction available under that regime, but the appropriate tax treatment can depend on how your property and rental business are structured. (This is where we hand the conversation over to your accountant or tax attorney.)
At Luxury Villas in Costa Rica, our job is to maintain the operational records behind your business so your tax professionals have reliable information to work from: reservations, revenue, property expenses processed through management, owner statements, and the other financial records generated through the rental operation.
You shouldn’t have to rebuild your rental year from platform screenshots and old emails every time your accountant asks a question.
If you own property in Costa Rica through a Costa Rican corporation or other legal entity, the entity itself can add another layer of obligations.
Costa Rican companies may have corporate tax, reporting, accounting, and other filing responsibilities independent of the taxes created by your vacation-rental activity. For example, the Ministry of Finance continues to assess Costa Rica’s annual Impuesto a las Personas Jurídicas (Corporation Tax) on qualifying legal entities.
Your attorney and accountant can advise you on the structure you’re using and the filings attached to it. But the important takeaway here is that owning the villa through a corporation doesn’t make the short-term-rental side disappear; it simply means there may be more than one compliance track running at the same time.
Pictured: Villa Royal
Rental taxation is separate from the ordinary obligations that come with owning property in Costa Rica.
Depending on your property and ownership structure, that can include municipal real-estate taxes, Costa Rica’s Solidarity Tax on qualifying high-value residential properties, corporate obligations, and potentially local licensing requirements.
Municipal licensing is particularly worth discussing with your Costa Rican attorney because Costa Rica’s municipalities don’t all treat short-term rental operations identically; requirements can depend on the canton, the property, and how the rental is operated.
Yes, and this is an especially important question if you’re still deciding what to buy.
Costa Rica’s national short-term-rental framework doesn’t erase the rules attached to a particular condominium or private community. Condominium law recognizes that the use of an individual unit remains subject to the condominium regime, its regulations, and applicable owner-assembly decisions.
Some communities permit vacation rentals freely. Others impose conditions on minimum stays, occupancy, guest access, parking, amenities, or other aspects of the rental. And some developments either prohibit short-term rentals or require owners to place rental properties into a particular in-house management program, which can limit your flexibility and sometimes comes with a considerably different fee structure.
If rental performance is part of your reason for buying, you want to understand those restrictions before you own the home. This is also where we can be extremely helpful to prospective owners, even though your attorney should review the actual condominium documents and advise you on what they permit.
We know the luxury rental market. We know what guests are booking, what amenities perform well, which layouts work for groups, what different locations offer, what travelers at your target price point expect, and where a potential property may sit within its competitive set. So, while the legal question is whether you can operate the rental the way you intend, the investment question is whether you should buy that particular property in the first place. You’ll want good guidance on both.
A staffed luxury villa can introduce employment considerations of its own.
If your ownership entity directly employs housekeepers, caretakers, cooks, gardeners, maintenance personnel, or other staff, Costa Rican labor, social-security, and occupational-risk requirements may apply. Per Costa Rica’s Ministry of Labor, employers have obligations concerning worker protection and occupational-risk insurance through the INS.
This is another area where you’ll want professional advice on your particular arrangement. An employee, an independent contractor, and a worker employed by your property-management company aren’t necessarily the same thing from a legal standpoint.
Our professional management can make the operational side much simpler by coordinating established teams and trusted providers rather than leaving you, from another country, to assemble and manage every service relationship independently.
If there’s one thing worth taking away from this overview, it’s that the regulatory side of owning property in Costa Rica doesn’t live in one tidy place.
The ICT has the tourism-registration piece. Hacienda handles taxation and invoicing. Your municipality may have local requirements. Your condominium or HOA has another set of rules. Your ownership entity can create additional responsibilities. Online platforms add another layer. And then there’s your actual villa, with guests arriving, staff and vendors coming and going, maintenance to coordinate, bookings to track, and a business to run.
No single professional does it all. Your Costa Rican attorney should be the authority on the legal obligations attached to your property and ownership structure. Your accountant should advise you on taxation, filings, and financial reporting. And as your Costa Rica property management team, we handle the operational world surrounding your property and keep the information generated by that operation organized.
For you as an international owner, your team is indispensable. You may be very comfortable owning investments across borders and still have no interest in deciphering Costa Rican legal or financial Spanish, monitoring changes to local requirements, or piecing together information from five different vendors every time your accountant needs an answer.
That isn’t something you should have to do alone. At Luxury Villas in Costa Rica, we work with owners who expect their vacation homes to be managed as real assets. We care for your property, operate the rental, maintain the records, support the guest experience, and work alongside the professional advisors you rely on for legal and financial guidance.
And if you haven’t bought yet, bring us into the conversation early. We can help you look at a potential villa through the lens we know best: how it will actually perform as a luxury vacation rental once you own it.
Whether you’re evaluating a new investment or taking a closer look at the management behind a property you already own, get in touch. Let’s talk about what your villa needs from the team behind it.
