The tourist rental business, its regulations, and the consequences of illegal practices.
Non-traditional tourist rentals are considered to be properties such as houses, apartments, or villas, which are rented to tourists for periods between 24 hours and a year. These rentals are regulated by the Costa Rican Tourism Institute (ICT) under Law No. 9742 (Law Regulating Non-Traditional Hosting through Digital Platforms). Providers of these services must register with the ICT (Costarrican Tourism Institute) and the Ministry of Finance to ensure tax payment and user security.
In addition to registering with the ICT, hosts must have a municipal permit or “patente”, be registered as a tax payer, and pay the corresponding taxes.
When searching Airbnb for the number of rentals in the Cóbano district, we see a general number indicating more than 1,000, so it's difficult to know exactly how many there are.
Santa Teresa Hoy contacted the Chamber of Tourism and Commerce of the Blue Zone (CATUCZA) to find out if they have more accurate records, and they told us that in the Cóbano district there are 1,335 non-traditional vacation rentals, considering the Airbnb and Vrbo platforms.
We spoke with the Municipal License Department and were informed that only 114 non-traditional vacation rentals have an operating license in the Cóbano district, 8% of all the existing ones. Although the exact amount of municipal income lost due to this lack of regularization is unknown, "Within the same economic sector, some commercial licenses generate annual payments of up to 11 million colones ($22,000 USD), while others pay minimal amounts of 2,500 colones ($5 USD) per year. This variation is based on the annual declarations that each patent holder must file, based on their income tax return filed with the Ministry of Finance" explains Bachelor Darío Álvarez Arguedas, head of the License Department.
Until recently, it was very difficult to enforce compliance with these obligations in Costa Rica. Starting this year, 2025, a new regulation has been introduced, allowing Airbnb to share billing information with the Ministry of Finance. This means that taxes must be paid on the entire price the guest pays on the platform, not just the portion the host chooses to declare. This also affects the annual tax payment, as it depends on the results of the tax return.
The requirements to obtain the “patente” are:
- Submit the application including the completed and signed Form.
- Copy of the identification of the applicant or legal representative in the case of companies.
- Certification of legal status (Personería jurídica): This is only required for legal entities.
- Sanitary Operating Permit – issued by the Ministry of Health.
- Work Risk Insurance.
- Payment or exemption from ACAM.
- Be registered as a taxpayer with the Ministry of Finance for the requested activity.
- That the applicant is up to date with payments to the Costa Rican Social Security Fund.
- Municipal Location Resolution issued by the Construction Department of this same Municipal District Council.
It should be noted that these requirements are necessary for the tourist establishment to operate legally, which is why they are required to obtain a license.
Some hosts complain about the slowness of granting patents and the complexity of the process, which requires visits from the Ministry of Health.
The income to the Municipality from this type of permits constitute freely earmarked resources, meaning that the municipal administration can allocate them according to its needs, without being subject to a specific purpose. These funds are used to finance municipal development projects, the acquisition of office furniture and equipment, machinery and tools, as well as to pay for public services, salaries, fuel, and, in general, any other expenditure that the administration deems pertinent to the fulfillment of its institutional functions and objectives.
For several years now, Airbnb has exploded in popularity both in the Cóbano district and around the world. A platform that began as a way to "travel like a local," share accommodations with hosts, and earn extra money has become a source of business for large investors, and the lack of regulation has contributed to a growing housing crisis worldwide. Extremely high rental prices that very few can afford have led to neighborhoods and towns becoming tourist attractions.
Costa Rica hasn't been the only place to put limits on Airbnbs; many places have begun to implement regulations.
In New York, current law (Local Law 18) severely restricts short-term rentals on Airbnb and similar platforms, prohibiting the rental of entire apartments for less than 30 days unless the host is present and strict safety and habitability standards are met. Hosts must register with the city to rent out their primary residence, and only a maximum of two guests are allowed. Platforms like Airbnb cannot process reservations for unregistered units, and the city imposes fines for illegal transactions.
Barcelona will phase out all tourist rentals (more than 10,000) by 2028, prohibiting the renewal of licenses and the issuance of new ones, as announced by the mayor in June 2024 and later ratified by the Supreme Court in 2025.
In Hawaii, Airbnb's primary regulation is the state requirement that vacation rental owners and operators obtain a Certificate of Registration from the Hawaii Department of Taxation and display their tax identification number on their listings. Additionally, compliance with zoning and land use laws is crucial, as properties must be located in tourist areas or have a vested right to be rented on a short-term basis.
What do you think about the situation in the Cóbano district? Do you think more regulations could be implemented in the area?
Note by Elena Parras, Founder and Editor of Santa Teresa Hoy Magazine
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