Taxation in Colombia

Thanks for all the responses. I guess I'll reply one by one. Spoke w a tax lawyer about this and evidently there is no enforcement with regard to people on a tourist visa. Either way I'm going to step up the time frame of my planning for a 1 year visa.

Thanks again!  Yes, your wording is correct that it would be type of income not type of visa that would affect taxes. I'm thinking of dividends and capital gains most specifically. So say I pay 15% capital gains in the US. In Colombia I think I'm correct to state that an investment held over two years would be taxed at a rate of 10% hence leaving me with zero tax liability in Colombia. Does my thinking fall in line with what your experience has been?

Hi again!  I'm just thinking in terms of if I'm paying taxes..  the not letting foreigners work part I totally get. I've just never seen it where you can't work and still get taxed.

For your year long Rentista visa did you need to provide an aposlalized birth certificate. I know I'll need a certified letter from my financial institution showing enough monthly income from annuities and good standing.

Also wondering if colombia will tax me on a piece of land I own in Costa Rica?  Costa Rican land taxes are very very low so if they do then the Colombian tax might be higher and leave me with exposure here. Thanks for the welcome and all the great info!!

Derf123 wrote:

Spoke w a tax lawyer about this and evidently there is no enforcement with regard to people on a tourist visa.

Provided you do not overstay your tourist stamp, you will be under the 183-day minimum for automatically becoming a tax resident.

North American short-time visitors receive a tourist stamp, often informally called (by Expats) a tourist visa.

cccmedia

Derf123 wrote:

I'm going to step up the time frame of my planning for a 1 year visa.

Since December 2017, most visas have a 3-year duration.  This includes visas based on a pension or other income.

What visa and visa-basis are you planning to choose, Derf?

cccmedia

Derf123 wrote:

So say I pay 15% capital gains in the US. In Colombia I think I'm correct to state that an investment held over two years would be taxed at a rate of 10% hence leaving me with zero tax liability in Colombia. Does my thinking fall in line with what your experience has been?

The tax rate on capital gains is 10 percent in Colombia, that is correct.

Where it gets tricky is the definition in Colombia of capital gains.

You will need to find out the time frame as defined in Colombia used to calculate the taxes on your investments.  This is almost certainly not something you can reliably do yourself.

As I understand USA tax law, securities held over one year are taxed as ordinary income .. and the higher capital-gains tax applies to those securities held less than a year.  This could be different in Colombia.

Inheritance cash is supposedly taxed at the 10 percent rate as capital gains in Colombia.  However, one's mileage may vary since some inheritances pay out monthly and it's anybody's guess whether La DIAN would charge a higher rate for monthly inheritance income.

Dividends may cause a higher tax rate to apply.

cccmedia

Derf123 wrote:

For your year long Rentista visa did you need to provide an aposlalized birth certificate?

For my 2017-18 TP-7 one-year visa (no longer issued), my USA birth certificate had to be certified by the locality and then apostilled.  It was all done while I was in Quindío, Colombia, working with a law firm's paralegal (in Medellín) and an apostille company in New York.

You showed us the most creative spelling of 'apostilled' I have ever seen.

cccmedia

Derf123 wrote:

Also wondering if colombia will tax me on a piece of land I own in Costa Rica?  Costa Rican land taxes are very very low so if they do then the Colombian tax might be higher and leave me with exposure here. Thanks for the welcome and all the great info!!

If this is raw land for which you do not charge anyone rent and you receive no income, you likely have no tax liability in Colombia.

cccmedia

Hahahah, yes my spelling can be a doozy..

So that's interesting. Nowhere have I read the the 1 year Rentista visa is no longer. It's now 3 years?

Yes!!!

I was born abroad and having the locality certify it won't be possible..

So the clock on th 183 days is Jan1-Dec31? If I spend four months in Colombia at the end of 2018 then leave say end of Dec or early Jan and return in 2019 I'd have another 180 days kminus any I spent in Colombia in 2019 before the trip out and back.

Thanks again so much for all the help. Really can't say that enough.

Derf123 wrote:

So the clock on th 183 days is Jan1-Dec31?

If you are talking about being subject to income tax in Colombia - no.  Being subject to income tax in Colombia is entirely separate from any visa requirements.

Colombia considers you to be a tax resident and subject to filing a declaración de renta on your world-wide income if you spend more than 183 days total in-country in any 365 day period not necessarily a calendar year.  Days of arrival and departure are considered whole days for the purpose of the calculation.

You would be subject to filing for the year in which the 183 day threshold was passed, so if sometime in 2018 you reached 184 days or more, you'd have to file in 2019 for the 2018 income tax year.

