Taxation in Colombia

Your situation is not the same as cccmedia's and not the same as mine.  But I have a hunch that you'd be liable for taxes as a tax resident in Colombia (if you spend 183 days or more in-country in any 365 day period you are considered a tax resident).

I used the same firm as did cccmedia for a paid opinion, not gratis - and although I pay little or no tax in the US, I would be subject to paying tax on my income in Colombia. 

The best I could hope for is to be able to deduct the amount of US taxes I paid from my Colombian tax bill - and the Colombian marginal tax rates start at 19% on as little as about $1000 USD per month, 28% on everything over about $1700 USD per month and topping out at 33% for everything over about $3400 USD per month.

The law firm is

http://langoncolombia.com/

cccmedia wrote:

The law firm put the question to an accountant and came back to me today with the following tax opinion....

If I don't pay tax to the U.S. on my U.S. income, I don't owe tax to Colombia on that income.

Gurrego:  Do you have that accountant's information?

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You could request the accountant's contact information through Langon Law Group of Medellín (and New York).  The principal, Harvard Law-educated Alan Gongora, has been generous in responding gratis to Expat preliminary questions.  agongora(at)langoncolombia.com

Langon just assisted me in obtaining a TP-7 visa, which I registered on Friday (March 25, 2017).  Since 2017 will be my first year as a tax resident of Colombia (183 or more days out of any 365-day period), I won't need a COL accountant to prepare my initial tax return until late in 2018.

cccmedia in La Zona Cafetera

gurrego wrote:

I receive VA Compensation and it's not taxable in the US, I am hoping it's not here either.

We Expats are still waiting for Colombia's tax bureaucrats to make clear the new tax regulations.

A 'Tributaria' reform-law was passed in December (2016).  One apparent change is the abolition of the worldwide-income tax, which was never supposed to be permanent anyway.

At this point, regardless of the laws, I have concluded that a good tax professional in Colombia can protect most Expats from the worst-case tax scenarios.  Getting a professional to do your return IMO is essential:  do not try this on your own.

My TP-7 visa is for one year, until March 2018.  By then I plan to have a better idea of my COL tax liabilities.  If they turned out more onerous that the tax opinion suggested, I would consider limiting my time in Colombia to 183 days or fewer per annum, starting in 2018.

cccmedia in La Zona

I had the same understanding when it comes to countries south of the US border. Too bad that Colombia is taxed foreigners on the retirement income because we will naturally contribute to the economy just by simply being there.

You figure that the average expat with stay in decent housing will eat out often and will purchase a lot of items i.e. furniture, clothing and other items probably at a higher rate than the locals will pay.

Hello to all of you interested in moving to Colombia receiving a pension in any foreign country! A lot of outdated information is still to be found in the forums, changes in tax laws and regulations are frequent. While doing some research on the present situation I was made aware of a new government decree from December 2017. Foreign pensioners are still required to file a tax return (>DIAN) when they take residency in Colombia for more than 183 days within any period of 365 days.
The good news is that pensions received outside Colombia are now definitely tax exempt.
The decree explains the rule as a means to avoid double taxation, making Colombia so much more attractive to expats as a place to retire.
I got aware of this thanks to a bilingual professional accountant in Medellin, Paula Cruz. She is recommended in other expat forums as well, and very efficient in helping to prepare and do the tax return at a moderate fee. Very professional and experienced lady with uptodate information!

Ralf, Brother Archer, or others...

Do you have a link to the pensions-are-not-taxed-in-Colombia decree .. or the relevant portion of said decree?

According to medellinguru.com's report on Colombia taxes for Expats, there was a ruling (date and number not specified) that non-Colombia pensions are taxable for Expat tax-residents of Colombia.  Does anyone have a link or specifics on that supposed ruling?

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English-language information on the Internet on this subject varies too much to be credible.  At some point, the source material, in Spanish, will have to be researched to get answers on this subject, which is crucial to many Expat deciisons on whether to move to Colombia for more than 183 days a year.


cccmedia

I've looked at a number of sites, especially
https://www.gerencie.com
that keeps up-to-date on all things financial, and can find no substantiation that now, foreign pensions are not taxable for tax residents of Colombia, whether the tax resident is a Colombian citizen or a foreigner.  As well I read several Colombian newspapers on-line daily, and have so for years, and have not seen any stories about this at all.

As far as I know this still sums up the official position of DIAN regarding pensions from the exterior:
https://www.gerencie.com/tratamiento-de … ombia.html
The relevant sentence on this page which cites the governing DIAN document is "...la DIAN mediante oficio 58213 de 2014 deja claro que en el caso de las pensiones extranjeras, las mismas se encuentran gravadas en su totalidad en Colombia."

A rough translation:  "...DIAN by means of document 58213 of 2014 makes clear that in the case of foreign pensions, the same are taxed in their entirety in Colombia."

