Payroll and Benefits Guide Costa Rica

Last updated: May 03, 2023

Costa Rican Colón (CRC)
Employer Taxes
Payroll Frequency
Employee Costs
San José
Date Format
Fiscal Year
1 January- 31 December
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Employer Payroll Contributions


Health and Maternity


Basic Pension Scheme


Banco Popular Employer Fee


Family Assignations


Social Aid (IMAS)




Contribution from Banco Popular Employer


Labor Capitalization Fund


Complementary Pension Fund


National Insurance Institute (INS)


Solidarity Association (optional so not included in total cost)


Total Employment Cost


Employee Payroll Contributions


Medical & Maternity


Disability, Old Age & Death Benefits


Workmens Savings Banks


Total Employee Cost


Employee Income Tax


0-941,000 CRC


941,001 – 1,381,000 CRC


1,381,001– 2,423,000 CRC


2,423,001 – 4,845,000 CRC


4,845,001 and above

Employer taxes


Employee taxes


Minimum Wage


The minimum wage for 2023 is CRC 11,738.83 for unskilled employees to CRC 15,333.31 per day for specialized employees.




Payroll Cycle

The payroll cycle in Costa Rica is generally monthly, and payments are to be made once each month.

13th Salary

In Costa Rica, it is mandatory to pay a 13th-month salary payment; the employer must make the payment by 20th December each year.

Working Hours


The maximum number of hours an employee can work is 48 hours per week. Nighttime workers, 7p.m.-5a.m., may only work a maximum of 36 weekly hours. 


Over 48 hours in a week is considered overtime and is paid at 150% regular wages. Pay for work on holidays is at 200%.  The maximum overtime allowed to perform daily is 4 hours.

Working Week



Paid Time Off

In Costa Rica, the paid annual leave entitlement is dependent on the years of service that the employee has served. The standard paid leave entitlement is 14 days per year for employees with 50 weeks of continuous employment. If the employee has offered less than 50 weeks of employment, they are entitled to one day of leave per month.

Employees are not entitled to accumulate or carryover any leave unless it is agreed upon by the employer and the employee in a written agreement.

Vacation Days
Public Holidays

Public Holidays

There are 13 public holidays. Each year the government may decide if public holidays falling on weekends will be moved to a weekday or will be lost.

Sick Days

Employees in Costa Rica are entitled to full paid sick leave for the first three days of sickness. The employer pays 50.00% of the employee’s regular salary and social security pays the remaining 50.00%. From the fourth day of sickness, social security pays 60.00% of the normal daily wage and the employer is not obligated to pay anything to the employee.

The employee must submit a medical certificate to the social security administration to receive payment within 48 hours of the start of the sick leave.

Maternity Leave

Pregnant employees are entitled to receive four months of paid maternity leave; 1 month before the due date and three months after the due date.
The maternity payment responsibility is shared equally between the employer and the CCSS (Costa Rican Social Security Fund) for the full four months.



Paternity Leave

Private sector employees are not entitled to paternity leave; fathers holding public sector jobs are entitled to eight days of paid paternity leave.

Parental Leave

Private sector employees are not entitled to receive parental leave.

Other Leave

In Costa Rica, in the event of the death of an immediate member, an employee is entitled to bereavement leave of three days paid leave.


Termination Process

The termination process varies according to the employment agreement or collective agreement in place and is based on the type of contract and reason for termination.

Individual employment contracts can be terminated by

  • By law
  • By mutual consent of the parties
  • By either party of the employment contract within the terms and conditions provided by the law.

Employers may terminate employment contracts by dismissal for reasons related to the employee (e.g. professional inadequacy, as a disciplinary sanction) or not associated with the employee (e.g. job cancellation).

If the employer requests a dismissal letter, the employer is obligated to present one, whatever the cause of termination was.

Notice Period

In Costa Rica, the notice period for a temporary or permanent employee is dependent on the employee’s length of service as below:

  • 0-3 months:  No notice required
  • 3-6 months: 1 week
  • 6 months-1 year: 15 days
  • 1 year+: 1 month

Severance Pay

In Costa Rica, the severance pay is dependent on the employee’s length of service as below

  • 3 to 6 months: 7 days
  • 6 months to 1 year: 14 days
  • 1 year : 19.5 days
  • 2 years : 20 days
  • 3 years : 20.5 days
  • 4 years : 21 days
  • 5 years : 21.24 days
  • 6 years : 21.5 days
  • 7 – 9 years : 22 days
  • 10 years : 21.5 days
  • 11 years : 21 days
  • 12 years : 20.5 days
  • 13 years+ 20

Probation Period

The probationary period in Costa Rica is dependent on the type of role and is stipulated within the employment agreement. In general though, probation periods are three months.



