The fiscal evolution in the regulation of digital platforms such as Airbnb in Costa Rica. An origin without a regulatory framework.

By Gabriela Paez

Airbnb was born in 2007, in the context of the financial and real estate crisis that was affecting the United States. The high cost of living in cities like San Francisco and the economic difficulties led two distressed entrepreneurs to look for creative ways to generate additional income to cover the rent or their apartment loan. Their solution was simple but innovative: they inflated three mattresses in their living room and offered short-term accommodation to visitors attending a conference in the city, including a breakfast service. Thus the concept of “ Air Bed and Breakfast ” was born.

The idea evolved from the realization that many people faced similar needs: taking advantage of available spaces to generate income, especially in times of economic uncertainty. This concept evolved into a digital platform that connected hosts with travelers, charging commissions for each reservation made. This model allowed Airbnb to expand globally in a short time.

However, its growth occurred in an environment marked by a lack of legal and fiscal regulation. Many cities did not have specific laws for this new form of accommodation, which led to conflicts over taxation, the impact on the real estate market and competition with the traditional hotel sector. Although it began as a subsistence solution, Airbnb became one of the largest and most disruptive companies in global tourism.

When these platforms began to operate in Costa Rica, the activity grew rapidly, but without a clear legal framework to regulate them. Many owners of houses and apartments took advantage of these platforms to offer accommodation to national and international tourists, but the vast majority did so in a completely informal manner. This not only generated inequality with the traditional hotel sector, which had to comply with rigorous tax and quality regulations, but also represented a significant loss of tax revenue for the State. The Treasury, without the necessary tools to identify and supervise these operations, faced tax evasion in a growing market.

Costa Rica's first step. Law No. 9742: A basis for regulating digital hosting

In 2019, the Legislative Assembly responded to this problem by enacting the Framework Law for the Regularization of Non-Traditional Lodging and its Intermediation through Digital Platforms. This Law established specific rules for the first time, obliging both property owners and digital platforms to register with the corresponding authorities. Among the provisions, the obligation to register with the Costa Rican Tourism Institute (ICT) and the General Directorate of Taxation (DGT) stood out, as well as the application of the 13% Value Added Tax (VAT) on lodging services and therefore on its profit tax in any of its forms. The law also laid the groundwork for the creation of a registry of providers and platforms, a fundamental tool to guarantee transparency and facilitate oversight. This was an essential first step towards the formalization of digital lodging.

Second step: Decree No. 43154. Refining the rules and closing gaps

In 2021, the Government issued Executive Decree No. 43154, a regulation that specified how Law No. 9742 was to be applied. This decree introduced important measures to strengthen fiscal control, such as the obligation for owners to file monthly tax returns and the designation of digital platforms as VAT withholding agents. This meant that platforms such as Airbnb and Booking.com were required to collect VAT directly from payments made by users and transfer it to the Treasury. The Decree also strengthened cooperation between the ICT and the DGT, requiring the sharing of data from registered borrowers to facilitate the detection of non-compliance. These measures began to close gaps that previously allowed tax evasion, forcing many borrowers to formalize their activities.

Next step: Resolution MH-DGT-RES-0025-2024. Automation and international standards

The next breakthrough came in 2024, when Costa Rica implemented Resolution MH-DGT-RES-0025-2024, which marked a turning point in the taxation of digital hosting. Based on OECD standards, this Resolution introduced the automatic exchange of tax information, obliging digital platforms to annually report to the Treasury the income generated by each owner. This includes details about the properties rented, the fees charged, and end-user data. The resolution also imposed strict due diligence rules on platforms, requiring them to verify the tax residency of borrowers and ensure that they comply with their tax obligations. This level of automation and transparency not only closed loopholes for tax evasion, but also brought Costa Rica in line with international standards for the digital economy.

The measures implemented have had a slight impact on tax collection and the formalization of the sector. What was previously a predominantly informal activity is now expected to be considerable for the national treasury. In addition, by regulating both traditional and non-traditional accommodation under the same rules, a greater competitive balance has been achieved in the tourism market. However, there are still things to be done. Many small owners continue to operate outside the system, either due to ignorance of their obligations or a lack of resources to formalize. And we must be careful since many owners base their income from these platforms to finance their investment-type apartments in the future. In this context, it is foreseeable that the Treasury, at some point, will require clear accounts of these operations.

Conclusion

Costa Rica has come a long way since the days when digital hosting was a disorderly and uncontrolled phenomenon. Law No. 9742, Decree No. 43154 and the 2024 Resolution have transformed this sector, leading owners and platforms to operate under a clear and equitable legal framework. Although there are still loopholes to close and overcome, the combination of national legislation, international cooperation and monitoring technologies puts Costa Rica in a strong position to continue advancing the regulation of digital hosting.