If things have changed, please provide specific cites that everyone can access and read for themselves and not just unsubstantiated rumor.  It would be good news indeed if foreign pensions were not taxed - but given that Colombia's new tax laws have overall RAISED taxes as designed, it seems unlikely that they would do an about-face from that policy and allow foreigners who are residents to live un-taxed in Colombia - especially since Colombia still taxes any pensions their own citizens may receive from abroad.

The consensus on Internet sites is that tax law changes were made in 2017 -- whether by decree or in the statute known as Reforma Tributaria.

So we cannot rely on anything printed before 2017 regarding pension taxes for Expats .. or other tax matters.

cccmedia

It's up in the air - I have seen no changes published that say the treatment of foreign pensions has changed to now make them exempt from taxation.  Undoubtedly people have been slipping through the cracks one way or another, and not paying taxes.  Whether that will create problems for them in the future I do not know.

DIAN still says you're a tax resident if you spend 183 or more days out of any 365 day period in Colombia - that has not changed.  I'd be interested in finding out the legal basis by which you can avoid that!

I do not have the answers - except I'd reiterate, the designed purpose of the Reforma Tributaria is to increase the tax take. So I don't think they have decided to now let foreign pensions go untaxed - that they are taxable remains the same as far as I can find out, and as far as I know the DIAN policy that foreign pensions are not exempt from taxation as renta still stands.  Whether that foreign pension is that of a foreigner, or a Colombian citizen, it's still subject to taxation.

Colombian pensions are not taxed except for that amount which exceeds 1000 UVT, or over 30 million COP per month, a sum not likely to be exceeded by any Colombian pensioners whose pensions are thus untaxed.

This article in Medellín Guru from August of 2017 appears to me to be correct in all the particulars - except that it does not talk about the new tax rates or the Reforma Tributaria - and it states that foreign pensions are taxed:

https://medellinguru.com/income-taxes/

Intrigued by the search challenge and having no familiarity with this, I did find this reference to new tax treatment beginning in 2018 in which income still remains taxed but will be placed in "buckets" for tax treatment:

Types of taxable income

A tax reform was approved in Colombia and is in force from FY 2017. The Law 1819 introduced several changes to the individual's tax structure. From FY 2017 (returns which will be filed in 2018), the rents received by individuals should be separated in “baskets” depending on the type of income:

(I) Labor Income;

(II) Pensions;

(III) Capital income (interests or financial yields, rentals, royalties, etc.);

(IV) Non-labor income (residual basket) and

(V) Dividends.

In addition, there would be a regime for capital gains, understood as the gain obtained from selling assets possessed for more than two years. In this case, the tax rate applicable is 10%.

Now, the new Colombian tax regime applicable to each income should not affect any other, therefore the respective taxable base (related to each basket) cannot be unduly affected by deductions, tax benefits, and costs and expenses that should only be charged to a particular income (belonging to a specific basket). As a result of the calculation process of each basket, a net income will be generated in each event, which will be added at the end to the other net income related to the other categories (baskets: labor income and pensions, capital income and non-labor income and dividends), in order to determine the definitive income tax liability for the employee.

Here's a link to the full article:
https://home.kpmg.com/xx/en/home/insigh … rders.html

Based on someone's observation that it would seem very doubtful that any tax law change would have the objective of lowering taxes, it seems to me the concept of placing income into different "buckets" and then reducing the bucket income by related deductible expenses ensures that expenses for one activity, say, rental property, does not reduce income more than the income the activity produced.  Stated differently, the pension income "bucket" cannot be reduced for expenses relating to rental property.  So, this change would possibly increase tax revenue by limiting expenses to the particular income to which it is related.  Maybe?

Thanks for that, SawMan.  I've been able to find more by searching for the various Artículos of Ley 1819 of 2016.  But still nothing that specifically talks of foreign pensions - as far as I can tell they are still considered taxable in their entirety by DIAN.

In passing, KPMG needs to employ better translators.  All throughout that document they have translated the Spanish renta simply into English as "rent" - which is just plain wrong.  Filing your taxes in Colombia is declaración de la renta and it does NOT mean "declaration of the rent"...renta in this case means "income".  So when they repeatedly throughout their document translate it to the English word "rent",  it is not confidence-inspiring that they are getting the rest right, either...

However I do believe they have the gist of it right, where they say:
'In the case of residents, taxable income also includes rents (should be "income" not "rents") and occasional gains from a foreign source.'  This would include foreign pensions, which are income.

Ralph, as a result of your post, I spoke with my Accountant, and she states, that unless you can quote the Decree your Accountant is referring to, then she does not believe the information you have been given is correct, in fact she believes, we will be hit harder than previous years, and has seen nothing to the contrary.
I hope you can verify your information, I was getting quite excited for a minute or two.

Was there a decree or not?   

The source of the information posted by Ralf was identified as accountant Paula Cruz of Medellín.

Before this discussion a few weeks ago, I contacted Paula Cruz  (among other accountants) and set up a a paid consultation by email chat  about my 2017 Colombia taxes, at 9 a.m. on a certain day.

On that day, I emailed her at 8:58 a.m. to initiate the consultation.


