Expatriate tax ebook - Columbia

Basis of taxation

Charge to tax
Residence
Income from employment
Source of employment
Benefits (in kind)
Expatriate concessions
Relief for foreign taxes
Deductions against income

Charge to tax
Any income cause by a labour relationship is taxable income; however, 25% is exempt income

The factor that determines the income tax is any revenue that may increase the individual’s estate.

Every resident and non resident that received any income considered as national sourced will be entitled as contributors. After the fifth year of residency, his/her income of national and foreign source will be both levied with income tax.

It is worth to point out that not every contributor is liable to fill an income tax return, only if during the fiscal year, the taxpayer receives net revenues over 3.300 UVT or has a Net equity over 4.500 UVT.

Residence
The continuous staying in the country for over six (6) months in the taxable year or period, or completed within said period, as well as the discontinuous staying for over six months in a taxable year or period.

Income from employment
The Colombian tax arises from the labour income like salaries, commissions, fees and cultural, artistic, sporting and similar activities, compensations, or because of services rendered by individuals, when the work or activity is done within the country.

Since the day the expatriate received any revenues from a labour relation such revenue will be taxable income.

The rate for the non resident is 33%, if the expatriate is resident the applicable rate depends of the procedure establish in the Colombian laws and he/ she will be treat as any other national.

The employers are responsible to withhold every month an advance income tax that each employee must paid for his revenues arise from the labour relationship

When the incomes are not over 95 UVT the rate is 0% (fiscal year 2008). (see Income tax rate chart)

It is worth to point out that each employer determines the withholding tax each month according to a specific procedure regarding the Colombian Tax Code.

Source of employment
Any services arise from a labour contract rendered within the country.

Benefits (in kind)
The general exemption for income tax purposes is the 25% of the incomes. There are some other exemptions such as compensation arises from labour accidents, maternity or severance pay.

Expatriate concessions
Expatriates do not have any benefits different that the one granted to the nationals.

Relief for foreign taxes
Tax Credit

Domestic taxpayers receiving incomes from foreign source, being subjected to income tax in the country of origin, are entitled to discount against the Colombian income tax, that amount paid abroad on the same income, as long as such discount does not exceed the amount locally payable by the taxpayer for the same income.

Deductions against income
Health contributions and educational expenses or interest arise from loans for acquisition of real property appoint as a home.

Information about Columbia:

introduction

facts and figures

basis of taxation

what taxes?

tax planning opportunities