To Pay Tax in Colombia or Not

If we are good law abiding Expats, we will do our legal bit to help Colombia, but that doesn't mean we are going to empty our pockets for them.

When you decide to live in Colombia, one of your obligations is to visit DIAN and register your status with them, I registered before I received my first cedula, they used my passport to complete the process, telling me to return once I was in possession of my cedula. I had to do this, as I had sent ten boxes of personal possessions from Spain, and had to have a N.I.T.  for the import process.

Then you have an obligation to submit a Tax Return every year, for some like myself this causes a bit of extra work, because here the Tax year runs January to December, and in the UK it runs April to April, so I have to work out what is from January to April of one UK Tax year, and April to December of the following.

Again unlike the UK where you can file your own Tax Return, here you can't, you have to employ a certified Accountant, and they come in all qualities from total rubbish, to cheap and thorough, to those that charge more than your tax bill! I have had the pleasure of the first two of these, fortunately now I have a gem. Some will let you prepare your own Tax return and they will check it, then put their signature and stamp to it. However if you can find a good Accountant, they are worth their weight in gold.

If you are not sure if their is a Double Tax Treaty with your home Country, ask your Accountant to liaise with DIAN, and find out, at the time the UK didn't have a Double Tax Treaty, but it turned out that DIAN had a mutual agreement with HMRC in the UK, which amounted to the same thing, therefore my pension in the UK is taxed at source, as a result I provide my UK tax certificates to DIAN, and they work out what the difference is between the two countries, after that they deduct my tax right offs, and if I am lucky I end up paying nothing, except my Accountants bill.

The first meeting I had with  the Accountant who has done my returns for the last few years, she told me, "No one wants to pay Tax, and you pay me to to keep your bill to a minimum", to date she has done just that.

In order to reduce your bill, keep every receipt you get, that has anything to do with;
property improvements,  maintenance, furniture or taxes;
vehicle purchase, sales, maintenance, taxes, insurance. 
Personal bills, such as EPS, other healthcare bills,
Receipts for transfer of funds from your Transfer Company, to show the amount and rate of exchange, Account statements from your home country bank to show 'main' income, as proof it is not from criminal activity,
Any other bills that might just be used to offset taxes here, ask your Accountant, I'm sure I have missed some off.

I would suggest to help your Accountant, and keep his or her bill down, you sort your receipts out, and put them in separate classifications, in date order. I know I get a discount for doing this, and as you have to find them in the first place, it only takes a few minutes to get them in order.

I know there are many Expats who don't file a Tax Return, they think by using an ATM with their home countries Cashcard they can avoid DIAN, and they brag about it, but slowly but surely the Authorities are catching up with these people, it just isn't worth it. I certainly don't like the idea of having to spend my life looking over my shoulder, it may cost a little more, but it's worth the peace of mind.

Dear Phil,

I have been seeking out a tax professional with the same client-money-saving attitude as yours.

One pro told me it would take nine hours of his time at $130 US per hour to research my case and put a filing together.  Then he offered a $30 an hour discount.

Another quoted a tax rate for my payment higher than the tax rate for my main class of income.

A third one I just emailed earlier today.

Please tell us the name and email address of your Colombia accountant.  It doesn't matter what city he or she is in.

cccmedia in Depto. de Nariño

cccmedia I would normally willingly have given that information, especially as I only paid a total equivalent of $86 US last year for her services, but she has gone into semi-retirement, and told me not to give out her details.

One piece of advice, I wouldn't go for one advertised on the internet, they are usually very expensive, you are better with a local Accountant, speaks no English, does commercial accounts, because then your declaration is a doddle for them, and your fee is their undeclared pocket money. Ask a local shop if they have a good Accountant, it would be worth it in the long run.

Phil makes a lot of sense on this issue.

SunsetSteve :

Phil makes a lot of sense on this issue.

It appears I might save about $814 US on my accountant charges for tax year 2017 if I take Phil's advice, compared to what the Medellín pro was quoting me.

This strikes me as a classic example of saving big money in South America by utilizing one's Spanish-language skills instead of seeking out a pro who speaks English and promotes his services to Gringos.

Thanks, Phil. :)

cccmedia in Depto. de Nariño

The local tax accountants do.not have a CLUE when it comes to tax liabilities of Expats in Colombia.

