Income tax return: foreigners and Colombians living abroad

The beginning of the deadlines for filing the income tax return of individuals in Colombia is approaching, and many foreigners and Colombians living abroad must also comply with this obligation, provided that they meet certain requirements.

The obligation to file the income tax return as a natural person falls on all those who have generated income or have assets in Colombia, regardless of whether they are residents or not; this occurs because the raison d’être of the tax in question is to pay the State a percentage of the profits obtained within the national territory, regardless of the nationality or tax residence status of the taxpayer. With the following steps you can not only easily determine whether or not you are obliged to comply with this requirement even if you are outside Colombia, but also other important aspects related to the process of formalizing the return.

Verify whether or not you are a resident for tax purposes.

Articles 9 and 10 of the ET indicate the aspects that a natural person must take into account when trying to determine whether or not he/she is a tax resident in Colombia. The following are the conditions that determine such quality:

1. permanence in the country: if you stayed in Colombia during 2017, continuously or discontinuously, for more than 183 calendar days, including the days of entry and exit of the country.

2. Foreign service of the Colombian State: If during 2017 you were linked to the Colombian State and rendered services abroad, but by virtue of the Vienna Convention on diplomatic and consular relations, you are exempt from taxation in the country where you are on mission, with respect to all or part of your income and occasional gains during the prospective taxable year or period.

3. Personal and patrimonial relations with the country: he/she shall also be considered a declarant if during the taxable year 2017 he/she met any of the following requirements:

a. Your spouse or permanent partner (a) not legally separated, or dependent minor children, have tax residence in the country.

b. 50% or more of your income is of national source.

c. 50% or more of your assets are administered in the country.

d. 50% or more of its assets are understood to be owned in the country.

e. It does not prove its condition of resident abroad for tax purposes.

f. You have tax residence in a jurisdiction qualified by the national government as a tax haven.

However, do not lose sight of the fact that even if you meet any of the requirements set forth in the above paragraphs, you would not be considered a resident if 50% or more of your annual income comes from the country where you are domiciled, or if 50% or more of your assets are located in that same territory.

So, for example, if a Colombian based in Spain, whose children and wife are in Colombia, has 100% Spanish income and assets, he/she is not a Colombian tax resident.

Confirm if you meet any of the requirements

For the taxable year 2017 is obliged to declare income any natural person, whether Colombian or foreign, who during that same year has reached any of the following 5 requirements:

1.He/she was responsible for VAT in the common regime during the taxable year 2017.

2.Its gross equity as of December 31, 2017 was higher than 4,500 UVT, corresponding to $143,366,000.

3.The gross income obtained during 2017 was higher than 1,400 UVT, which amounts to $44,603,000.

4.Their purchases and consumptions with any means of payment exceeded 1,400 UVT, corresponding to $44,603,000.

5.The consignments, deposits or investments also exceeded 1,400 UVT, equivalent to $44,603,000.

“Non-residents in Colombia must evaluate only the level of gross income obtained in Colombia and their gross equity held in the same country”.

In this regard, it is of utmost importance to take into account that non-residents in Colombia must evaluate only the level of gross income obtained in Colombia and their gross equity owned in the same country, in order to determine whether or not they are obliged to file the respective income tax return in Colombia.

Classify the type of information to be reported to the Colombian government.

In this regard, it cannot be lost sight of the fact that, according to article 265 of the ET, are considered assets owned in Colombia the rights over assets located in national territory or that are exploited in the country, shares and rights over national entities, shares or social rights of Colombian residents in entities that, in turn, have business or investments in national territory; credit rights when the debtor has residence or domicile in Colombia, and foreign funds that are linked to the ordinary course of business of the taxpayer in Colombia.

Likewise, some income considered as national source are those coming from the exploitation of tangible and intangible goods within the country, permanently or temporarily, with or without own establishment; the alienation of tangible and intangible goods in any title, if these are within the country at the time of their alienation; the profits coming from real estate located in the country and the income obtained in the exercise of commercial activities within the national territory. The other types of income included in this classification can be consulted in articles 24 and 25 of the ET.

You may also be interested in: Income tax return and assets abroad.

Determine the form that corresponds to you

The application of the new tax identification system for the preparation of the income tax return of individuals is only mandatory for resident individuals and resident unliquidated successions. Consequently, for the taxable year 2017 the forms for filing this tax obligation will also depend on whether or not you are a resident, as follows:

–Form 110: applicable to non-resident individuals, regardless of whether or not they are obliged to keep accounting.

– Form210: to be used by resident individuals, regardless of whether or not they are required to keep accounting records.

“foreign resident individuals obliged to file the income tax and complementary tax return must do so electronically and pay the tax in the same way”.

These forms can be filled out in a much simpler way if you use one of our four tools.

Verify compliance with the formal aspects

–Filing deadline: the deadlines for filing this return start on August 9, 2018 with codes 99 and 00 (last two digits of the NIT), and end on October 19 with codes 01 and 02; to verify the maximum date that corresponds to your tax identification number, you can consult our 2018 tax calendar.

–Virtual return: natural persons residing abroad obliged to file the income tax and complementary tax return, must do it electronically and pay the tax in the same way, or through banks and other authorized entities in the Colombian territory.

Exception that may be used for not filing a tax return

Numeral 2 of article 592 of the ET exempts non-resident individuals from filing their income tax return, when all income obtained in Colombia has been subject to the withholdings of articles 407 to 411 of the ET.

Source: Actualize