Thinking About Working in Costa Rica to Support Your Pura Vida Lifestyle?
If you want to work here legally, plan on embarking on a labor of love.
For so many of those who come to visit Costa Rica on vacation, it’s love at first sight. And she’s a real beauty, let me tell you! Costa Rica not only looks different, it feels different. There’s a palpable, tangible, profound, unmistakable, and inexplicable vibe that envelops you as soon as you arrive – whether by air, land, or sea.
Its natural beauty is both eye-popping and jaw dropping (reminds me of an emoji). From the tops of its volcanoes to the verdant mountain slopes of its cloud forests, to its sweeping plains, and right down to the pristine beaches on its gentle Caribbean slope and rugged Pacific coastline, there are few places in the world that can pack so much natural wonder, beauty, and splendor into such a tiny geographical land mass.
If that’s not enough, the vibrant, friendly, and always-smiling Costa Rican people – with their laid back, pura vida (“pure life”) lifestyle – add a human dimension that dovetails perfectly with Mother Nature. Everyone looks you in the eye, waves, says, “Hola!”, and greats you with a warm handshake and a beaming grin. Folks here do more with less to the point that having a lot of “things” becomes superfluous.
We all know that it’s easy to fall in love. But making a relationship work is the challenging part. And Costa Rica is no exception to the rule. So, if you want to work here – legally – plan on embarking on a labor of love.
I should be easy for me to find a job, right?
It all may look easy, but it’s not. First of all, foreigners without residency are not allowed to work legally in Costa Rica. Costa Rica’s Immigration Law is very strict on who can and cannot work here. Costa Rica’s protectionist policies favor Costa Rican citizens and give the cold shoulder to foreigners who may be looking to take away jobs from Costa Rican nationals in order to control the national unemployment rate – currently at a record low!
As a foreigner who wants to work, you must have permanent residency status to do so. And, in order to be eligible to apply for that status, you must first obtain temporary residency status and maintain it for three years – after which you may apply for permanent residency and legally work as an employee in Costa Rica.
That being said, there are ways to make money here by owning and administrating your own business without actually “working”. For instance, you can own a property management company and manage it while hiring Costa Rican employees to do the "work". For whatever reason, administration of your own business is not considered “work” under Costa Rican Labor Law. “Work” is what employees do - bartenders, call center workers, hotel front desk, software engineers, furniture makers, home repair techs, restaurant chefs, etc.
So what are the legalities of it all?
Let’s start with a review of residency status. There are four primary types of temporary residency that foreigners who move to Costa Rica may apply for:
Pensionado (“Retiree”): Without a doubt, if you’re retired and have a guaranteed annuity or pension that pays you at least $1,000/month, pensionado residency status is the way for you to go!
Whether you’re single or married, you need only show proof of a monthly pension of at least $1,000/month for yourself. If you’re married, the pension recipient can be either spouse (in other words, it’s $1,000 for both of you). You must demonstrate the pension plan is payable to you for life in order for it (and you) to qualify.
It should also be noted that many lifetime annuities can qualify as pension plans. Your social security retirement benefits, 401k plans, IRA/Keogh distributions, and private company pensions, all qualify as pensions.
Pensionados must live in Costa Rica for a minimum of four months per year. It doesn’t have to be four consecutive months. So, you can come and go as you wish. But, you have to be in-country for a total of four months.
After maintaining your pensionado residency for three years, you can apply for permanent residency, which gets you a work permit to legally work in Costa Rica.
Rentista (“Rentier”): Rentistas are people who receive income from assets and investments. This residency status is very popular with people who aren’t retired yet, but can prove that they receive a guaranteed, unearned income of $2,500/month from investments, savings, or other sources. If you’re a “trustafarian”, rentista status is perfect for you! But then again, you probably don’t have to work.
Sidebar: trust·a·far·i·an
/ˌtrəstəˈferēən/
Noun INFORMAL
a wealthy young person who adopts an alternative lifestyle incorporating elements from non-Western cultures.
Rentistas have to be able to prove that they will be receiving their $2,500/month non-earned income for a minimum of two years – guaranteed. The tricky part can be the obtaining the proof. Typically, you’ll need either a notarized letter from your home bank stating you have $60,000 in some sort of long-term account that you can draw $2,500 from each month and deposit in a Costa Rican bank account.
If that’s not an option, you can open a bank account at a Costa Rican bank with the $60,000 and draw $2,500 monthly from that account. The bank can then help you with your rentista letter for your residency application.
Again, rentista residency only gives you temporary residency and you are not legally allowed to work in Costa Rica. But, as with pensionado residency, you may apply for permanent residency after three years and get a legal work permit.
Rentistas must live in Costa Rica for a minimum of four months each year. You can come and go, but you have to be here a total of four months.
Sidebar: Costa Rica has recently started a Digital Nomad program that allows foreign nationals to work remotely from Costa Rica by incentivizing them with certain benefits. Foreigners may apply for the immigration sub-category of Estancia ("Stay") allowing them to extend their 180-day tourist visa to a full year, with the option to renew for an additional year. Digital Nomads are exempt from Costa Rican income tax, can open a national bank account, and validate their home driver's license for the duration of their stay. They may also waive customs taxes on telecom and electronic devices necessary for them to meet their remote working requirements. To qualify you must earn a minimum of $3,000 each month originating outside of Costa Rica ($4,000 if you want to apply for your dependents to stay legally in Costa Rica.