Check.ot the PWC or Deloite Touche websites on these subjects. They deal with big foreign Corps who bring expats into their Colombian branch offices.

But if it gives you a warm fuzzy feeling go ahead and use a ma and pa accounting service.

It really doesnt matter because DIAN doesnt have a clue (or any real.motivation) either

So now, on this thread, we have the OP, Phil, who suggested I visit a local accountant who probably speaks no English .. and for whom my Colombia tax return would undoubtedly be "a doddle" (a snap, easy money, no problem).

On the other hand, along comes Quechimba with the certainty that local accountants know nothing about Expat tax obligations.

Perhaps the truth lies in between.

Or perhaps not.

Phil's experience is based on successful work with a now-retired or semi-retired accountant about whom he raves.

Quechimba's experience is based on, what?  A single bad experience with a below-average local accountant in Caldas?  Really, we don't know because Quechimba didn't source the post.

Frankly, as of this moment, the pros -- findable on the Internet -- have let me down .. and I haven't yet chosen anyone to do my tax filing for TY 2017.

I'm ready to talk to some local accountants .. and will make my own assessment of their evident abilities.

cccmedia in Depto. de Nariño

No..same experience he has..just "diferent :)  approach" ..ja ja ja :)  :)

I use Alfred E Nuemann as my "TaxConsultant" in Colombia..

Coming up... a picture of Quechimba's tax consultant....

Quechimba :

I use Alfred E Nuemann as my "TaxConsultant" in Colombia..

Alfred E. Neuman is the fictional wide-eared, gap-tooth cover boy and mascot of MAD Magazine .. where he debuted in 1954.

His likely comment about Colombia's worldwide tax on Expats: 
"What, me worry?"

www.mentalfloss.com/article/65069/12-th … -about-mad

I have a sister-in-law who is a tax accountant in Pereira.  I'm not living there yet, but I started to ask about taxes and expats and 'Double' taxes, etc...during my list visit there.  She didn't know off the top of here head, but within 2 days, she found all the information we needed.  She has Colombian tax books from 2000 to present in her 'home office'.

I told her many expats are looking for someone like her.  I'll check to see if she's interested/comfortable doing it and PM you guys.  Her English is limited to just a few words.

PM me if you are interested and my spouse and I will contact her.

There are a number of people (expats) who for various reasons didn't declare their tax when they first moved to Colombia, often because they didn't intend on staying for years but kind of slipped into it and before they knew it (due to ignorance or otherwise) found that they owe various years of back tax and sanctions for not having declared.

I for one looked into paying those off and getting myself right, employed an accountant and had them assess my situation.  The amount of money owed was horrifying and enough to make me stop the process and (perhaps stupidly) not pursue it further.

Many expats have no RUT here in Colombia, as far as DIAN are concerned these people don't exist and DIAN do not actively pursue them for tax returns.  It does not mean that they don't have an obligation to declare, that is well understood but when faced with a bill that might clean out your lifes savings it makes you think twice.

It is common advice to "do nothing" if DIAN are not looking for you, I actually think there are lots of people in this situation who perhaps intend on simply leaving colombia if it becomes an issue.  As unattractive as it is it is a very real option when faced with a bill that would reset your savings for the last few years.

If you recently moved to colombia definatley get a good accountant and declare your tax.  When you are ahead of the problem you can write off your income in various ways and minimise what you have to pay, your accountant can help you with that.

If you didn't declare for years and found yourself in a hole then I, and I am sure others, would be very interested to hear your experiances and advice.

Until 2013 (declaration 2012 Tax year), Ex Pats were given a free five years before having to declare tax, as is my luck, it changed as I moved here, I am informed by my Accountant that DIAN is now actively targeting ExPats with a view to helping to fill the black hole, but as I have said, and as Rizzo80 just mentioned, there are many payments that can be used to help reduce your tax bill, an example, I was told that my tax bill could have been as high as $7000000 COL last year, but with all the bills taken into account, I only had my accountants bill to pay!

Jeez Phil , I would be interested to hear of a soecific case you know of of DIAN actually "pursueing" an expat without the expat first voluntaraly providing them information before hand (poking a sleeoing dog
So to speak)

I haven't said that I am aware of this, it is a statement by my accountant, but there are many ways of tracking down non-payers, Expat or local, if they wish to, ATM transactions, Healthcare, School registrations, to name but a few.

