Renta 2020: self-employed workers

According to Article 336 of the ET, self-employed workers must choose between subtracting in their income tax return costs and expenses or 25% of exempt income. In no case both benefits may be taken together in the income tax return for the taxable year 2020.

According to the new version of article 336 of the Tax Statute -ET-, modified by article 41 of Law 2010 of 2019, for purposes of establishing the net income of the general taxable year 2020, self-employed individuals who meet certain requirements that we will indicate below, must choose between taking in the income tax return the costs and expenses associated with their economic activity from fees or compensation for personal services or the 25% of exempt income provided in paragraph 10 of article 206 of the ET.

Thus, as a novelty for the income tax returns of individuals to be filed between August 10 and October 20, 2021 at the latest, the 25% exempt income will be applicable to:

1.self-employed workers who receive fees and hire or link for a term of less than 90 days less than 2 workers, as long as they have not opted to subtract the costs and expenses proceeding in the development of their activity.

2.self-employed workers who obtain income for compensation of personal services and have hired less than 2 persons in their activity, regardless of the time of such hiring and as long as they have not opted to subtract the costs and expenses incurred in the development of their activity.

This same precision is contained in article 1.2.1.1.20.5 of Decree 1625 of 2016, replaced by article 1 of Decree 1435 of 2020, which establishes that taxpayers who receive income considered as earned income from fees or compensation for personal services, obtained in the development of an independent professional activity, may subtract the costs and expenses that have a causal relationship as long as the value equivalent to 25% of exempt income has not been subtracted.

Let us remember that, for the taxable year 2019 returns, the rule allowed self-employed workers to take in their income tax return (form 210) both the costs and expenses, as well as the exempt income of numeral 10 of article 206 of the ET. However, with the amendments made by Law 2010 of 2019, self-employed workers will no longer have both benefits and therefore the net income on which the income tax for taxable year 2020 will be calculated will be increased.

Source: Actualize