Inversionista (“Business Investor”): If you’re taking the plunge and buying Costa Rican real estate that’s valued at $150,000 or more, this is the residency status you’ll want to apply for. All you have to do is prove your investment(s) have a registered or verifiable total value of $150,000 or more.
Sidebar: The relatively new Ley Inversionista 9996 (Investor Law No. 9996) was passed a few years ago to incentivize investment in Costa Rica in return for a reduction in the fee and for tax breaks. The former $200,000 dollar value requirement was reduced to $150,000 and the following additional incentives were created and passed with the new law:
1. Exemption from all import taxes present for one time only, for the importation of household goods.
2. Exemption of import taxes for instruments or materials for professional or scientific practice.
3. Exoneration of twenty percent (20%) of the total transfer tax on real estate acquired.
4. Importation of up to two land, air, and/or sea transportation vehicles, for personal or family use, free of all import, customs, and value added taxes.
5. The amounts declared as income to qualify for the benefits of the law are exempt from income tax. Income obtained in Costa Rica, resulting from investments made in the country, is subject to income tax.
Like pensionado and rentista residencies, inversionista residency is a temporary residency status. The same rules apply with respect to owning and administrating a business, and not being allowed to work. But, unlike pensionados and rentistas, inversionistas must live in Costa Rica for at least six months each year.
Vinculo (“Marriage/Relation”): If you’re hearing wedding bells, or you’re seeing pink or blue (wink), vinculo residency status may be the one for you. You have to prove that you have a relationship with a Costa Rican citizen “in the first degree.” That means by marriage or birth.
Like the previous three statuses discussed, vinculo residency gives you temporary residency status. Not so long ago, you used to be eligible for permanent residency immediately upon getting married and obtaining vinculo status. Not anymore. There were too many sham marriages and the law was changed.
If you’re a foreigner married to a Costa Rican national and have vinculo residency status, you only have to visit Costa Rica at least once a year to maintain it. If you’re married with vinculo status and have a child, you are immediately eligible for permanent residency status and a work permit. Your kid’s gonna have to go to college someday.
I have permanent residency and can work. What should I expect from my employer?
Well, not much in the way of a salary. The legal minimum salarios (“salaries”) for different occupations are defined by the Ministerio de Trabajo y Seguro Social (“Ministry of Labor and Social Security”, or “MTSS”) are pretty low. The reality of the averages are a bit better, but still lower than what you’re used to. Waiters average $5/hour. Mechanics may make about $10/hour. A software developer makes about $32/hour. Physicians? $50/hour on average.
Keep in mind that these are legal minimums – you may be able to garner more pay. But the bar has been set very low for you.
To offset the low wage scale, the social democracy of Costa Rica (a bastion of Latin America socialism that has so far avoided a Venezuelan scenario) has Labor Laws that are extremely protective of workers. Employers have an obligation under the law to the Caja Costarricence de Seguro Social (“Social Security Adminstration”, “CCSS” or “Caja”) and the Instituto Nacional de Seguro (National Insurance Institute”, or “INS”; i.e. Workers Compensation). What does that mean?
Your employer is responsible for a big chunk of your Social Security payment. 20% of your salary is your employer’s responsibility, while another 9% is your Social Security contribution. Both portions must be paid by your employer to the CCSS. And, your employer is also responsible for securing a Workers Compensation insurance policy and paying your insurance premiums.
The official work week cannot exceed 48 hours by law. Most professionals work from 9AM to 5PM five days a week. While laborers work another ½ day on Saturday.
Vacation time is pretty much what you’d expect. Workers are entitled to a minimum of two weeks of paid vacation for each fifty (50) weeks of continuous employment with the same employer. Labor Law does not allow you to accumulate vacation time. So, plan on using it or losing it each year.
In addition to your two weeks of vacation, Costa Rica has several legal national holidays you’ll be allowed to take off. If you elect to work on those days, your employer must pay you time-and-a-half. The legal holidays are: January 1 (New Year’s Day), April 11 (Juan Santamaria day), Easter (Holy Thursday and Good Friday), May 1 (Labor day), July 25 Nicoya Annexation day), August 15 (Mother’s day), September 15 (Independence day), and December 25 (Christmas). Unpaid legal holidays include August 2 and October 12.
We’ve saved the best for last! You, as an employee, are entitled to a Christmas bonus each year of an additional month’s worth of salary paid to you by your employer! It’s called aguinaldo. And it comes just in time to buy all those presents and pay the annual marchamo (“registration”) on your vehicle.
So, that’s it in a nutshell. A very big nutshell. If you’re going to work in Costa Rica, you’re going to have to get legal or risk being deported. To get legal, you’ll have to apply for some sort of temporary residency before being able to obtain your permanent residency. Once you have permanent residency, you’re going to have to find a job. If you manage to find one, you probably won’t be making the money you’re used to making. But, you will be well-protected under Costa Rica’s Labor Code.
There’s an old expat saying about Costa Rica: “Bring a suitcase full of cash, and two full of patience.” If you have a guaranteed pension, or $60,000 to put in the bank, or $150,000 to sink into an investment (or put in the bank), you can run a business (which, where I come from is “work”) and make a good income. If you want to work like me in real estate, you're going to have to get legal.
If you think you’re going to arrive and find legal work in Costa Rica, stay put - it’s not going to happen. If you work illegally, chances are someone will report you and you'll have to cease and desist or be deported. Getting legal is going to cost you money and time one way or another. The question is, how much is working here legally worth to you, and can you afford the time and money to make getting legal happen?