She did not respond.

Later in the week, I emailed her again.  Again no response.

So I put no stock in a second-hand report that Paula Cruz claims there is some, unspecified 2017 decree that is relevant.

If you have any specifics on a decree that we can confirm on the Internet, Ralf, please let us know.

cccmedia

The last thing I would want to do is spread rumours on this topic or recommend finding cracks in the system.
I was very well aware of all the sources mentioned, but it seems the info was only based on DIAN's exclusion of foreign pensions in "Oficio 58213 de 2014" referring to "Estatuto Tributario Nacional", Art. 206, no 5 (exempting pensions up to 100.000 $ from taxes in general, without excluding foreign pensions).
Maybe this info is now outdated and should be revised. A few days ago my tax consultant, specialized in expats and obviously very experienced, made me aware of "Decreto 2250 - 2017", signed by the Colombian government Dec 29, 2017, thus the most recent and legally most binding on this topic. There I found section "Articulo 1.2.1.20.2" and if I understand it correctly it is an extension to the above mentioned "Estatuto Tributario Nacional 2014", Art. 206 no 5, making it applicable to foreign pensions as well, thus overruling DIAN's exclusion mentioned above.  This is the new addition: "Aquellos ingresos mencionados anteriormente y que correspondan a rentas de fuente extranjera, se reconocéran en esta cédula (...)", roughly translated: 'The type of income mentioned in this article includes income from foreign sources (...)'.
I am neither a legal nor a tax expert, but I know a little about priorities in legal regulations,  a government decree can normally definitely overrule or render invalid any regulation ("oficio") issued by government agencies.
Probably someone in this forum looked into that already and can comment where I am wrong and where I might be right.
Some professional advice I got so far supports my view but there are other "experts" that uphold the statements made in this and other forums during 2017. It is very difficult to make important personal decisions amidst that confusion - so any well supported comment will be helpful. In any case I highly recommend to use the services of a specialized professional instead of only relying on posts in the forums that could be outdated, and the repetition of outdated info could be harmful.

Sorry to hear about your problems communicating with Paula Cruz, cccmedia, I am in contact with her for about a week by email and phone, and got the impression she is extremely busy, probably because of all the confusion on the topic. She prefers phone or personal contacts.
Nevertheless to support her view she emailed me that "Decreto" which I have been studying since together with the "Estatuto" and the "Oficio", the only 3 documents I know of. My interpretations are still not confirmed, but a law firm in the US (fascpaconsultants.com) sent me an info with the same conclusion: foreign pensions up to 100.000 $ are tax exempt in Colombia if declared as pension income. I assume the legal basis is the now extended Art 205, no 5, "Estatuto...".
Nevertheless some lawyers and accountants in Colombia (some of them charging very high fees !) maintain the view published in the forums last year. They probably don't know the "Decreto" yet and stick to DIAN's "Oficio" until the "Decreto" has been fully understood, evaluated, explained and interpreted. But a Colombian friend told me that the government on occasion of signing the "Decreto" was marketing it as a milestone to make the country more attractive for pensioneers from abroad. Probably viewing the economic gains higher than additional possible tax income by the few above the level of tax free income (appr. 13K $ anually) that are willing to pay double taxes spending more than 183 days in the country. Politically and economically it's wise to think so. Let's hope it turns reality when submitting our tax returns.     
For my tax return Paula Cruz invited me for a personal appointment in Medellin within the next two or three weeks and I could probably post more after that. In any case one should carefully select the professional consultant, the risk  of mistakes in this crucial issue for lack of knowledge is high and the chances to claim refunds once the tax has been set are low.

Well I could be wrong but here goes anyway.  Sorry it is long and I hope I haven't gotten myself twisted around my own axle.  I think I need (and deserve) a stiff drink after all this...and so does anyone who can read and understand it all...they (DIAN and Colombian legislators who wrote this crap) could teach the IRS a thing or two about obfuscation, it's like wading through molasses...

First, Articulo 1.2.1.20.2 number 2 is this, from

https://www.icicat.co/normatividad/impu … residentes

"2. Rentas de pensiones: Se incluyen en esta cédula los ingresos de pensiones de jubilación, invalidez, vejez, de sobrevivientes y sobre riesgos laborales, así como aquellas provenientes de indemnizaciones sustitutivas de las pensiones o las devoluciones de saldos de ahorro pensional, obtenidos de conformidad con la legislación colombiana.

Aquellos ingresos obtenidos por los conceptos mencionados anteriormente y que correspondan a rentas de fuente extranjera, se reconocerán en esta cédula, pero no les será aplicable la limitación establecida en el  numeral 5 del artículo 206 del Estatuto Tributario, de conformidad con el parágrafo 3 del artículo 206 del Estatuto tributario. Lo anterior, sin perjuicio de lo establecido en los Convenios para evitar la doble imposición suscritos por Colombia."

