Jun 8, 2026
By: Rebeca Sequeira | Finance Manager - EAS LATAM
The central message is clear: accounting may recognize exchange differences at closing, but for purposes of the Corporate Income Tax, only those that have been realized should be taxable or deductible.
IFRS: accounting recognition of foreign exchange differences
Under IAS 21 - The Effects of Changes in Foreign Exchange Rates, monetary items in foreign currency - such as cash, accounts receivable, accounts payable, or loans - are translated at the closing exchange rate at the end of each period. Exchange differences arising from settlement or from the translation of monetary items are normally recognized in profit or loss.
From a financial perspective, this treatment allows the financial statements to reflect the updated economic effect of holding assets or liabilities in foreign currency. If a company has an account receivable in U.S. dollars and the exchange rate changes at closing, accounting must reflect that effect, even if the receivable has not yet been collected.
Costa Rican tax treatment: realization criterion
The Costa Rican tax treatment does not automatically follow the same accounting logic. In the consultation, the Tax Administration confirms that the determination of taxable income or deductible expenses from foreign exchange differences must respect the realization criterion, both for Corporate Income Tax and for capital income, capital gains, and capital losses.
This means that the foreign exchange difference recorded for accounting purposes at closing may be necessary under IFRS, but it should not necessarily affect the income tax base if it has not been realized through collection, payment, currency exchange, or acquisition of another asset.
The DGT itself indicates that the reference to the fiscal period closing operates as an accounting measurement benchmark, but should not imply an automatic tax effect. It even warns that taxing unrealized foreign exchange differences could force the taxpayer to pay tax on an external element of its activity that has not been effective, which could generate an unreal and arbitrary taxation.
Practical comparison
Situation | Treatment under IFRS | Costa Rican tax treatment |
Account receivable in U.S. dollars at closing | It is updated at the closing exchange rate and may generate an accounting gain or loss. | It does not necessarily affect income tax if it has not been collected. |
Account payable in U.S. dollars at closing | It is updated at the closing exchange rate. | It does not necessarily generate a deductible expense or taxable income if it has not been paid. |
Collection of an account receivable in U.S. dollars | The final effect is recognized in profit or loss. | At that point the exchange difference is realized and may be taxable or deductible. |
Payment of a liability in U.S. dollars | The final difference is recognized. | At that point the exchange difference is realized for tax purposes. |
Simple example
A company invoices USD 100,000 when the Costa Rican Central Bank selling exchange rate was CRC 520. At the fiscal year-end, the account remains outstanding and the exchange rate decreases to CRC 500.
For accounting purposes, under IFRS, the account receivable must be updated and an unrealized exchange loss is recognized. For tax purposes, according to the DGT criterion, that effect should not yet be deducted if the account has not been collected.
If the company later collects the USD 100,000 when the exchange rate is CRC 510, the realized exchange difference is calculated by comparing the exchange rate on the date of the economic transaction with the exchange rate on the date the income is received or the liability is paid, using the Central Bank selling exchange rate.
What companies should monitor
This criterion requires a proper tax reconciliation. It is not enough to take the accounting result and transfer it directly to the income tax return.
Type of exchange difference | Expected treatment |
Realized exchange difference | Taxable or deductible, as applicable. |
Unrealized exchange difference at closing | Accounting record, but tax reconciliation. |
Exchange difference associated with exempt income or free trade zone activity | It should be segregated. |
Exchange difference associated with taxable transactions | It may affect taxable income if realized. |
For companies under a free trade zone regime, or with both taxable and exempt income, the analysis must be even more careful, because not every foreign exchange difference necessarily belongs to the same tax basket.
The Tax Administration criterion is important because it separates two areas that are often confused: accounting measurement under IFRS and the tax determination of income tax.
For practical purposes, companies should keep clear records of the original transaction date, the exchange rate used, the collection or payment date, and the reconciliation between accounting results and the tax base. In an environment of exchange rate volatility, this difference may have a relevant impact on the income tax return.
References
General Tax Directorate. Consultation MH-DGT-DNTI-DCN-CONS-0022-2026, February 25, 2026. Tax treatment of realized and unrealized foreign exchange differences.
Income Tax Law, Law No. 7092: articles 1, 5, and 27 bis.
Regulations to the Income Tax Law, Executive Decree No. 43198-H: articles 13(c), 17(o), and 47.
IAS 21 - The Effects of Changes in Foreign Exchange Rates.