Good Evening from Costa Rica
Costa Rica has long taxed only the money its residents earn here. A bill sent to lawmakers this week would change that for part of it, with a proposed 15% tax on interest, dividends, rents, royalties and capital gains earned abroad. The timing is awkward, landing the same week a global index ranked Costa Rica fifth in the world for retirees, partly on how lightly it treats foreign income.
Also this week: President Laura Fernández fired her foreign minister over a missed meeting with Donald Trump, El Niño has 74 communities on water rationing, drones are forcing pauses at the main airport, and a stormy Saturday turned deadly at a Guanacaste beach.
This Week By the Numbers
15% — proposed tax on certain foreign income earned by Costa Rican tax residents
139 — days Manuel Tovar lasted as foreign minister, the shortest tenure since 1948
74 — communities rationing water as El Niño dries out the Pacific side
5th — Costa Rica’s world ranking for retirees in the 2026 Global Relocation Index
23 — Michelin Key hotels in Costa Rica, more than the rest of Central America combined
₡454.70 — where the dollar closed Friday, its highest level since June
The Top Story
The bill now goes to the Legislative Assembly, where it can be amended or rejected. (Ezequiel Becerra / AFP)
If you are a tax resident of Costa Rica and earn money from investments or property abroad, a bill presented to the Legislative Assembly on Tuesday could eventually change what you owe. It proposes a 15% tax on five types of foreign income: interest, dividends, royalties, rent and capital gains.
That would be a real shift. Costa Rica has long used a territorial system, taxing income generated here rather than elsewhere. The bill keeps that system but carves out a broad exception for passive income from abroad, and it reaches individuals, companies, trusts and investment funds, not just multinational groups.
It is not a tax on every dollar you bring in. The bill does not say pensions, salaries or retirement income would automatically be covered, and how each source is treated would depend on how it is classified under Costa Rican tax law. Tax residency is also a separate question from immigration residency.
Foreign tax you have already paid, such as U.S. withholding on dividends, would count toward what you owe here so the same income is not taxed twice. The government says the goal is to treat foreign investment income the same as income earned in Costa Rica.
For now, nothing has changed. The bill still has to be debated, and its wording could change substantially before any final vote.
More News
Tovar lasted 139 days in the job.
President Laura Fernández fired Foreign Minister Manuel Tovar on Thursday, saying he failed to tell her about a Shield of the Americas security meeting with U.S. President Donald Trump in New York. Tovar attended and led the Costa Rican delegation. Fernández says she was never properly informed or given the chance to go herself, and her office called the handling of the invitation negligent.
The dismissal came while Tovar was in New York for the UN General Assembly, where Costa Rica is backing Rebeca Grynspan for secretary-general. His 139 days made him the shortest-serving foreign minister since 1948, and Foreign Trade Minister Indiana Trejos is now acting foreign minister.
By the end of the week, Fernández was defending the decision in blunt terms, warning her Cabinet that major decisions go through her.
Rainfall on the Pacific slope is running up to 37% below normal. (Ezequiel Becerra / AFP)
If you live on Costa Rica’s northern Pacific side, your tap may already be on a schedule. Community water systems in 74 communities are rationing because springs and wells are losing flow, and some have dried up. The cuts are concentrated on the Nicoya Peninsula, central Guanacaste, the hills around Lake Arenal, the Gulf of Nicoya coast and the foothills of the western Central Valley.
This is happening in September, normally one of Guanacaste’s wettest months. The National Meteorological Institute has declared a meteorological drought across the Pacific slope and Central Valley, and El Niño conditions could last until at least January, so the dry season may begin with water sources already depleted.
If you are storing water, use clean, covered containers made for drinking water, and ask your local water board for its rationing schedule. The Caribbean has the opposite problem, with rain up to 42% above normal flooding pastures and damaging rural roads.
Healthcare and foreign-income rules drove Costa Rica’s retiree score.
Costa Rica placed fifth in the world for retirees in the 2026 Global Relocation Index from Singapore-based advisory firm Rumavi, behind Malaysia, Panama, Portugal and Thailand. Overall it ranked 20th of 192 countries and territories, the highest in continental Latin America and ahead of Panama, Uruguay and Canada.