Discussion: 
(1) The last part of the first paragraph numbered 2, "obtenidos de conformidad con la legislación colombiana" seems to make it clear that what they're talking about is any pensions etc. that are "obtained in conformity with Colombian legislation" which would not include foreign pensions. 
(2) In the second paragraph  the first sentence says roughly "Those incomes obtained by the aforementioned concepts and which correspond to income from foreign sources" are recognized by this document, but "the limitation established by numeral 5 is not applicable". 
(3) The last sentence says, referring to the limitation established by numeral 5 (a rough translation) "The previous, (is) independent from (or without regard to) that which is established in the Convenios to avoid double imposition (i.e. double taxation) subscribed to by Colombia."  In other words ignore what numeral 5 says, the limitation it outlines is not applicable for foreign income.

OK now we move on to the text of the above referenced "numeral 5 del artículo 206 del Estatuto Tributario" mentioned in the second paragraph of number 2.  It says above the limitation established by it (numeral 5) is now not applicable, "...no les será aplicable la limitación establecida en el  numeral 5 del artículo 206 del Estatuto Tributario..."

Here is numeral 5, from:

http://estatuto.co/?e=1043

"5. Las pensiones de jubilación, invalidez, vejez, de sobrevivientes y sobre Riesgos Profesionales, hasta el año gravable de 1997. A partir del 1 de Enero de 1998 estarán gravadas sólo en la parte del pago mensual que exceda de 1.000 UVT.**

El mismo tratamiento tendrán las Indemnizaciones Sustitutivas de las Pensiones o las devoluciones de saldos de ahorro pensional. Para el efecto, el valor exonerado del impuesto será el que resulte de multiplicar la suma equivalente a 1.000 UVT**, calculados al momento de recibir la indemnización, por el número de meses a los cuales ésta corresponda."

Discussion: 
(4)  OK what is the limitation?  Per numeral 5, previously, pensions of the kinds listed were taxed only in the part of the monthly amount that exceeded 1000 UVT, which is a bit over 30 million COP, around $11,000/month USD, a sum that very few pensions in Colombia reach.
(5)  So what about foreign pensions?  Nothing about foreign pensions is mentioned per se, just that income which comes from foreign sources is mentioned - and the limitation that Colombian pensions are not taxed unless they were more than 1000 UVT/month, is all that applies.

So my reading of this all, in conclusion is:  The limitation of numeral 5 does not apply to foreign income.  Foreign pensions are treated as income for tax residents, that has not changed.

This is backed up here, where they say that none of this applies to a Colombian citizen - or any tax resident - who receives a foreign pension:

https://actualicese.com/actualidad/2017 … -de-renta/

Please feel free to make any corrections or ask questions - I am sure of one thing:  This is complicated enough that I don't think I understand it well, if at all - but there is nothing I see that suggests that foreign pensions will be treated any differently from ordinary, foreign income for any tax resident of Colombia.

Ralf27 wrote:

.... In any case one should carefully select the professional consultant, the risk  of mistakes in this crucial issue for lack of knowledge is high and the chances to claim refunds once the tax has been set are low.

I hope you end up being right and myself wrong Ralph, but I have every faith in my Accountant, and as much as getting a refund wouldn't be easy, as you say. Not paying your tax, can be even more expensive, as you have to pay the tax and the fine! I look forward to your update, following your meeting with Sra. Cruz

UPDATE: My Accountant, has checked the relevant regulations, and it is her sincere belief that Sra. Cruz, if she has indeed given you that information Ralph, is totally wrong. There is nothing in the new regulations to reduce our tax as pensioners, Foreign Pensions will continue to be treated as normal income, but with less options to reduce the tax bill.  My Accountant is in full agreement with you '...one should carefully select the professional consultant, the risk  of mistakes in this crucial issue for lack of knowledge is high...'

Overall the Reforma Tributaria is designed to collect MORE in taxes not less, from almost every source.  Colombian pensions will now be taxed at lower income levels than before, hitting those who receive even less than 3 million COP per month, according to:

http://www.eje21.com.co/2016/10/reforma … pensiones/

TABLA 2. IMPUESTO PENSIONES  EN  PROYECTO REFORMA TRIBUTARIA, ARTÍCULO 16; UVT = $29.753
Mesada
$

Mesada UVT    SSS + SP (13%);  UVT    Base Gravable
Neta; UVT

Exenta UVT    Renta Líquida Gravable; UVT    Tasa %    Impuesto
UVT    $
3.000.000    100,8    13,1    88    83    5    20    5    148.765
4.000.000    134,4    17,5    117    83    34    20    11    327.283
5.000.000    168,1    21,8    146    166    -20    30    14    416.542
7.000.000    235,3    30,6    204,7    166    38,7    30    32    952.096
9.000.000    302,5    39,3    263,2    250    13,2    33    49    1.457.897
10.000.000    336,1    43,7    292,4    333    -40,6    35    59    1.755.427
17.236.350    579,3    75,3    504,0    333    171,0    35    133    3.957.149


No se necesita ser chef para distinguir entre un filete de pavo y una costilla de marrano, ambos apetitosos. Lo establecido en estos artículos implica que se pretende gravar las pensiones y obligar a declarar renta en 2017 a los pensionados con ingresos totales de $41.654.200 en 2016, y en 2018 lo estarán aquellos con ingresos por $29.753.000 de hoy. Es decir, estará obligado a declarar renta en 2017 el pensionado que recibió 14 mesadas de $2.975.300 o 13 mesadas de $3.204.169 durante el año 2016. Para 2018 las mesadas para declarar renta se reducirán a  $2.125.214 de hoy para quienes reciban 14 mesadas y a $2.288.692 de hoy para los de 13 mesadas.

