Countries › Costa Rica › Guide › 6. Taxes › Interest deduction limits in Costa Rica: 20% of EBITDA for net non bank interest, indefinite carryforward and no deduction without withholding

Interest deduction limits in Costa Rica: 20% of EBITDA for net non bank interest, indefinite carryforward and no deduction without withholding

Argentina. For full detail on Argentina, go to The Argentine Thread.

Last verified: 2026-10-29 · Status: Stable

Costa Rica has no debt to equity ratio; instead, net interest expense is deductible only up to 20% of EBITDA (UAIIDA) each year, with the excess carried forward indefinitely within the same annual cap. Interest owed to Costa Rican supervised financial entities, the development banking system and supervised foreign banks, and interest financing domestic public infrastructure projects, is outside the cap. Interest paid to S.R.L. quota holders and interest on which withholding was not made are never deductible.

USD figures use the Banco Central de Costa Rica reference selling rate of ₡454.82 per US dollar published for 29 October 2026 (indicator 318 on bccr.fi.cr), rounded to the cent. The salario base for 2026 is ₡462,200 (Circular 246-2025 of the Consejo Superior del Poder Judicial, under Ley 7337 art. 2).

Key facts

Interest limitation type	Net interest up to 20% of EBITDA (UAIIDA) Ley 7092 art. 9 bis, as of 2026-10-29 · in force
Net interest cap as share of EBITDA	20 %Ley 7092 art. 9 bis, as of 2026-10-29 · in force
Carryforward of disallowed interest	Unlimited, within each year's cap Ley 7092 art. 9 bis, as of 2026-10-29 · in force
Fixed debt to equity ratio	None Ley 7092 art. 9 bis, as of 2026-10-29 · in force

The rule

1. Net interest expense (interest expense less financial income) is deductible up to 20% of profit before interest, taxes, depreciation and amortisation (UAIIDA) for each period; UAIIDA is net profit plus deductible financing costs, depreciation and amortisation (art. 9 bis).
Example: UAIIDA of ₡500,000,000: maximum net interest ₡100,000,000. / About US$219,867.20 on US$1,099,336.00.Ley 7092, art. 9 bis added by Ley 9635, art. 9 bis, 2018-12-03 official text · verified 2026-10-29

2. Excluded from the calculation: bank loan formalisation fees and FX differences, and interest on debts with the Sistema de Banca para el Desarrollo, entities supervised by a superintendency under CONASSIF, and foreign banks and financial entities supervised in their home country; the administration may still include them if the loan is not real or is backed by the borrower's own deposits. Interest financing public infrastructure projects of a domestic developer subject to the 2% withholding of art. 23(g) is excluded, along with the project profits (art. 9 bis).Ley 7092, art. 9 bis, 2018-12-03 official text · verified 2026-10-29

3. Net interest above 20% may be deducted in later periods, without time limit, within each period's cap; the taxpayer must prove those expenses whenever they arose, even after the ordinary prescription period. Entities supervised under CONASSIF are excluded from the rule, and the administration may authorise a higher limit on a prior reasoned request (art. 9 bis).Ley 7092, art. 9 bis, 2018-12-03 official text · verified 2026-10-29

4. Interest and financial expenses are deductible only if directly related to the business and taxable income and not capitalised; interest paid to quota holders of an S.R.L. is treated as a dividend and is not deductible, interest is not deductible if the related withholding was not made, and the taxpayer must show the use of the loan (art. 8(d)). Written or unwritten loans are presumed to bear at least the highest BCCR lending rate (art. 10).Ley 7092, art. 8(d) and art. 10, 2018-12-03 official text · verified 2026-10-29

Worked example

A subsidiary with UAIIDA of ₡500,000,000 (US$1,099,336.00) pays ₡150,000,000 of interest to its foreign parent and has no financial income. It deducts ₡100,000,000 (US$219,867.20) this year and carries ₡50,000,000 (US$109,933.60) forward. A loan from a supervised foreign bank would be outside the cap. The 15% withholding on the full ₡150,000,000 still applies.

Step by step

Compute UAIIDA from the tax return figures each year.
Separate interest owed to supervised lenders, which is outside the cap.
Track disallowed interest by year with supporting documents, since it may be used years later.
Withhold and pay tax on interest to foreign lenders on time to keep it deductible.

Common traps

Back to back loans through a bank backed by the borrower's own deposits are brought back into the cap.
Quota holder loans in an S.R.L. give no deduction at all (art. 8(d)).
Interest free intercompany loans can be imputed interest at the BCCR lending rate (art. 10).

Sources

Related: Costa Rica country profile · live dashboard · central bank and release calendar · our posts on X · where Argentina is involved, see The Argentine Thread guide

← Transfer pricing in Costa Rica: arm's length rule, 25% related party test, annual return above 1,000 salarios base and five year APAsTax losses in Costa Rica: three year carryforward, five years for agricultural, new industrial and audiovisual companies, no carryback →

Get rule changes weekly

Free. One email a week from The LatAm Thread.

One more step after you press the button: we take you to Substack, where your email is already filled in. Confirm there to start. No spam, unsubscribe anytime, we never share your address. By subscribing you agree to the privacy policy.