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Costa Rica credit card withholding VAT on e-services

  • Jun 15, 2019 | Richard Asquith

Costa Rica has provided more details on its plans to require credit card, or other financial intermediary, companies to withhold VAT on payments to foreign digital services providers.

The new cross-border digital services tax requires the Tax Administration to regularly provide credit card issuers with list of non-resident digital service providers to which withholding VAT applies. The card companies must split the VAT element of any payment to the named providers, and remit to the tax authorities. The financial intermediary collection model would apply to B2C and B2B transactions.

Alternatively, non-resident providers may VAT register and be responsible for the VAT collections. This would include the obligation to file monthly returns, detailing VAT charged and collected.

The new requirement will come into effect as soon as the Tax Administration issues the list of targeted providers. This is anticipated for July 2019.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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