Thanks for your comments, especially OsageArcher, you really deserve a drink or two and more than that for your extensive elaborations. Maybe my interpretation is wrong and yours is right. I try to understand why some Colombian professional consultants  have changed their views since "Decreto 2250 - 2017" raising my hopes to stay on as a "residente fiscal" without double taxation. It hurts when the pension is well above the regular tax exemption - and the alternative in my case would be to limit my stay to 183 days a year, avoiding taxation. That's why I am hyperactive on this issue bothering the forum with my numerous posts.
Only one comment on your conclusion:
"The limitation of numeral 5 does not apply to foreign income.  Foreign pensions are treated as income for tax residents, that has not changed."
So far I had a different understanding of the term 'limitation', maybe due to the fact neither English nor Spanish is my mother tongue, sorry, maybe I am wrong. I thought 'limitation' refers to
- either 1000UVT as a top for tax exemption (not very likely )
- or more likely: being part of the Colombian pension system mentioned as a prerequisite ('limitation') for exemption
In my first assumption the addition in numeral 5 is due to some constitutional issues raised in 2014 as was mentioned in DIAN's "Oficio", now paving the way to make exemption applicable to foreign pensions as well on a basis compatible with the Colombian constitution.
My apologize if I add to the general confusion.

No, Ralf, I think the confusion is general, not just among us but amongst Colombians too, seeing as how even the professionals don't often deal with foreign income.

I think I'm right - the way "limitation" is referenced in the Artículo is just to say it does not apply.  In numeral 5 the only limitation referenced is that pensions of more than 1000 UVT per month are taxed and anything under is not - for Colombian pensions.  But according to the other link I posted that too is now changed, Colombian pensions will be taxed if they are over even several million a month.

I'd love to be wrong and find out that I could stay 183 days or more in Colombia, be considered a tax resident, but not have to pay any taxes on my pension because it wouldn't be considered income!  But I just don't think that's the case, or even that they would purposely set it up that way to the foreign expat's advantage.

I agree with OA, and I think the reason no one knows, including DIAN, is that the Government seem to have nothing better to do than change the Tax Regs, since I moved here in 2012, they have been changed four times including the latest, that is totally ridiculous, I don't know any other country that does that.
I am learning new ways of reducing my Tax Bill every year, the things to remember are to find out if your Home Country has a double tax Treaty with Colombia, or if DIAN has an agreement with your Tax Dept. which in effect is the same as the Double Tax Treaty. Keep all your receipts, for anything to do with property maintenance, if you own your property, all receipts for car maintenance, and Healthcare payments, and anything else you think you may be able to claim against your bill, Your Accountant can get quite creative, whilst keeping within the law, every peso saved helps.
I have just been informed that I  can now also claim for the monthly sum I give my Wife, that will be a big saving and may well bring me down enough, not to have to pay anything again (except my Accountants pocket money!).
As I have said before, my Accountant says time and again, that people who live here, pay enough taxes, without being fleeced, and a good Accountant will do his or her best to reduce your Tax liability to zero, or as near to it as possible.

There is plenty of sense in what you say, OA, based on lots of experience. I see we are in the same situation.
I was (still am a bit) interpreting "Decreto 2250" this way: the Colombian government considers the 1) economic benefits of attracting more foreign pensioneers well above the taxable levels to invest in property and consume inside Colombia more than 183 days / year. Instead of 2) sucking every peso out of those few who are willing to accept severe double taxation. In the case of plan 2) the equation of total fiscal income might be negative in comparison with 1).
My choice of tax consultants was based on several recommendations in the forums, including "medellinguru". I hope I wasn't totally misled.
Still waiting for additional infos / clarificacion before changing my plans drastically.

Ralph, I wish you were right, my Wife who is Colombian has read Decreto 2250, and she states it clearly states that the Pensions of Foreigners from their home country will be treated as normal income, (I get the gist of the Decreto, but readily admit I don't understand it in detail).

She says that the figures OA quotes in the table are the rate of tax on your disposable income, i.e. what is left after all your deductions, so if you have 7.000.000 COP left you will pay 30% on that, if you can get the deductions down to under 3.000.000 COP, you pay nothing.

Apparently there is a project to change the Tax System yet again, maybe your...and our, wish, is somewhere in that! However I would be surprised if it were, because that is what used to happen, all pensions were tax free, than they changed it, I can't see them relinquishing their hold on a tax that is raking them in money, albeit, it will deter people moving here on a permanent basis.