Thanks for the feedback. there are a surprising number of people taking the same stance as Quechimba.  The issue is that many Expats get very mixed messages, I have had accountants put the fear of god (DIAN) into me suggesting that they know everything and will hunt me down while on the other side I have had a lot of advice (including some not very official account advice) to do nothing.

Again, I'll restate.  If you just turned up in Colombia or you have been here a year or so then get an accountant and declare your tax... you'll be glad you did if you later put down routes in the country.

For those persons who have gone various years without declaring (probably because you don't have a RUT) I'd like to hear your thoughts, specifically if you have meaningful advice or took some action.

Most accountants I have asked laugh when they hear what I owe and immediately suggest I have made some mistake, "you'd have to be earning more than Neymar to have to pay that much" (I don't).  They assume you'll have huge receipts stored from 2014 (car, house, declarations in other countries) that can be deducted from your taxable income but that is not always the case.  Indeed many of the receipts I did provide were no good since they didn't include any payment of IVA.

* Did anyone here ever voluntarily declare after having let tax years mount up? 
* Did any of you leave the country to escape those obligations? 
* Do expats in this situation all believe that DIAN will never ever bother catching up with Expats?

Just to clarify a point made, you only need a R.U.T (El Registro Único Tributario) if you are in business, or importing items (Because I was importing personal items when I moved to Colombia, they gave me a temporary RUT, with instruction to return and change my status, once the items had arrived, if you fail to do so, you get taxed as a business), what you do need is a N.I.T (Número de Identificación Tributaria), this can be obtained by making an appointment with DIAN online, and then going to your local office with your passport. I have always found the Assessors, friendly and helpful.

PhilCo58 :

cccmedia ...  One piece of advice, I wouldn't go for one advertised on the internet, they are usually very expensive, you are better with a local Accountant, speaks no English, does commercial accounts, because then your declaration is a doddle (a snap) for them, and your fee is their undeclared pocket money. Ask a local shop if they have a good Accountant, it would be worth it in the long run.

I liked Phil's advice about this earlier .. and I like it even more now. :)

Looking around the neighborhood for an accountant today, I was introduced to a local accountant who does commercial accounts for a local cable-TV company.  The introduction was by a vitamins-product salesman I met on the street.  The accountant has been doing accounting work for the salesman's "amiga."

On the computer screen at the accountant's desk at the cable company, in just several minutes, she brought up a Spanish-language document, the Reforma de Tributaria that was redone last year .. and she found something recently posted there that drastically reduced my 2017 tax bill for Colombia far below what I had been quoted by the fancy-pants English speakers in Medellín.

:top: Great job putting us onto the idea of finding a local who does commercial accounts, Phil.:top:

You saved me thousands of dollars in taxes.  And the local accountant didn't charge me ni un peso.

cccmedia in Ipiales, Nariño

Brilliant news! I'm really glad it worked for you.   :)

"And the local accountant didnt even charge me ni un peso?"  But of course you tipped her handsomely, right?

I was thrilled with her work and offered to pay her.

She declined.

Since we were at her place of work with a lot of people around, it would have been awkward for her to make her look like she was inappropriately moonlighting or to try to force money on her by insisting.

cccmedia in Ipiales, Nariño

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Whether you have to file and possibly pay taxes in Colombia is simple, and it applies to EVERYONE whether you are an expat or a native.

You must file and possibly pay taxes to Colombia on your world-wide income, if you satisfy both these conditions:

1)  You are a tax resident, i.e., you spend more than 183 days total in-country in any consecutive 365 day period.

See  http://www.mondaq.com/x/636064/Capital+ … cia+Fiscal

2)  Your 2018 annual income in the taxable period was 46,418,000 COP or more (about $14,770 USD at today's exchange rate).

See
https://www.finanzaspersonales.co/impue … 2019/78984

I have found this thread to be very helpful. It's now clear to me that that for a high net worth person still earning a professional income in the USA and living intermittently between assignments in Colombia on a migrant visa, there would be some Colombian income tax as well as wealth tax to pay given their higher rates kicking in at lower thresholds, despite getting a credit for the US taxes paid.

One question: If a US citizen earning income in the USA stays fewer than 183 days during any 365 day period in Colombia but his non-earning spouse and minor child continue to stay in Colombia for more than 183 days during the same period, would there be any tax to pay to Colombia? I ask because a Colombian citizen in my situation would be considered a tax resident per DIAN's guidelines (see 3a): https://www.oecd.org/tax/automatic-exch … dency.pdf. Thanks!