The retiree ranking gives the most weight to healthcare quality and the tax treatment of foreign income. Costa Rica’s strongest pillar was livability and health, with high marks for healthcare affordability, air quality and climate.
The weak spot was safety. Street safety scored 46.1 out of 100, and the country ranked only 60th for entrepreneurs, though it placed 16th for digital nomads and remote workers.
Rivers and waterfalls can rise within minutes when rain falls upstream.
A stormy Saturday turned deadly. Two men between 20 and 25 years old were found dead Saturday night at Playa Cabuyal in Liberia, Guanacaste, after strong currents pulled them out, according to the Costa Rican Red Cross. A woman with them was brought back to shore by people on the beach.
At the Los Reyes waterfall in San Lorenzo de Tarrazú, the Red Cross resumed its search at dawn Sunday for an 18-year-old swept away by the current Saturday afternoon. In Sarapiquí, rescuers reached a woman after floodwaters carried her off a bridge she was trying to cross on a motorcycle.
The storms came with Tropical Wave 47, which dropped up to 125 millimeters (4.9 inches) of rain in places. Stay out of rivers and waterfall pools during and after afternoon storms, and never cross a flooded road or bridge, on foot or by vehicle.
Drone reports near the airport have roughly doubled this year. (ICT)
Drone sightings near Juan Santamaría International Airport have roughly doubled compared with last year, according to airport operator AERIS, and each one can bring takeoffs and landings to a stop.
When a drone is spotted near a flight path, controllers may pause operations until the airspace is clear. For passengers, that can mean delayed departures, arriving planes held in the air and, in serious cases, diversions to another airport.
Flying a drone within 8 kilometers (5 miles) of any Costa Rican airport requires advance permission from civil aviation authorities, and violators face penalties. AERIS says the no-fly zones shown in a drone’s app are not a substitute for checking the rules.
Quick Hits
Playa Blanca is still open, for now. A court suspended visitor and vehicle access to the protected marine wetland around the Garabito beach, but the order cannot be applied until environmental authorities define the affected areas. What they tell the court this week will decide whether access changes.
A wider yellow fever vaccine rule starts October 1. Costa Ricans and legal residents heading to Bolivia, Ecuador, Paraguay, Trinidad and Tobago, Venezuela, Suriname, Guyana or French Guiana need the shot at least 10 days before departure, plus the international certificate.
Rincón de la Vieja keeps erupting. A moderate eruption Wednesday sent a plume up to 2,000 meters (6,560 feet) above the crater, and the Guanacaste volcano has logged 249 steam-driven eruptions since early July. It stays at alert Level 3, and authorities urge care near the rivers that drain it.
The dollar bounced off its record low. It closed Friday at ₡454.70, its highest since June, but one economist expects year-end dollar inflows from aguinaldos and holiday spending to push it back down from late October.
La Sele blew a 3-0 halftime lead. Costa Rica lost 4-3 to Curaçao at home in its Nations League opener as fans chanted for coach Fernando Batista’s exit. Only the top two teams in the group advance.
Spotlight
Nekajui moved up from two Michelin Keys to three. (Ritz-Carlton)
Nekajui, a Ritz-Carlton Reserve on Guanacaste’s Papagayo Peninsula, has been promoted to three Michelin Keys, the guide’s highest hotel distinction. Only 18 hotels worldwide reached the top tier for the first time this year, and Nekajui was the only one in the Americas. It joins Nayara Springs in La Fortuna as Costa Rica’s second Three-Key property.
Michelin singled out Costa Rica as a highlight of its 2026 regional selection. The country added four new One-Key and three new Two-Key hotels and now has 23 Key hotels, more than Belize, Guatemala, Panama, Honduras and Nicaragua combined.
The list reaches well beyond luxury Guanacaste. It includes Pacuare Lodge on the Pacuare River, El Silencio in Bajos del Toro, Lapa Rios on the Osa Peninsula, Aguas Claras in Puerto Viejo and four One-Key hotels in Nosara alone.
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