Expat Taxes in Colombia

Take a quick look at the expat taxes in Colombia in this article.

If you want to invest as an expat or high-net-worth individual, which is what i specialize in, you can email me (advice@adamfayed.com) or use WhatsApp (+44-7393-450-837).

This article isn’t formal tax advice and the facts might have changed since we wrote it.

Introduction

Colombia, officially known as the Republic of Colombia, can be found at the northernmost end of South America. Given its rich biodiversity, it has been named one of the world’s megadiverse countries. Lush forests, white sand beaches, and hiking trails with awe-inspiring views abound. And with 9 UNESCO World Heritage Sites, culture doesn’t lag behind the natural resources of the country. The streets also come alive at night with a festive atmosphere and a chance to just let loose. With employment opportunities and an affordable cost of living, the country has become an option for foreign nationals. This consideration then comes with the question of what the expat taxes in Colombia are.

Who is considered a tax resident in Colombia? 

Any individual, either of local or foreign nationality, who resides in the country for a total of more than 183 days within a period of 365 days is considered a tax resident in Colombia.

Furthermore, a Colombian national who meets any of the following is considered a tax resident in the country: 

  • Have spouses or dependents who reside in Colombia for a total of 183 days within a 365-day period
  • At least 50% of income is obtained from the country, either directly or indirectly
  • At least 50% of properties and/or assets are managed in the country 
  • At least 50% of assets are physically located in the country 
  • If the National Administrative Department of Taxes and Customs of Colombia (DIAN) requests evidence of fiscal residency in a foreign country but no such proof is given to them
  • An individual who is a fiscal resident of a country that is deemed a tax haven by the national government

On the other hand, an individual will not be considered a Colombian resident if they meet any of the following criteria: 

  • At least 50% of the yearly income is obtained from where they are domiciled 
  • At least 50% of assets are established where they are domiciled 

Residents are taxed on their income earned within and outside of Colombia. On the other hand, nonresidents are only taxed on their income earned within the country. 

Personal Income Tax in Colombia

The government implements a progressive tax system. This means that higher income levels are met with a concurrent increase in the taxes applied. The table below shows the tax rates applicable to different income brackets.

Marginal Rate (%)Taxable Income (COP)
0More than 0 but less than 1,090
19More than 1,090 but less than 1,700
28More than 1,700 but less than 4,100
33More than 4,100 but less than 8,670
35More than 8,670 but less than 18,970
37More than 18,970 but less than 31,000
39More than 31,000 

The aforementioned rates are applicable to income earned from employment, capital, and non-employment. This includes earnings from work conducted in Colombia, salaries, wages, fringe benefits, commissions, and all other earnings from an employee-employer relationship. At the same time, this also involves income from interest, royalties, rentals, and intellectual property.  

Furthermore, similar rates are applied to income from retirement and disability pensions, income earned from labor risks, and related compensation.

The tax rate for non-tax residents is 35%. 

Dividend Taxes in Colombia

Rates for dividends will depend on whether they are subject to tax at the corporate level. For dividends that are subject to tax at the corporate level, a marginal rate of 0% is applied to a taxable income of more than 0 COP but less than 300 COP. A marginal rate of 10% is applied to any amount of at least 300 COP. On the other hand, a flat tax rate of 35% is applied to dividends that are not subject to tax at the corporate level.

Capital Gains Taxes in Colombia

The capital gains tax in Colombia is 10% and is applicable to the following:

  • Gains from the sale of assets such as stocks, bonds, and the like that have been owned for a minimum of two years
  • Gains from liquidation of a company that has been in operation for a minimum of 2 years
  • Gains from inheritance, legacy, or donations 
Expat Taxes in Colombia: Capital Gains Tax
Gains from the lottery are subject to tax.

Gains obtained from the lottery, gaming, and activities of a similar nature are subjected to a tax rate of 20%. 

Does Colombia have Double Tax Treaties?

Yes, Colombia has double tax treaties (DTTs) with 15 countries. They are as follows: Bolivia, Canada, Chile, Czech Republic, Ecuador, France, India, Mexico, Peru, Portugal, South Korea, Spain, Switzerland, United Kingdom, and Italy.

Conclusion 

With this, expat taxes in Colombia are under a progressive tax system when it comes to personal income. However, there are double tax treaties with a couple of countries that can help alleviate expenses from such. Because of this, it would be good to calculate the amount of take-home pay or income derived from any economic activity to determine the feasibility and practicality of being in the country.

Pained by financial indecision? Want to invest with Adam?

Adam is an internationally recognised author on financial matters, with over 438.5 million answers views on Quora.com and a widely sold book on Amazon

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