Thanks PhilCo and OA taking your time to look into this thoroughly and substantiate your view in detail. According to OA the recently added inclusion of foreign pensions in the rules for tax exempted income is absolutely meaningless. I hope he is wrong, but I am afraid he is right. In that case it remains an absolute mystery why foreign pensions are now included in the framework of rulings for tax exemptions when the hidden outcome is they are NOT EXEMPTED!!

The "experts" consulting me still owe me an explanation why they interprete the "Decreto 2250" in the line of a new tax relief for foreign pensioners. I will keep the forum posted.

If they cannot substantiate their view the last straw in my case would be an agreement on avoiding double taxation (as mentioned in the addition to Art. 206, no 5). So far Colombia has valid agreements with Switzerland, Czech Republic, Spain, Portugal, Mexico, Chile, India (!!!) ... and is in negotiations with my home country, Germany, but that may take years.

For the time being thanks for any additional comments on the issues of tax relief for foreign pensions in the context of the "Decreto 2250".

I had a telephone consultation with Paula Cruz to prepare my "declaracion de rentas" for 2016 (!!!) before I travel to Medellin next week for an appointment in that matter. She confirmed her view that "Decreto 2250 - 2017" results in tax exemption for foreign pensions equal to those received within the Colombian system.

So I had a closer look at OsageArcher's excellent elaborations and the crucial passage about a limitation that doesn't apply to foreign pension income:

OsageArcher wrote:

(...)
the way "limitation" is referenced in the Artículo is just to say it does not apply.  In numeral 5 the only limitation referenced is that pensions of more than 1000 UVT per month are taxed and anything under is not - for Colombian pensions.  (...) Colombian pensions will be taxed if they are over even several million a month. (...)

The "Decreto" says about tax exemption about foreign pensions:

"(...) no les será aplicable la limitación establecida en el numeral 5 del artículo 206 del Estatuto Tributario, de conformidad con el parágrafo 3 del artículo 206 del Estatuto tributario limitation is the restriction in PAR 3 (...)"

So I think the "limitation" is to be found in PAR 3:

"PAR 3. Para tener derecho a la exención consagrada en el numeral 5 de este artículo, el contribuyente debe cumplir los requisitos necesarios para acceder a la pensión, de acuerdo con la Ley 100 de 1993."

Speaking under correction, of course, the "Decreto" is terribly complicated, my conclusion is this: Foreign Pensions are tax exempted - without having to comply with the prerequisites of Colombian Pension Laws stated in PAR 3.
Moreover in my understanding the last part about existing treaties ("Convenios para evitar doble imposicion") with other countries only refers to these treaties. They cannot be affected by Decreto 2250. So foreign pensions received from those countries like Spain, Switzerland ... have their own tax rules.

Sorry, this was long again, maybe obsolete in future when Colombian pensions will be taxed too, as OA mentioned.

Feel free to correct me, to get a reliable understanding of the "Decreto" will take a while ...

Enjoy the Puente!

Thanks, Ralf - when you're retired, it's always a puente, ja ja!

I still think foreign pensions are treated as income - I refer again to this link:

https://actualicese.com/actualidad/2017 … -de-renta/

They state very clearly from the first paragraph that any foreign pension is not exempt from Colombian tax but an amount may be deducted according to any foreign tax paid:
"Si una persona pensionada colombiana que vive en otro país llega a ser considerada residente para efectos fiscales, no podrá considerar las pensiones que reciba en el exterior como rentas exentas, pero si podrá restar el impuesto pagado en el otro país por ese concepto como descuento tributario."

Remember that although it says above una persona pensionada colombiana because this article is specifically written from the Colombian point of view, the key phrase is Si...llega a ser considerada residente para efectos fiscales... which means a tax resident - and ANY tax resident of Colombia, whether foreign or native, has the same rules applied to them, as far as income is concerned.  You don't get any break for being a foreigner, or for being a native.

Farther down the page is this:
"En la situación planteada, la persona deberá declarar el valor de las pensiones que recibe en Estados Unidos; sin embargo, es necesario tener en cuenta que estas pensiones no podrán restarse o considerarse como rentas exentas, a pesar de que en el numeral 5 del artículo 206 ..."

So in bold in the article paragraph text it says foreign pensions may not be subtracted or considered tax-exempt.  And it goes on to say that numeral 5 applies only to Colombian pensions, not foreign pensions.  Then it repeats again that any tax paid in the foreign country on the foreign pension may be deducted from the Colombian tax owed, counting the foreign pension as income.

I'd be interested in hearing what Sra. Cruz makes of what is said in the link - it still seems clear to me that external, foreign pensions are treated as ordinary income, for any tax resident of Colombia foreign or native, with the proviso that any foreign tax paid on the pension may be deducted from the Colombian tax bill.  And that's what this article clearly states, and says several times. 

Of course they could be wrong, but again, it would seem too good to be true that tax residents who are foreigners can get away with not paying taxes on their foreign pensions, when Colombian citizens who are tax residents have to...and if it seems too good to be true, it usually is.

