Article 14 establishes offenses for not complying with the law, which automatically transforms the rental service to be illegal.
/ A.M. Costa Rica wire services photo.


-Published: Tuesday, November 26, 2019-

Law to regulate online hosting to be effective in May


By the A.M. Costa Rica staff

Law No. 20.865  which regulates rentals through online services such as Airbnb will come into force in May. The measure requires additional paperwork by owners who offer their properties for short-term rentals.

The law becomes effective six months after Nov. 19, the day it was published in La Gaceta, the official government newspaper.  The full title is the "Law for the regularization of non-traditional rentals and its intermediation through digital platforms."

Therefore, as of May 19, all people or companies offering lodging services must comply with the law.

Legislative deputies approved the measure in September.

This law has the goal of requiring that non-traditional rentals pay taxes on their services and thereby increase government revenue while regulating that commercial activity as well.

The law applies to all tourist rentals in homes, apartments, villas, chalets and bungalows, among others, as well as guaranteeing users security and protection when they purchase the service through the platform.

The text approved contains adjustments related to the rights of the users and the obligations of the non-traditional rental service providers.

Owners, for example, must be registered at the Costa Rican Institute of Tourism and at the Ministry of Finance at the General Directorate of Taxation. They also must obtain a municipal license, known as a patente municipal, to offer rentals.

Article 14 establishes offenses for not complying with the law, which automatically transforms the rental service to be illegal.

"It is considered as an illegal operation of the non-traditional hosting service when: The non-traditional hosting service provider does not possess the marketing and service requirements established in this law," says Law No. 20.865.

In case of offering illegal rental or lodging service, the law orders "the immediate intervention of the General Directorate of Taxation, the Ministry of Health, municipalities and any other institution that regulates commercial activities."

According to Deputy Roberto Thompson, the law represents a major boost to the tourism sector. "There is a very important segment of people who are using this type of accommodation in Costa Rica, through this law, we are trying to regularize and establish taxes and guarantee minimum conditions."

In September the  Chamber of Tourism, know as Canatur, celebrated the approval of this law.

“For the private sector, this step towards the regulation of lodging which is extremely important,” said Saray Valverde, president of Canatur. For several years, Canatur has requested the regulation of this type of non-traditional lodging service.

In February the Chamber of Hotels also requested the approval of the law.

According to the Hotel Chamber, this law will generate more tax revenue for the government, will protect tourists and will create a level playing field for competition.

The chamber said that the issue is one of fair competition because hotels, in addition to paying taxes, must invest capital to comply with specific rules and compliance to protect people with different abilities, while the informal hosting sites are not.

Law No. 20,865, in Spanish, can be reached at La Gaceta official newspaper site.



------------------------
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