Total commercial sale of a business in Costa Rica: how to calculate the 2.25% and 15% capital gains

By Gabriela Páez.

Master in Tax Consulting.

The recent administrative interpretation regarding the total sale of a business establishment necessitates a more structured approach to taxation. The central issue is not whether a preferential tax rate applies by default to the entire transaction, but rather whether the operation truly constitutes the complete sale of the business, that is, the full transfer of the going concern with all its assets and liabilities. In this scenario, the discussion shifts to the capital gains and losses regime, but the tax calculation cannot be resolved by simply applying a single rate to the total purchase price.

That distinction is crucial. The recent ruling analyzes the sale of the entire business, not the sale of an isolated division or the individual disposal of loose assets. Therefore, the correct technical message should not be that the sale is taxed at 2.25%, but rather that, even in the case of a complete sale, the taxpayer must itemize the transferred assets and rights to determine which qualify for the special 2.25% rate and which remain subject to the general 15% rate.

The general rule in Costa Rica is that capital gains are taxed at 15%. However, the Income Tax Law allows for a reduced rate of 2.25% on the sale price when it is the first sale of assets or rights acquired before the capital gains tax regime came into effect. In practice, this means that the total sale of a business can include, within a single transaction, components taxed at 2.25% and others taxed at 15%.

Here's the most important technical clarification: selling the entire business doesn't automatically make the entire price eligible for the 2.25% tax rate. The tax authorities require identifying the assets and rights included in the transaction, establishing their transfer value, and verifying their acquisition date. Only assets or rights acquired before July 1, 2019, and which also meet the legal requirement of first sale, are eligible for the 2.25% tax rate on their sale price. Assets or rights acquired after that date, however, are subject to a 15% tax on the gain, that is, on the difference between their transfer value and their tax basis.

In other words, although legally it is a single, total commercial sale, for tax purposes the calculation requires a disaggregated analysis. The contract may establish a global price for the business, but for tax purposes that amount must be reasonably allocated among the various assets and rights transferred. Otherwise, the seller risks an unsupported tax assessment, especially if they intend to argue that the entire transaction was covered by the 2.25% tax rate.

Example of calculation in a total commercial sale

Suppose a company sells 100% of its business establishment for a total price of ₡2,000,000,000. The transaction includes the entire business and the contract incorporates a technical allocation of the transfer value of the transferred assets and rights, so that the tax calculation can be traceable.

Transferred component	Date of acquisition	Transmission value	Tax base	Tax
Land and operational building	2014	₡900,000,000	2.25% of the price	₡20,250,000
Furniture and equipment	2017	₡250,000,000	2.25% of the price	₡5,625,000
Management software	2021	₡110,000,000	15% on profit of ₡50,000,000	₡7,500,000
Brand acquired	2022	₡220,000,000	15% on profit of ₡120,000,000	₡18,000,000
Transferable operating license	2024	₡70,000,000	15% on profit of ₡40,000,000	₡6,000,000
Goodwill		₡450,000,000	15% on the profit	₡67,500,000

In this example, the sale remains a total commercial sale of the business. However, the tax is not determined on the total price of ₡2,000,000,000 with a single rate. Components acquired before July 1, 2019, that qualify for the first sale total ₡1,150,000,000 and generate a tax of ₡25,875,000 at 2.25%. Components acquired after that date generate a tax of ₡31,500,000, calculated at 15% on the respective profit, as does goodwill, which generates a tax of ₡67,500,000 at 15% on the profit. The total tax amounts to ₡124,875,000.

The practical lesson is clear: the transaction may be complete from a commercial perspective, but tax calculations still require a technical separation by asset or right. Therefore, when negotiating the sale of an entire business, it is not enough to agree on the enterprise value or the total purchase price. A transfer value allocation matrix, the tax basis of each relevant component, and sufficient supporting documentation are also needed to justify why one part of the transaction is taxed at 2.25% and another at 15%.

The recent ruling on the complete sale of a business did not establish that all businesses sold are taxed at 2.25%. Rather, it recognized that the complete sale of a business can be analyzed under the capital gains tax regime. From there, the technical task involves correctly calculating which portion of the transaction qualifies for the special tax rate and which portion must remain subject to the general tax rate.

In short, when the entire business is sold, the right question isn't whether the whole transaction falls to 2.25% or 15%, but rather how the transfer price is distributed among assets and rights with different tax histories. That's where the true tax viability or soundness of the transaction is determined.

References

• Article 31 ter of the Income Tax Law.

• Administrative criterion MH-DGT-DNTI-DCN-CONS-0012-2026 on total sale of commercial establishment.

• Rules for determining the acquisition value and transfer value in the Law and its Regulations.