​​Costa Rica’s immigration system provides several options for employers of foreign nationals, including mechanisms for business visits, short-term assignments or employment, long-term temporary employment, and adjustment of status to permanent residence.

A business entry authorisation allows foreign nationals to perform a wide range of business and professional activities in Costa Rica for up to 30 or 90 days (depending on nationality), provided they do not receive remuneration locally. Visa-exempt nationals may receive the business entry authorisation upon arrival, while visa nationals require either a Consular or a Restricted Entry Visa, depending on their nationality.

The Restricted Visa Commission must approve a Restricted Entry Visa​ in Costa Rica before a consulate may issue it.

Foreign nationals seeking to conduct business or ​work activities for more than 30 or 90 days (depending on nationality) or seeking to conduct any locally remunerated activity in Costa Rica require work authorization.

The Short-Stay Visa is used by skilled foreign nationals seeking to conduct business or professional activities for more than 30 or 90 days (depending on nationality) or short-term remunerated work in Costa Rica. It permits work initially from​ six months to one year.

The primary category of work authorisation is the Temporary Residence (either for accredited or non-accredited companies), which is typically granted for two years. Companies accredited by immigration authorities in Costa Rica receive benefits such as a special processing desk for immigration applications with shorter processing times ​and the ability to work during the processing of their immigration applications.​

Companies can register with the General Directorate of Migration and Foreigners and, by so doing, receive special treatment that can see reduced deadlines for the processing of residence applications.



The standard rate of VAT in Costa Rica is 13.00%

Stay up to date on payroll & employment law changes

Version History

April 10, 2022
Income tax brackets have been updated.
October 10, 2021
Employees entitled to 100% pay for first three days of sick leave instead of 50%

Questions & Answers

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Tara M.
Tara M.
2 years ago

Hi, is it possible to receive payment for unused vacation days?

Erez Greenberg
Erez Greenberg
2 years ago
Reply to  Tara M.

Hi Tara, remuneration in lieu of annual vacations is prohibited unless termination happened prior to having been able to take all the vacation days.

David Baer
David Baer
2 years ago

When an employee is terminated because od the closing of a business what reporting is required to CCSS or other agencies

Emily Kuhnert
Emily Kuhnert
2 years ago
Reply to  David Baer

Hi David, thank you for your question. Regardless of the reason for termination, the only place you would need to notify of said terination is Social Security.

Emily Kuhnert
Emily Kuhnert
2 years ago
Reply to  David Baer

Hi David, thank you for your question. Regardless of reason for termination, the only place you need to notify of said termination is social security.

1 year ago

Is it necessary to pay vat on employee salaries?

Emily Kuhnert
Emily Kuhnert
1 year ago
Reply to  Roccoon

Hi, thank you for your question. There is no need to paid regular salaried employees VAT on their wages. Are you referring to paying VAT for non-salaried employees or employees under EOR?

1 year ago

Is retroactive pay allowed in Costa Rica? For ex: Giving my employee a raise in August, but making it effective as of June?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Roxy

Yes, it is allowed.

Gianni Rodriguez
Gianni Rodriguez
8 months ago

Can the USA based employer give the USA holidays for its costarican employee since the office is closed ? And can the employee and employer agreed to take only USA holidays even though the employee will be working from Costa Rica?

3 months ago

What is the minimum number of hours per week am employee must work tp receive benefits like paid holidays?

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Payroll and Benefits Guide
in Costa Rica

What’s covered in this guide:

  • Employer/employee contributions
  • Minimum wage
  • Working hours
  • Visa requirements

And more...

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All questions are answered by our in-house compliance department working in conjunction with our local in-country partner for this specific country

Public Holidays Calendar

Costa Rica 2023
Day Date Holiday Notes
Sunday Jan-1 New Year’s Day
Thursday Apr-6 Holy Thursday
Friday Apr-7 Good Friday
Tuesday Apr-11 Juan Santamaría Day
Monday May-1 Labor Day
Tuesday Jul-25 Annexation of the Party of Nicoya
Wednesday Aug-2 Day of Our Lady of the Angels
Tuesday Aug-15 Assumption of the Virgin
Tuesday Aug-15 Mother’s Day
Sunday Sep-3 Day of the Black Person and Afro-Costa Rican Culture
Friday Sep-15 Independence Day
Friday Dec-1 Army Abolition Day
Monday Dec-25 Christmas day