In Costa Rica, board of directors' fees are an issue that combines strategic, legal and fiscal elements. These gratuities, to recognize the contribution of directors in decision-making, are subject to strict criteria to determine their acceptance as a deductible expense. National jurisprudence , together with resolutions such as ruling No. 325 of the Administrative Tax Court , have set clear precedents on when these fees are valid and when they can be rejected.
The principles of causality, proportionality and formality , ensuring that allowances are focused on strategic revenue decisions aimed at generating income and not on operational or daily activities.
Causality and relativity: foundations of economic reality.
The principle of causality in tax regulations requires that all expenses be necessary, useful and directly related to the generation of taxable income. In the case of allowances, this implies that:
The decisions made must be strategic in terms of revenue, such as approving budgets, investments or expansion plans.
Diets associated with meetings focused on day-to-day operational or administrative issues will not be considered deductible.
Ruling No. 325 of the Administrative Tax Court exemplifies this criterion. In that case, the deduction of per diem allowances was rejected because it was not proven that they were linked to the production of income. The Court concluded that:
The minutes of the meeting presented lacked details that would demonstrate the strategic nature of the decisions taken.
The functions performed were ordinary activities, so the payments did not comply with the principle of causality.
Some beneficiaries of the allowances also received salaries, which generated inappropriate duplicate expenditure .
This ruling reinforces the need to differentiate between operational and strategic functions within a board of directors, making it clear that allowances will only be accepted when they directly contribute to the development and growth of the business.
Documentation with support and principles
Costa Rican jurisprudence has also established the importance of having formal documentation to support per diem payments. This includes:
Board meeting minutes : Minutes should clearly reflect attendance, topics discussed and, above all, the strategic impact of decisions taken.
Accounting records : Payments must be properly documented, indicating the date, beneficiary and specific purpose of the diet.
Proportionality : The amount must be reasonable in relation to the complexity of the decisions and the size of the company.
Ruling No. 325 highlights that the lack of complete and justified minutes may lead to the rejection of the allowances as deductible expenses. The tax administration, in this regard, has been emphatic: the burden of proof falls on the taxpayer , who must demonstrate that the allowances are useful, necessary and relevant to the economic activity.
Profile of the diet recipient and its fiscal impact
Another aspect is the profile of the person receiving the diet, since this influences their tax acceptance:
Shareholder-director: Allowances must be clearly differentiated from dividends to avoid reclassifications.
Director-employee: If the beneficiary also earns a salary, the allowances could be interpreted as a duplication of salary.
Independent Third Party: Allowances paid to outside directors are more easily acceptable, provided they are properly documented.
Ruling No. 325 showed how these situations can lead to fiscal adjustments. In that case, the payments of allowances to employee-directors were not accepted, as there was no clear delimitation between ordinary and strategic functions.
For a board diet to be accepted as legitimate, it is essential that companies comply with the following:
Causality and strategy: Decisions should be focused on generating income, avoiding operational functions.
Detailed documentation: Clear minutes and accounting records supporting payments.
Proportionality: The amounts must be reasonable and aligned with the nature of the business.
Role differentiation: Clarify the position of the recipient (shareholder, employee or third party) and avoid duplications.
Ruling No. 325 of the Administrative Tax Court leaves a clear lesson: without causality and without documentation, allowances will be rejected . In a context of increasing scrutiny, companies must manage these compensations with total transparency and rigor, ensuring that they are used as a true strategic instrument to strengthen governance and decision-making.
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