That's our take on it as well OA,  the fact is at the end of the day, we have to be guided by our Tax 'Experts', we have to have our Declarations signed off by a Colombian Accountant, whether we like it or not BUT if they are wrong it is us that bears the responsibility of the fallout not them, and DIAN can come after you years after a wrong declaration. All I would say to Ralph is, make sure you keep all copies of communication with Ms. Cruz if you decide to go with her reading of this, just in case. You mention that you are doing your declaration for 2016, which does not even come under the latest tax rules, however if you are going ahead with Ms. Cruz, I would ask her to contact DIAN and ask them if they have an ' agreement' with the German tax authority, that' what mine did and it turned out they had a local agreement with the UK, which is on a par with a Double Tax Treaty. In my case a Double Taxation Treaty was agreed in December, but it still has to be ratified.

Right OA, for me it's always puente ... that's the good part - and I like to enjoy it without preocupations about taxes

And thanks a lot again for pointing out those regulations and explanations in detail. Basically it matches exactly the information I had before Paula Cruz made me aware of "Decreto 2250-2017", signed Dec 29th 2017. It probably takes a while until the new applications will be integrated into those sources mentioned. So far I find no references there, probably due to the date of publication, the complexity of it and the low priority of foreign pensions within the complete scenario. Some tax lawyers and accountants I contacted last week didn't even know that document existed, thus unable to comment it.

And I'm fully with you PhilCo, DIAN will have the last say in this. They may or may not accept the declaration of my pension as tax exempted. So far I simply try to find a back up for the advice I got within the legal norms. Thanks for the warnings, I will bear them in mind.

The "Decreto" might be retroactive because it doesn't change any of the existing laws. According to what I was told the document is designed to fill gaps and add necessary explanation within the existing legislation. "Oficios" published by government agencies could be made simply invalid, "Estatutos" are below the law as well and can be modified retroactively by a government "Decreto" because they might not have been reflecting the laws sufficiently / adequately.

Well, this is just a mix of what I was told and what I make of it after about 20 years of indirect participation in the German tax system, without being a legal professional myself. So any correction will be very welcome.

Based on cccmedia's recommendation I contacted Langon Law Group about "Decreto 2250", they are investigating. I will keep the forum posted about the outcome.

Here's the decreto on-line at Actualícese:

https://actualicese.com/normatividad/20 … 9-12-2017/

As Ralf says it's designed to fill the gaps and add necessary explanation.  I'm not sure they succeed too well with the explanation part...

I've read it, or at least skimmed it.  So far I can't find anything that would change the treatment of income from foreign pensions for Colombia tax residents.  I have searched the whole document to show where the string "pensi" is found, some 134 hits, to catch both pensión and pensiones, but have not found anything that would indicate foreign pensions are tax-exempt.

Similarly I searched the Decreto for the string "extranj" to catch all the permutations of extranjera.  There were only 9 hits and none of them had anything to say about foreign income being tax-exempt.

If anyone could cite the section and the words that do that it would be helpful!  It would be definitive. 

Here is shown Artículo 330 which I thought might have something that would shed some light.  It does not.  I also looked at Artículo 337 and others which were no help.  But this is a good site, you can navigate from Artículo to Artículo for what it's worth:

http://estatuto.co/?e=845&w=libro-primero

They definitely didn't do a great job in explaining, I am wrecking my brains to sort out the part about possible tax exemptions for foreign pensiones, picking out the relevant parts of the old "Estatuto" and the new "Decreto". Maybe it helps to look at the essentials if I identified them correctly with the help of Paula Cruz, the accountant mentioned above. Its all in Spanish because I use it for inquiries addressed to other Colombian professionals asking for confirmation / answers to my questions below these quotes:

A)    "Estatuto Tributario Nacional 2014, Art. 206         (ANTIGUA)
> [ingresos no gravados]
(…)
5. Las pensiones de jubilación (...) estarán gravadas sólo en la parte del pago mensual que exceda de 1.000 UVT.** [= appr. 30.000.000 COP]
(...)
PAR 3. Para tener derecho a la exención consagrada en el numeral 5 de este artículo, el contribuyente debe cumplir los requisitos necesarios para acceder a la pensión, de acuerdo con la Ley 100 de 1993.
(…)"

B)
"Decreto 2250 - 2017            (NUEVO)
[> ingresos no gravados, comentario, extension del numeral 5 del “Estatuto ...”]
Artículo 1.2.1.20.2.
(...)
2. Rentas de pensiones: Se incluyen en esta cédula los ingresos de pensiones de jubilación (…), obtenidos de conformidad con la legislación colombiana.

