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Transfer pricing in Costa Rica: arm's length rule, 25% related party test, annual return above 1,000 salarios base and five year APAs

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

Taxpayers that transact with related parties in Costa Rica or abroad must price them at arm's length for income tax, and the tax administration adjusts only where the agreed price lowers or defers Costa Rican tax. Related parties include 25% direct or indirect ownership or control and any party in a non cooperative jurisdiction. Large taxpayers, free zone companies and anyone whose related party transactions exceed 1,000 salarios base (₡462,200,000 in 2026) file an annual transfer pricing information return, and advance pricing agreements run for five years.

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

Arm's length principle in the income tax law	Yes Ley 7092 art. 81 bis, as of 2026-10-29 · in force
Ownership or votes test for related parties	25 %Decreto 43198-H art. 77, as of 2026-10-29 · in force
Related party transactions above which the annual TP return is due	462200000 CRCDecreto 43198-H art. 81(b); 1,000 salarios base (Circular 246-2025), as of 2026-01-01 · in force
Advance pricing agreement term	5 yearsDecreto 43198-H art. 83, as of 2026-10-29 · in force

The rule

1. Taxpayers that carry out transactions with related parties resident in Costa Rica or abroad must determine income, costs and deductions using the prices independent parties would agree in comparable transactions, following the economic reality principle of CNPT art. 8. The valuation applies only when the agreed price results in lower tax or deferral in Costa Rica, and the administration may adjust and is bound by the adjusted value for other resident related parties (art. 81 bis). The law empowers the Executive to regulate methods, correlative adjustments, documentation, the information return, unilateral, bilateral and multilateral APAs and mutual agreement procedures; refusals of APA requests cannot be appealed.Ley 7092, art. 81 bis added by Ley 9635, art. 81 bis, 2018-12-03 official text · verified 2026-10-29

2. Related parties include persons that participate directly or indirectly in management, control or capital, in particular a holding of at least 25% of capital or votes, five or fewer persons controlling both parties with 25% together, and companies forming a decision unit. Transactions with residents of non cooperative jurisdictions (a profit tax rate more than 40% below the 30% rate, or no information exchange agreement or treaty with Costa Rica) are presumed related (art. 77).Decreto Ejecutivo 43198-H, Reglamento de la Ley del Impuesto sobre la Renta, art. 77, 2021-07-22 official text · verified 2026-10-29

3. Methods: comparable uncontrolled price, cost plus, resale price, profit split and transactional net margin, applying the most appropriate method (art. 79); the comparability analysis covers the characteristics of the transactions, functions, assets and risks, contract terms, economic circumstances and business strategies (art. 78).Decreto Ejecutivo 43198-H, art. 78 and art. 79, 2021-07-22 official text · verified 2026-10-29

4. An annual transfer pricing information return is required from taxpayers with related party transactions that are classified as large national taxpayers or large territorial companies or are in the free zone regime, or whose related party transactions exceed 1,000 salarios base in the year; all taxpayers with related party transactions must still set arm's length prices (art. 81). Documentation must be available to the administration, in Spanish, for the CNPT art. 109 retention period (art. 82).
Cost to do it: Threshold of 1,000 salarios base: ₡462,200,000 in 2026, about US$1,016,226.25.Decreto Ejecutivo 43198-H, art. 81 and art. 82, 2021-07-22 official text · verified 2026-10-29

5. Taxpayers may request an advance pricing agreement before the transactions; it lasts five years, and if no agreement is reached the file is closed with no appeal (art. 83). A correlative adjustment following another country's adjustment is available where a treaty in force provides for it (art. 76).Decreto Ejecutivo 43198-H, art. 76 and art. 83, 2021-07-22 official text · verified 2026-10-29

Worked example

A distribution subsidiary buying ₡600,000,000 (US$1,319,203.20) a year from its foreign parent exceeds the 1,000 salarios base threshold (₡462,200,000) and must file the annual information return, even if it is not a large taxpayer.

Step by step

Map all related party transactions, including with domestic group companies and branches.
Prepare a functional analysis and benchmark with the most appropriate method.
Check whether the free zone, large taxpayer or 1,000 salarios base test triggers the annual return.
Keep documentation in Spanish ready for audit; consider an APA for recurring material flows.

Common traps

Free zone companies must file the information return regardless of transaction size (art. 81(a)).
Any transaction with a party in a non cooperative jurisdiction is presumed related (art. 77) and its expenses may be non deductible (Ley 7092 art. 9(k)).
An adjustment upward in Costa Rica is not automatically matched abroad; correlative relief depends on a treaty.

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

← VAT in Costa Rica: 13% on goods and services, reduced rates of 4%, 2%, 1% and 0.5%, reverse charge on services from abroad and monthly returnsInterest deduction limits in Costa Rica: 20% of EBITDA for net non bank interest, indefinite carryforward and no deduction without withholding →

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