Third-Party Payments: Tax and Regulatory Considerations in Costa Rica

By Ana Yency Campos

In today’s globalized business environment, it's common for companies to not only provide direct services but also manage payments on behalf of their clients. These types of transactions, known as third-party payments, involve the intermediation of funds. Although this is a legitimate and necessary practice in many industries, these transactions must be handled with appropriate protocols to prevent the Tax Administration from misinterpreting them as the intermediary company's own income, which could lead to undue tax burdens.

Today I'll share with you the guidelines you must follow to comply with the Tax Administration, accounting regulations, and SUGEF (General Superintendency of Financial Institutions).

First, let's define what a third-party payment on account is: it's a transaction in which I make a monetary disbursement on behalf of a third party, without the amount representing any income or expense of my own. In this transaction, I simply act as a payment channel, using funds provided by my client to cover obligations to a supplier or entity, without assuming financial responsibility for the obligation.

This model of fund management is observed in sectors such as:

Shipping Agency and P&I: Shipping agencies cover vessel costs on behalf of their shipowners or P&I (Protection & Indeminity) clubs, including port taxes, surveyor fees, and crew medical expenses.

Property Management: Companies that manage rentals and provide real estate services may receive funds from landlords to pay for utilities, maintenance, or cleaning services.

Law firms or independent attorneys: Disburse amounts for court fees, certifications, or registrations on behalf of their clients.

Construction and architectural project management: They manage payments to subcontractors, material purchases, or permits on behalf of their clients.

In all these cases, the intermediary does not assume the obligation as his own, but simply channels the money.

Tax Treatment and Electronic Invoicing

From a tax perspective, payments on account of third parties should not be considered income or expenses of the intermediary, as they do not represent compensation for its own services. The General Directorate of Taxation has established specific guidelines to correctly reflect these transactions in electronic invoices.

With the entry into force of version 4.4 of electronic receipts starting June 1, 2025, new boxes have been introduced for payment methods and the obligation to detail the recipient's economic activities.

To correctly issue an electronic invoice for these operations, the following elements must be considered:

Accounting Treatment according to IFRS (International Financial Reporting Standards)

Payments on account from third parties should not be considered income or expenses of the intermediary. Under IFRS 9, these amounts are recorded as liabilities, as the intermediary only manages the funds without generating any revenue of its own.

On the other hand, IFRS 15 establishes that an entity should only recognize revenue for goods or services it actually provides. Since in these cases the intermediary is not the actual provider of the service, the amounts charged are not part of its invoicing or tax base.

Regulation and Requirements before the SUGEF

Companies that handle payments on behalf of third parties may be subject to oversight by the General Superintendency of Financial Entities (SUGEF), especially if the activity involves recurring and significant handling of third-party funds.

Law 7786 on Narcotics and Article 15 of Law 8204 establish that companies that routinely manage third-party funds must register with the SUGEF (Tax Administration Service) to prevent money laundering risks. This may apply to the following cases:

I. Property managers who handle large volumes of property owners' money.

II. Construction project managers with high payment flows to subcontractors.

III. Service companies acting as payment agents abroad.

If a company exceeds the thresholds defined in the SUGEF regulations, it must register and comply with due diligence reports.

Recommendations:

a) Issue correctly detailed invoices, excluding these amounts from the tax base.

b) Ensure that the actual supplier bills the end customer directly and not the intermediary.

c) Verify whether the activity requires registration with SUGEF to avoid regulatory non-compliance.