What may not be deducted from the taxable base of the estate tax?

Article 295-2 of the ET, modified with Article 37 of Law 1943 of 2018, mentions the values of the assets that may be subtracted in the calculation of the taxable base of the wealth tax from 2019 to 2021. However, shares or quotas in domestic companies may not be subtracted.

Articles 35 to 41 of Law 1943 of 2018 modified several of the articles ranging from 292-2 to 298-8 of the Tax Statute -ET-, to establish a new version of the wealth tax that will apply from 2019 to 2021 (which will be declared in the new form 420 that was announced by the Dian in a draft resolution published on April 12, 2019, and that will imply having the old liability code “03-wealth tax” reflected in the RUT).

Said tax, which will only be payable by the income tax payers expressly mentioned in the new version of article 292-2 of the ET, and who have possessed as of January 1, 2019 a tax net worth reportable to the Colombian Government for an amount equal to or greater than $5,000,000,000,000, has quite a few differences in relation to what the previous “wealth taxes” were.

One of such differences is that the new wealth tax from 2019 to 2021 will not apply, for example, to any of the national legal entities (regardless of whether they are of the ordinary or special regime). Such tax is designed to be levied only on individuals or unliquidated successions (residents or non-residents) that are income tax payers (therefore, it would not apply to those who become taxpayers of the new unified tax under the simple regime), as well as on some foreign companies.

Due to the above, and taking into particular consideration that this time domestic companies will not be liable for the new equity tax, what happened is that the new version of article 295-2 of the ET, which mentions the assets that can be effectively subtracted from the liquid equity to obtain the taxable base of the tax, no longer includes the instruction about subtracting the net equity value of the shares or quotas in domestic companies. In effect, such rule will only allow subtracting the following values:

1. In the case of individuals, the first 13,500 UVT of the net worth value of their house or apartment ($462,645,000 for 2019). This exclusion applies only with respect to the house or apartment where the individual actually lives most of the time; therefore, recreational properties, second homes or any other property that does not meet the condition of being the place where the individual lives are not covered by this exclusion.

2. 50% of the patrimonial value of the assets subject to the complementary tax of tax normalization that are declared in the taxable period 2019 and that have been repatriated to Colombia on a permanent basis.

“it was only in the previous versions of the “wealth tax” or “wealth tax” that it was allowed to subtract the net asset value of “shares or quotas in national companies” “

Therefore, it is clear that it was only in the previous versions of the “wealth tax” or “wealth tax” that it was allowed to subtract the net asset value of the “shares or quotas in national companies”. Such subtraction was allowed precisely to avoid double taxation on the same net worth, since in those previous versions of such taxes both the legal entities national corporations and their respective partners or shareholders were listed as taxpayers.

Source: Actualícese