Transfer Pricing in Costa Rica

The legal framework

Costa Rica applies the arm's length principle under article 81 bis of the Income Tax Law (Law 7092), inserted by the 2018 public finance reform, Law 9635; the operating machinery sits in Title V, articles 74 to 83, of the Income Tax Law Regulation, Executive Decree 43198-H of 22 July 2021. The regime is older than those dates suggest. The Dirección General de Tributación had been adjusting transfer prices since Interpretative Directive 20-03 of 2003, and the Constitutional Chamber upheld that practice in votes 4940-2012 and 8739-2012, holding that articles 8 and 12 of the Tax Code sufficed and that no single method was mandated. The case law predates the statute it now interprets.

One feature of article 81 bis is easy to miss and expensive to overlook: the re-pricing power bites only where the related-party price produces lower Costa Rican tax or a deferral. It is a floor under taxable income, not a neutral valuation standard. Relief in the other direction runs solely through the correlative adjustment in article 76, and only where a double tax convention provides for it. The network is four treaties — Spain, Germany, Mexico and the United Arab Emirates — all approved after 2010, but they do not all carry the post-2010 Article 7: the Spanish convention was signed in 2004 and keeps the older six-paragraph text, so attribution wording has to be checked treaty by treaty.

Article 77 casts relatedness widely, reaching 25 per cent of capital or votes held directly or indirectly, five or fewer persons controlling both entities, single-decision-unit tests built on board appointment powers or overlapping executives, joint ventures, and head office and permanent establishment pairings. Relatedness is presumed where the counterparty sits in a non-cooperative jurisdiction. Domestic dealings are in scope alongside cross-border ones. The OECD Guidelines carry no formal legal status and no domestic instrument incorporates them, but the DGT invokes them openly — by name in the recitals to its APA resolution — and Costa Rica has been an OECD member since 2021.

Methods, comparables and benchmarking

Article 79 lists the comparable uncontrolled price, cost plus, resale price, profit split and transactional net margin methods, plus an alternative to CUP for goods with an international quoted price. There is no hierarchy: the taxpayer picks the method that best respects the arm's length principle and, under Resolution DGT-R-49-2019, must justify the choice. The DGT may authorise further methods by general resolution, the only door through which an Amount B style approach could enter. Comparability under article 78 tracks Chapter III closely, adjustments are mandatory where they eliminate material differences, and the Regulation states that a database search is one part of a comparability analysis, not a substitute for it.

Benchmarking outcomes under article 80 are stricter than many expect. A single comparable stands as the reference; with two or more an interquartile range must be built, and a tested result outside the first-to-third quartile band is deemed non-arm's-length and adjusted to the median. There is no full-range option and no tolerance band. Local practice computes quartiles on the inclusive convention (Circular 23-2022), so an exclusive-method study may be reviewed against different arithmetic.

No preference for local comparables applies, and the small domestic listed universe makes regional sets the norm. The tested party need not be the Costa Rican entity, but the local file must name it and explain the selection, and form 273 now requires the choice to be flagged. No dedicated rules govern intangibles, services or financial transactions; Chapters VI, VII and X are followed in practice. Two consequences bite: the simplified approach for low value-adding services has not been adopted, so management charges need real benchmarking, and hard-to-value intangibles are unregulated, so the presumptive HTVI adjustment does not apply.

Documentation: what the DGT expects

Costa Rica runs a two-tier system with a different population in each tier. The documentation obligation has no threshold: under article 82 of the Regulation and Resolution DGT-R-49-2019, every taxpayer transacting with related parties must hold a master file and a local file demonstrating arm's length outcomes. Nothing is filed periodically; the files are produced on demand. Under article 43 of the Tax Procedure Regulation an individualised request carries ten working days to comply, extendable by twenty more only for force majeure or genuine complexity. Ten working days is not enough time to build a study, which is the point of a contemporaneous standard. Documentation must be in Spanish and kept for the five-year period in article 109 of the Tax Code.

The second tier is the annual informative return, form 273, reinstated by Resolution MH-DGT-RES-0026-2025 after an eight-year suspension and filed only through the TRIBU-CR virtual office; anything filed another way counts as not filed. Three categories file: large national taxpayers, Free Trade Zone taxpayers, and taxpayers whose related-party transactions exceed 1,000 base salaries, roughly 462 million colones for 2026. Note a mismatch: article 81 of the Regulation also lists large territorial enterprises, which the resolution omits.

The deadline is six months after fiscal year end, but the first two cycles run on transitional dates, FY2024 by 31 March 2026 and FY2025 by 30 June 2026; mid-2025 commentary giving 30 November 2025 for FY2024 is superseded. Per counterparty and transaction type the return collects the method, the arm's length adjusted amount, the tested party, the profit level indicator with its formula and result, the median and both quartile bounds, and the databases used. Country-by-country reporting sits separately under Resolution DGT-R-001-2018 at the 750 million euro threshold, filed by 31 December of the following year in OECD XML, notified by the last working day of March, and only by a Costa Rican ultimate parent or designated surrogate: there is no secondary local filing.