The income tax situation in Colombia is likely to get worse and not better - they already fall short of monies for their 2019 budget and are already talking about yet another reforma tributaria to somehow get more money coming in - from income taxes, the IVA and other sources.   The outlook is bleak for funding for the whole 4 years of Duque's presidential term.

The reality is when the government is looking for other sources of income, "there ain't nobody here but us chickens" - they have to get it from the people who work and earn.

Currently about 2.6 million Colombians are subject to filing income tax, out of a population of almost 50 million total - that's those who make about $3.6 million COP per month or more, $44 million COP a year or more,  It may be lowered to those who make only $1.9 million or more COP per month, which would approximately double the tax base to over 5 million Colombians.

This article in El País of Cali summarizes some of the problems:

https://www.elpais.com.co/economia/los- … taria.html

OsageArcher wrote:

The income tax situation in Colombia is likely to get worse and not better....

The reality is when the government is looking for other sources of income, "there ain't nobody here but us chickens'....

Yeah, chickens and Expats.

There was the story of a man in a psychiatrist's office.  He tells about his uncle who thinks he is a chicken, acting and making sounds like a chicken.

"Did you turn him in?" the shrink asks.

"We can't, doc, we need the eggs."

Derf123 wrote:

I was born abroad and having the locality certify it won't be possible.

When I got my Colombia Rentista Visa for 2017-18 ( which expired in March 2018), I obtained certification of the USA birth certificate while staying in Colombia.

What makes you believe that you cannot do the same for whatever country certified your birth?

cccmedia

OsageArcher wrote:

Currently about 2.6 million Colombians are subject to filing income tax, out of a population of almost 50 million total - that's those who make about $3.6 million COP per month....

That is one fascinating statistic, that 2.6 million Colombians or only about five percent of Colombians are subject to file income taxes.

Over-taxing the masses who make the equivalent of under $300 US per week on average .. is an unpleasant idea in a country experiencing a troubled transition period.  Which shows why Gringos are potentially a big fat target for the Colombian tax man, going forward.

cccmedia

Also, not all those 2.6 million Colombians who make as much or more than $3.6 million COP/month and who are subject to filing, actually pay any taxes.  But that's going to have to change to tax those who make even less, to try to pay for Colombia's ambitious and under-funded social programs.

This just points up that Colombia is a poor country.  Most people are poor and have to get by on very little, relative to developed countries.  Here in the US we are approaching about 50% of the population who do not pay Federal taxes - more than 4 out of every 10 households pay no Federal income tax at all.  But in Colombia as cccmedia points out, about 95% of the population pay no income taxes and only 5% make as much or more than about $1200 USD per month or $14,400 USD per year.

The middle class in Colombia although growing is still very small as a percentage of the overall population.

I was born in Iran and haven't been there in quite a long time. My mother says I have a certificate of live birth issued by the State Dept in Washington DC so hopefully that can be certified.

Do you know of people who have been coming and going on the 90 day stamp that have been asked to pay taxes because of this?  A lawyer told me that this one isn't being enforced. Again, he was talking about the 90 day entry stamp and not an applied for visa.

Derf123 wrote:

I was born in Iran and haven't been there in quite a long time. My mother says I have a certificate of live birth issued by the State Dept in Washington DC so hopefully that can be certified.

If you were born in Iran (and not on USA property there such as an embassy) and the birth was certified in the USA, your case may be unique.

If there is/was a certificate issued in your case by the State Department, inspect it closely .. and possibly e-send a copy of it to a Colombia attorney to make sure it will pass muster.

cccmedia

Derf123 wrote:

Do you know of people who have been coming and going on the 90 day stamp that have been asked to pay taxes because of this?  A lawyer told me that this one isn't being enforced. Again, he was talking about the 90 day entry stamp and not an applied for visa.

In a word, the answer to your question is:  No.  Tourists don't pay taxes on income received from sources outside the country.

So long as you are in-country as a tourist and do not overstay 180 days out of 365, you do not automatically become an official tax resident of Colombia.

Your recollection that "this one isn't being enforced" is probably meaningless because what "this one" refers to .. seems vague.  Also, a new administration took over in August .. and could become more aggressive in tax collections at any time in compliance with the statutes.

Unless the attorney puts something about this in writing, I wouldn't rely on your recollection of that conversation.  if you contact him/her again, have that understanding put in writing.

cccmedia

Thanks, it's all I've got other than the original one which like I said is never going to be certified. Sooo, hopefully it can be certified if need be by the state Dept as they're the ones who issued the certified copy which was done around 1980.