Stoictraveler,  rather than get tax advice from an internet forum I would advise you to seek the opinion of a Colombian tax specialist/accountant.  Get several opinions from several practicing tax accountants, and pick the one you like best - but make sure they can back up their considered opinions with Colombian tax law.

BUT as far as this link says (we are unable to see the link you attempted to post - new members are not immediately able to post links):

https://www.dian.gov.co/impuestos/perso … entes.aspx

...a tax resident, who must file and possibly pay taxes, is anyone who meets ANY of the conditions listed, including # 3:

"3.  Que su Cónyuge o compañero permanente no separado legalmente o sus hijos dependientes menores de edad, tengan residencia en Colombia."

So it's my guess, on the plain language that DIAN puts forth, yes, you would be liable to file and possibly pay taxes.  The condition # 1 which the language says applies to Colombian citizens, and which applies to foreigners too, does not really matter since you DO satisfy condition # 3:

"1.  Permanecer continua o discontinuamente en el país por más de ciento ochenta y tres (183) días calendario incluyendo días de entrada y salida del país, durante un periodo cualquiera de trescientos sesenta y cinco (365) días calendario consecutivos, en el entendido que, cuando la permanencia continua o discontinua en el país recaiga sobre más de un año o periodo gravable, se considerará que la persona es residente a partir del segundo año o periodo gravable."

Again, I would get the opinion of several tax preparers.  But I think DIAN would definitely consider you as a tax resident based on # 3, for the concept of residence for tax purposes.

I agree Osagearcher that a good Colombian accountant is critical. So far I have contacted many and have heard from one who gave pretty vague answers. Awaiting response from others. Once I am physically in Colombia, it would be easier.
Regarding your response, I would ask you to search for RESIDENCIA PARA EFECTOS Y TRIBUTARIOS in google and on DIAN's webpage you will find a more complete list of who is considered a tax resident in Colombia. You will notice that criteria 1 and 2 apply to foreigners and Colombians alike but 3 and 3a apply solely to Colombian citizens. The link you provided is a more abbreviated version only for the Colombian citizens. Hence, judging strictly from my aforementioned DIAN link, DIAN is silent about foreigners who leave family behind but stay fewer than 183 days. But what's more, the last 1 and 2 (after 3) mention that even Colombian citizens who leave family behind but earn more than 50% of their income from abroad won't be considered tax residents. Hence, even Colombian citizens in my case should not be tax residents per DIAN. I only asked the question because it nowhere explicitly talks about foreigners with family in Colombia. Thank you again for your response.

I should clarify my last point: "But what's more, the last 1 and 2 (after 3) mention that even Colombian citizens who leave family behind but earn more than 50% of their income from abroad won't be considered tax residents." I meant more than 50% of their income from their domicile, not abroad. Because I have a home, and would be staying and working for more than half the year in the USA, USA would remain my domicile.

Again, someone on an internet forum may or may not give a correct answer - but in the end it's what DIAN thinks about it.  So in my opinion any speculation here among us is kind of pointless.

Some of this speculation is well resourced.......and worth paying attention to.........yours included..........some expats do their homework.....Most dont............

Stoic traveller..I cant comment on the tax   situation...

But it is not a very ideal family/ personal situation..

Una relación de lejos es una relación de pendejos.

Una relación de lejos es feliz para cuatro..

Hope you are planning something different in the bit to longer term, espescially with a child involved..

Saw reference to this app that helps track residency in an article regarding how New York state tax officials are increasingly conducting "residency" audits of their high income residents fleeing to Florida and other low-tax states.  No personal experience with it:

https://monaeo.com/personal

Thank you very much for sharing this information.

I have been discouraged from moving from the US to Colombia due to the potential of paying a lot in taxes but for some reason Expats have never shared what you have shared.

Contact Paula Cruz, set up an appointment and she can explain in detail what your tax will be. For us, it is so minimal as to not be any concern.

I am an expat who registers with DIAN for purposes of paying income tax in Colombia. I have a working system for keeping your expenses low in this regard.
My Colombian gf is an accountant. Easy peasy.
My system works very well in all other Colombian paperwork official requirements too. Especially when you don't speak spanish like me.

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