Perpetual Tourist It Is

The new President of Costa Rica addressed his nation recently from of all places, New York City, and announced his proposed reforms to increase revenue. The first of which is a new and improved version of the regular 13% sales tax into a Value Added Tax (VAT). OK, no big deal, as the average expat does not have too many ways to avoid this normal way of doing business.
But his second announcement is going to ROCK the expat world here. He has also proposed a Global Income Tax (GIT). The GIT will affect all residents of Costa Rica by taxing their income abroad. Sound familiar to you US residents? His proposal on the surface was supposedly aimed at the top end Costa Rican residents that go abroad and make an income elsewhere. But the expat community in Costa Rica is all abuzz because they know they are the real target.
How does this affect the multitudes of expats that have now become residents of Costa Rica? And their pensions? Rental income back home? On-line businesses? Etc, etc, etc?
It is expected that this proposal will not be passed. There are too many wealthy and influential Ticos that make far more money overseas than they do here in Costa Rica to prevent that from happening. But what is the next step? Blatantly target non-naturalized residents? Why not? Or is it “Por que no?”
Luckily for me I have decided to opt for the “dumber” path in Costa Rica. I have not come here expecting to buck the system. Costa Rica is not the place for that anymore. It was 20 years ago or even maybe 8 years ago, but no longer. My girlfriend and I will just stay as perpetual tourists. What this means is that every 90 days we have to either go back to our home country or make a border crossing, i.e. Panama or Nicaragua, to get our passport stamped to allow us to live in Costa Rica for another 90 days. And they just added a $7 exit fee at the borders to leave the country even if it is only for an hour. I know, what a pain in the behind.
However, for us, it is not a problem. You see, we have elected to invest here for the short to mid-term. We are also still young. At least we think we are at 48 and 42. We are not looking to end our lives here. We have made a conscious decision to come here to invest in a business that we think will appreciate in value and stay under the minimum for income for US tax standards. We really don’t care to become residents at this point. We don’t want to pay into the free healthcare system. We just want to live and invest in a place that we enjoy living in that can still make us an income. Did I mention we are only 300 meters from the beach?
I must admit that we had delusions of residency if we did well. Now, after only 9 months, we are starting to see the fruits of our labor and we have NO desire to move forward with residency. My best friend and realtor just called me today and said that if this law passes… he is OUT OF HERE. He is married to a Tica about to celebrate his 10th year anniversary and is now a resident. It makes no difference to him or me for that matter, this is not what we signed up for. The expat Facebook pages are lighting up.
So what is an expat or wannabe expat supposed to do? Costa Rica is awesome. Costa Rica is so easy. Costa Rica has Walmart, McDonalds, good roads, good hardware stores and so much more. I lived in Belize for 6 months so I have a perspective on this. It is beautiful here and there are so many North American and European expats here so you don’t have to reinvent the wheel. All the tough paths have been cleared. But…
I have been a long time reader of Lief and Kathleen at the publication “Live and Invest Overseas” and one of the few things I ever disagreed with them on was the idea of Costa Rica. I still think it has some great options for the short term investor wanting to run a business, but I sure have to agree with them more and more the longer I live here full time. This is NOT the place to retire unless you just have a bunch of cash and want to live the easy life. If so, come on down, I have real estate I can sell you.
Each person has to answer for themselves. I will admit our attention for the long term future is now uncertain. I have not gotten Belize from under my skin; it is more like a wart. It goes away, but comes back to you. We also almost bought in Nicaragua 2 years ago and we still talk about our visit there. For now we enjoy our very simple life here living far under the radar. There is going to be a lot of talk above the radar. We are just going to let that talk continue. And continue to hit the Panama border less than 2 hours south of us every 90 days as needed. Perpetual tourist it is!

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