The US and Costa Rica have a New Tax Information Sharing Agreement!

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On April 20, 2018, the Governments of Costa Rica and the U.S.A. signed a new version of their AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE REPUBLIC OF COSTA RICA FOR THE EXCHANGE OF INFORMATION RELATING TO TAXES.  The prior agreement was signed in 1989 and has been in force since 1991. This new agreement which was signed by the President of the Republic of Costa Rica, Luis Guillermo Solís Rivera, and the Ambassador of the United States, Sharon Day, must be submitted to the Costa Rican Legislative Assembly for ratification.   The purpose of the new agreement is to meet the standard of fiscal transparency set out by the Organization for Economic Cooperation and Development (OECD) regarding the exchange of information for tax purposes.

On April 22, 2018, the Costa Rica Star reported that Mr. Leonardo Salas, Minister of  Costa Rica Treasury ad interim, commented: “The signing of this new Agreement of Exchange of Tax Information with the United States represents another step in the search for more fiscal transparency, one of the most important objectives of the country for some years. This new agreement shows the commitment of the country in having an effective exchange of information according to the standards of the Global Forum of Transparency and Exchange of Information of the OECD for tax purposes. I want to thank all collaborators that participated in the process of negotiation and signing, whose efforts are reflected in the satisfactory conclusion of this agreement”.

What is Object and Scope of the Agreement?

“The competent authorities of the Parties shall provide assistance to each other through exchange of information that is foreseeably relevant to the administration and enforcement of the domestic laws of the Parties concerning taxes covered by this Agreement. Such information shall include information that is foreseeably relevant to the determination, assessment and collection of such taxes, the recovery and enforcement of tax claims, or the investigation or prosecution of tax matters. Information shall be exchanged in accordance with the provisions of this Agreement and shall be treated as confidential in the manner provided in Article 10 (Confidentiality)”

Exchange of Information Methods outlined in the Agreement

⦁    Exchange of Information Upon Request

⦁    Automatic Exchange of Information

⦁    Spontaneous Exchange of Information

The U.S. Department of the Treasury has a Signed Intergovernmental Agreement (IGA) with Costa Rica

On November 26, 2013, the IGA between the U.S. and Costa Rica was signed to implement FATCA.  Foreign Financial Institutions (FFIs) have been identifying and reporting tax information regarding U.S. account holders of Costa Rican Financial Institution accounts to the US Treasury.  The Costa Rica IGA is a Model 1A agreement which means that the U.S. is obligated to provide tax information to the Costa Rican government regarding Costa Rican individuals with accounts in the United States (reciprocal agreement).

Why was the Exchange of Information Agreement updated?

Renegotiating the Exchange of Information Agreement allows both the U.S. and Costa Rica to:

⦁    Assess, settle and collect taxes

⦁    Collect and execute tax claims

⦁    Investigate or prosecute tax matters

Don’t be a Victim of your Own Making.  Information Exchange is here to Stay!

The new Agreement signed between the U.S. and Costa Rica is aligned with the OECD standard for information exchange and mutual assistance.  US Taxpayers with undeclared Foreign Accounts as well as Costa Rican Nationals with undeclared U.S. accounts need to consult their specialized tax representative.  

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