Understand The Potentially Costly Laws Regarding Tax Residence In Colombia

For tax purposes, natural persons who meet any of the following conditions are considered residents in Colombia, in accordance with Article 10 of the Tax Statute:

1. Stay continuously or discontinuously in the country for more than one hundred and eighty-three (183) calendar days including the days of entry and exit from the country, during any period of three hundred and sixty-five (365) consecutive calendar days.
2. Be found, by their relationship with the foreign service of the Colombian State or with persons who are in the foreign service of the Colombian State, and by virtue of the Vienna conventions on diplomatic or consular relations exempt from taxation in the country in which they are on mission with respect to all or part of their income and occasional gains during the respective year or taxable period.
3. Be nationals and that during the respective year or taxable period: a) Your spouse or permanent partner not legally separated or minor dependent children, do not have tax residence in the country; or, (b) Fifty per cent (50%) or more of their income is from domestic sources; or, c) Fifty percent (50%) or more of their property is administered in the country; or, d) Fifty percent (50%) or more of their assets are understood to be owned in the country; or, e) Having been required by the Tax Administration to do so, do not prove their status as residents abroad for tax purposes; or, f) Have tax residence in a jurisdiction qualified by the National Government as a tax haven.

Tie Breaker Rules

It is important to know in view of the above scenario, that multiple situations can arise, that is, it may be the case in which being a tax resident in Colombia, eventually also, one is tax resident in another country. In this instance, the case must be submitted to the Tie Breaker Rules (law 1459 of 2011).

Where a natural person is a resident of both contracting states, his (or her) situation shall be resolved as follows: (a) Such a person shall be considered to be a resident only of the state where he has a permanent dwelling at his disposal, if he has permanent dwelling at his disposal in both states, he shall be deemed to be a resident only of the state with which he maintains closer personal and economic relations (center of vital interests). (b) If the state in which the person has the center of his vital interests cannot be determined, or if he does not have a permanent dwelling at his disposal in any of the states, he shall be deemed to be a resident only of the state where he habitually lives. (c) If he habitually lived in (d) If he is a national of both states, or is not a national of either state, or is not a national of either state, the competent authorities of the contracting states shall decide the case by mutual agreement.

For questions about Colombian taxes, please do not contact Finance Colombia! Instead, contact Rodriguez & Asoc. Bilingual tax law specialists in Colombia at [email protected] or click on the banner below.

This guest article is published as a courtesy to readers. Finance Colombia is a news publication and does not provide financial, legal, or tax advice. This information is provided as general news and the reader must consult is or her own counsel in order to make qualified, informed decisions. Information, rules, procedures, and laws may (and almost certainly will) change, and Finance Colombia assumes no responsibility for accuracy or timeliness of information.