Audits, penalties and the enforcement climate

The DGT audits under article 75 of the Regulation and the fact-finding power in article 103(b) of the Tax Code, with cases run by the large-taxpayer directorate or by Control Tributario Material. There is no bespoke transfer pricing penalty. Failure to supply information attracts the article 83 fine of 2 per cent of gross income for the preceding period, floored at three and capped at one hundred base salaries, cut by 75 per cent if the information arrives within three days of the deadline. An adjustment is sanctioned under article 81: 50 per cent of the sanction base as standard, 100 per cent where data was concealed and the debt exceeds 10 per cent of the base, 150 per cent where fraudulent means were used. What Costa Rica does not offer is a documentation-based penalty shield; the DGT's own framing is that a study is evidence in the taxpayer's favour whose protective value tracks the quality of the analysis.

Assessments reach back four years, ten where the taxpayer is unregistered or non-filing. Litigated volume has been low, though the published figures need care. A DGT presentation of November 2023 is the sole source for the frequently quoted 28 cases, 57 per cent decided in the administration's favour and 4 per cent annulled; that deck could not be retrieved and the numbers should be treated as unverified. The Sala Primera line opens with Colgate Palmolive (475-2013) and Nestlé (1365-2013), and independent accounts count ten such judgments through July 2022 — including GlaxoSmithKline (383-2022) and British American Tobacco (750-2022) — with the State prevailing in nine of them. Low volume is not low risk: the 2026 return gives the administration structured selection data for the first time.

Dispute resolution and advance certainty

Costa Rica has the full menu on paper and almost no track record. Advance pricing agreements rest on article 81 bis, article 83 of the Regulation and Resolution DGT-R-14-2021. Only unilateral APAs are procedurally regulated; article 83 promises bilateral and multilateral rules by resolution, and none has issued. There is no filing fee, and pre-filing meetings can be held anonymously, so exploratory contact is cheap. Under article 4 the DGT has six months to decide, extendable by six, with negative silence deeming the proposal rejected. Under article 6 an APA covers five fiscal periods beginning with either the year of application or the following year, so the current year can be covered but earlier years cannot: there is no rollback, although the DGT has told the OECD it is working on an amendment to allow one. Holders file an annual compliance report by the last working day of the third month after year end, and missing it leads to cancellation. Refusals and cancellations carry no appeal, and the agreement is spontaneously exchanged with the counterparties' residence jurisdictions.

Mutual agreement procedure runs under Resolution DGT-R-12-2017, with a three-year window from first notification of the measure, deemed admission if the DGT stays silent past its peremptory deadlines, and a 24-month conclusion target. One rule forces an early decision: commencing court proceedings archives the MAP definitively, and once a court has ruled the competent authority is bound. Treaty and litigation routes are alternatives, not a hedge. As at January 2026 no APA had been signed and no MAP concluded, so counsel should assume they are setting the practice. Domestically, an assessment can be met with an optional revocatoria within 30 working days or an appeal to the Tribunal Fiscal Administrativo, then the courts; filing both routes makes the second inadmissible.

Pillar Two, Amount B and what changes in 2026

As at August 2026 Costa Rica has not enacted GloBE rules: no income inclusion rule, no UTPR and no qualified domestic minimum top-up tax appear in the national legal database. The only normative trace is organisational, in Executive Decree 45736-H of April 2026. The exposure is immediate all the same, because the Free Trade Zone regime hosts many in-scope groups whose low effective rates will be topped up abroad if not collected locally. A domestic minimum tax is the obvious response, and FTZ groups should model it now.

On Amount B, Costa Rica is a covered jurisdiction for the Inclusive Framework political commitment running from 2025 to 2029 but has issued nothing domestically. Its framework does not allow the simplified and streamlined approach; it will respect outcomes applied by covered jurisdictions and not those applied by others. Local adoption would need a DGT general resolution under article 79. Two further 2026 changes matter: the article 9 bis interest limitation reaches its 20 per cent of EBITDA floor this year, ending a phase-in that began at 30 per cent in 2021, and Executive Decree 45500 of 23 January 2026 rewrote parts of the Tax Procedure Regulation, amending article 43 on information requests and article 268 on sanctioning procedure and repealing article 268 quater.

How practitioners should respond

Four priorities. First, close the contemporaneity gap. Because the master and local files fall due within ten working days of a request and apply with no threshold, any group with Costa Rican related-party dealings needs a Spanish-language file finished by the return deadline, not commissioned when the request lands.

Second, reconcile the study to the return before filing. Form 273 discloses the method, the tested party, the profit level indicator and its result, the median and quartile bounds, and the databases used, per counterparty and per transaction type. Those fields must match the study exactly; inconsistency is the cheapest audit trigger in the system to create and the hardest to explain.

Third, treat the quartile rule as a design constraint. With adjustment to the median and no tolerance band, a result near a quartile boundary carries real exposure; test sensitivity to comparable selection before signing.

Fourth, be realistic about relief. The arm's length rule is one-directional, there are no secondary adjustments, correlative relief needs one of four treaties, only unilateral APAs exist, and MAP and litigation are mutually exclusive. Where an adjustment is plausible, the practical protection is a well-evidenced contemporaneous file and, for material recurring flows, a unilateral APA over the current and following four years. The remedial architecture is thin, so the front-end work must carry the weight.