Costa Rica Employer Tax Obligations: A Comprehensive Guide

Understanding employer tax responsibilities in Costa Rica is essential for international businesses expanding into this Central American market. The total employer tax burden typically amounts to 27.67% of employee compensation, distributed across several mandatory contributions.

Mandatory Employer Contributions Breakdown

Employers in Costa Rica must contribute to the following social security programs:

Sickness and Maternity Insurance (SEM): 9.25%
Disability, Death and Old-Age Insurance (IVM): 5.42%
Other Government Agency Fees: 7.25%
Workers' Protection Act Additional Fees: 4.75%
Personal Injury Insurance: 1.00%

These rates are subject to periodic adjustments based on government policy changes. Employers should consult official sources or seek professional guidance for the most current information.

Costa Rican Social Security Fund (CCSS) Overview

The Costa Rican Social Security Fund (Caja Costarricense de Seguro Social) administers the country's comprehensive social security system. Employers must register employees within eight days of hiring through CCSS offices or their online platform. The system requires employers to designate a bank account for automatic payroll tax deductions, which are recorded in the Centralized Collection System (SICERE).

Health and Maternity Insurance (SEM)

This coverage includes medical services, maternity leave, and sickness benefits. The employer contribution rate of 9.25% supports comprehensive healthcare access for employees and their families.

Disability, Death and Old-Age Insurance (IVM)

This program funds retirement pensions, disability coverage, and survivor benefits. The current employer contribution of 5.42% is part of a gradual increase schedule established since 2009.

Period	Total Contribution	Distribution
2023-2025	10.66%	Employer: 5.42%; Employee: 4.17%; State: 1.57%
2026-2028	11.66%	Employer: 5.58%; Employee: 4.33%; State: 1.57%
From 2029	12.16%	Employer: 5.75%; Employee: 4.50%; State: 1.91%

Retirement Pension Requirements

Costa Rica mandates retirement at age 65 with eligibility requiring 240 months of contributions. Partial pensions are available for those with at least 180 months. The system offers both basic pensions (based on the average of the highest 300 monthly salaries) and mandatory individual account pensions.

Additional Government Agency Fees

Employers contribute approximately 7.25% to support various social programs:

Banco Popular Employer Fee: 0.25%
Family Allowances: 5.00%
Public Assistance (IMAS): 0.50%
Vocational Training (INA): 1.50%

Workers' Protection Act Contributions

An additional 4.75% supports worker protection programs:

Banco Popular Contribution: 0.25%
Employee Labor Capitalization Fund: 1.50%
Complementary Pension Fund: 2.00%
National Insurance Institute: 1.00%

Personal Injury Insurance

Separate from the CCSS system, employers must obtain personal injury insurance exclusively through the National Insurance Institute (INS). This mandatory coverage provides medical and economic compensation for work-related injuries or occupational diseases. Premiums typically average 1% of payroll but vary by industry risk level.

Employee Tax Responsibilities in Costa Rica

Employees contribute between 10.67% and 35.67% of their income, depending on their tax bracket.

Employee Contribution Structure

Sickness and Maternity Insurance (SEM): 5.50%
Disability, Death and Old-Age Insurance (IVM): 4.17%
Banco Popular Contribution: 1.00%
Income Tax: 0% - 25% (progressive)

Income Tax Framework

Individuals residing in Costa Rica for 183 days or more annually are considered tax residents. The 2025 income tax brackets for employed persons are:

Monthly Taxable Income (CRC)	Tax Rate
0.00 - 941,000.00	0.00%
941,000.01 - 1,381,000.00	10.00%
1,381,000.01 - 2,423,000.00	15.00%
2,423,000.01 - 4,845,000.00	20.00%
4,845,000.01 and above	25.00%

Tax-Exempt Income

Certain payments are exempt from income tax, including Christmas bonuses (up to one-twelfth of annual salary), accident or illness benefits, diplomatic compensation, and school-related wages.

Navigating Costa Rican Employment Compliance

International companies often face challenges adapting to Costa Rica's social security system. SailGlobal provides expert guidance to ensure compliance with local regulations while optimizing your employment strategy. Our team helps businesses navigate registration requirements, contribution calculations, and ongoing compliance monitoring.

For multinational corporations, understanding the interaction between Costa Rican social security and international tax treaties is crucial. SailGlobal's HR specialists assist in developing comprehensive compensation packages that meet local requirements while aligning with global HR policies.

Costa Rica Employer Taxes 2024: Complete Guide to Social Security Contributions