Aquellos ingresos obtenidos por los conceptos mencionados anteriormente y que correspondan a rentas de fuente extranjera, se reconocerán en esta cédula, pero no les será aplicable la limitación establecida en el numeral 5 del artículo 206 del Estatuto Tributario, de conformidad con el parágrafo 3 del artículo 206 del Estatuto tributario.
(…)"

    Mis preguntas:
> ese parte del “Articulo …” implica que 5., PAR 3 del “Estatuto ...” no aplica para pensiones extranjeras (“rentas de fuente extranjera”)? PAR 3 queda invalido para pensiones extranjeras y asi no son gravadas?

Ralph, if I remember correctly what my Accountant said the other day,  the part 'A' you have quoted refers to Colombian Pensions, not pensions from other Countries.

Up until December 2012 all pensions from whatever source were tax free, this changed on 1st January 2013, how do I know? because I moved here on January 10th 2012 thinking my pension would not be taxed in Colombia, and also thinking that I had five years before I had to make a tax declaration, which was the case, just my luck!

As you will be aware any declaration is for the previous year, so the change on January 1st 2013 effected 2012, fortunately for me I had many expenses my first year, and didn't at that time own any property, so my declaration was zero.

As you can imagine, I have kept myself abreast of any and all changes that effect me, likewise my Accountant has made a point of immediately informing me of any major changes, and did so when the last laws were updated, (I'm not referring to this order which is supposed to clarify points, but the law) as a result I was informed that this year, unless I could spend enough cash on property updates etc, I would have to  pay some tax, (until now my deductions have always taken me below the tax threshold). When I contacted her the other day, as a result of your comment, she said nothing had changed.

I still hope you are proved right, but I am planning on the advice given to me, that until now has always been correct.

Thanks a lot for your comment PhilCo, we have a similar biography in Colombia, only I bought property and built a house in 2011already and became a tax resident much later, in 2016. Unlike you I made the mistake not getting updates on the legal situation and with my outdated knowledge got trapped in 2016, without being aware of it, only realizing 3 weeks ago I owe for 2016, 2017 and part of 2018. Deductions I cannot count on, my investments were long ago.
That's why I am hyperactively and prematurely trying to figure out what the new "Decreto" has in stock for me. Such a complex and voluminous document takes some time to be sufficiently studied, interpreted and commented by the professionals in Colombia, especially with the focus on foreign pensions which are rather of minor importance. And I was told that law firms and accounting companies are now focusing on corporate tax declarations, due March 31st, while personal ones are only due in about half a year.
I think this might explain why the implications are not yet generally available to and by professionals.
Anyway, in my situation I have no time to wait for that.

Ralph, the only year you are out on, is 2016, which may or may not have an additional fine for late declaration,  2017 will be due in the second half of this year, and 2018 in the following year, there are many who DIAN will go after first,  yours is just a hiccup!

Si le entiendo bien entonces yo puedo vivir tranquilo con mi retiro en casi 7'500.000 cop al mes sin declarar nada mensual o anual

Alcvrdan wrote:

Si le entiendo bien entonces yo puedo vivir tranquilo con mi retiro en casi 7'500.000 cop al mes sin declarar nada mensual o anual

Alcvrdan, I don't know how you come to that conclusion, which I believe is mistaken.  You could be correct - I just read an article that says you can deduct up to 40% of your income, so that might bring you down to where you do not owe anything:
http://www.finanzaspersonales.co/impues … 2017/71019

By the way this is an English forum, please post in that language.

This article says that now persons making as little as just under 2.75 million COP per month must file a declaration (but that they might not be liable for any payments of taxes):
http://www.semana.com/nacion/articulo/l … ria/499829

This site contradicting the link above says anyone earning up to 2.479 million COP per month is not liable to file (it may be that this site or the other has transposed numbers, the one using 2.749... and this one using 2.479...).  You can also download a guide for the filing of taxes:
https://www.rankia.co/blog/dian/3478773 … -afectados

Under the old tax rates and laws, I believe you might have been liable for as much as 10-12 million COP annual tax, about 4000 USD give or take (that's without taking into account any deductions).  Under the new laws perhaps more - but to be sure you should consult a tax professional in Colombia, perhaps several, and pick the answer you like best!

You have to declare a monthly foreign pension of 7.500.000 COP, but probably not pay taxes, provided you paid taxes in the country of origin. There is still some confusion on the matter of double taxation in the case of foreign pensions and I would rather wait for additional confirmation before relaxing.

Ralf27 wrote:

You have to declare a monthly foreign pension of 7.500.000 COP, but probably not pay taxes, provided you paid taxes in the country of origin. There is still some confusion on the matter of double taxation in the case of foreign pensions and I would rather wait for additional confirmation before relaxing.

Not quite correct Ralf, my pension is similar to the figure you quote; provided DIAN have at least an agreement with your home country, even if it is not covered by a Double Taxation Treaty, then they will take into account the tax you pay in your home country, but if that is less than that in Colombia, you pay the difference, less any deductions.

In the UK I get the first £11000 tax free then 20% on anything above, quite what that brings the percentage down to overall I am not sure, but for arguments sake say it's 15%, and the tax rate here is about 32%, so I am going to have to pay 17% on any taxable income, which considering it is pension, I think is a bit harsh, but that's life.