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double taxation ?

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peggyjune
  11/5/2015 13:57 EST

I have been reading this forum - thanking everyone who has share information.

I am somewhat confused, if a ex-pat comes to live in Colombia, is there "double taxation" ? I will be getting Social Security next year and possibly
selling my home. I read somewhere that said there is taxes from income that the person coming from the USA ?

WhoaNellie
  11/5/2015 14:14 EST

My understanding from research and from reading other topics in this forum is that if you are in Colombia for 183 days or more during a year, your WORLDWIDE income for that year is subject to taxation by Colombia. A 33% tax level has been mentioned.

I hope we can get some clarification and more info about this, as it will affect my decision whether or not to be a full-time resident.

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peggyjune
  11/5/2015 14:48 EST

Thank you for this reply. Yes, I will also look into this with detail. Perhaps someone knows for sure ?

I will surely affect my future decisions to live full time in Colombia.

bmcb
  11/5/2015 15:27 EST

I know for colombian income If you are US citizens, I believe you need to be out of the US 330/365 days for US to give you an exemption on 90k or something... but pensioners can probably better answer your question

dliss62
  11/5/2015 15:49 EST

"here is a little more clarity on the matter. Pay particular attention the the Wealth tax! You can also google "Colombia worldwide tax" and get more info. Keep in mind that the U.S. also requires you declare foreign income, but does not tax your wealth!

Are you in Colombia more than 183 days out of any 365 continuous days? You are taxed on your WORLDWIDE INCOME.

This is a rather new law, passed in 2012 and put into effect for tax year 2013.

Basically, it considers ‘tax residency’ as anyone who is in the country for more than 183 out of any 365 days, by physical presence. It does not exempt any types of visa.

I’ll say that again in case you missed it- the law does not exempt any special type of visa. If you are physically present in the country over the 183 day limit, you are taxed on your WORLDWIDE income, regardless of why you were there. You must report income from all your sources, fill out bunches of forms, and sign over portions of your wealth that may have had absolutely nothing to do with Colombia.

Here is the text of the law on ‘tributario’ (income tax). See Articulo 9 and 10 for what I’m talking about.

Specifically, here is a clip from Articulo 10, section 1. regarding what actions makes one a ‘resident’ for tax purposes in Colombia.

“1. Permanecer continua o discontinuamente en el país por más de ciento ochenta y tres (183) días calendario incluyendo días de entrada y salida del país, durante un periodo cualquiera de trescientos sesenta y cinco (365) dias calendario consecutivos, en el entendido que, cuando la permanencia continua o discontinua en el país recaiga sobre más de un año o periodo gravable, se considerará que la persona es residente a partir del segundo año o periodo gravable.”

Translated it says:

“1. Remain continuously or discontinuously in the country for more than one hundred eighty three (183) calendar days including days of arrival and departure, during any period of three hundred sixty five (365) consecutive calendar days, with the understanding that when continuous or discontinuous stay in the country overlaps more than one taxable year or period, it shall be deemed that the person is a resident from the second taxable year or period.”

There you have it folks.

Note: I even verified this law with a lawyer who works on immigration issues for expats in Colombia. He verified for me that the type of visa a person has is irrelevant. If you meet the physical presence test, you fall into the net.

I have also verified this with an expat investor in Colombia who has verified it with national government officials.

So this is not a small issue.

How this affects you…

1) Let’s say you come to Colombia, stay for 1 month and love it. You then decide to take 6 months of Spanish classes so you sign up for a student visa and enroll in classes at a local university. You stay those additional 6 months, totalling 7 months.

Boom. You’ve just been caught in the Colombian WORLDWIDE tax net. You are required to report AND pay income on all of your income worldwide, including the income of all of your offshore companies.

That is the new law. I sh*t you not.

2) Let’s say you hear of some hip new business incubator in Colombia that wants to fund your startup. You come down to Medellin or Bogotá and stay for a year building your business.

Snap. You’ve just been caught in the Colombian WORLDWIDE tax net. You are required to report and pay income on all of your income worldwide.

3) Let’s say your heart is big and you obtained a volunteer visa to remain in Colombia for a year helping the native peoples of La Guajira, on the north Colombia coast.

Thonk. Despite your best of intentions towards Colombia and breaking your back on behalf of it’s people, you’ve just been caught in the Colombian WORLDWIDE tax net. You are required to report and pay income on all of your income worldwide.

Did you have income from your condo in the US? Pay tax to Colombia.

Did you have income from your investment in Vietnam? Pay tax to Colombia.

Did you have income from dividends in your Singapore stock? Pay tax to Colombia.

I don’t know about you, but this kind of thing really rubs me the wrong way.

But that’s not all…

The Anti-tax Haven Withholding tax

If the worldwide income tax were not enough, a recent withholding tax of 33% is now required for any transaction between a Colombian citizen or company and any entity domiciled in jurisdictions that Colombia considers to be ‘tax havens’. The list includes places like Hong Kong, the British Virgin Islands, and others. There is also an ‘in-waiting’ list of countries who would be put on the list within one year if they don’t sign tax-information exchange agreements. Some of these countries include Panama, the United Arab Emirates, and others.

Here is the article from El Colombiano regarding Decree 2193 against ‘tax havens’.

(If you can’t read Spanish, use the Google translator browser button to get an idea of what is being said.)

I get word from people in the know that much of the foreign investment that has been pouring into Colombia over the past 5-10 years have been from these ‘tax haven’ countries. There’s no telling what may happen to that capital now.

(By the way, ‘tax haven’ is just a label governments put on places they don’t like, in order to raise suspicion about them in a semantic twist… Governments in those places decide how they will operate, just as in non-tax-havens. There’s really nothing necessarily suspicious about them.)

Anyway, the effect of these laws will discourage the flow of money into Colombia by penalizing further those that do so. It will incentivize companies doing business with Colombia to keep their money further away from the actual Colombian economy.

If it turns out that a large portion of foreign investment has been via these countries, then you could see a huge slow-down in foreign investment in Colombia as a whole.

This will negatively effect the economy and also de-incentivizes internationally minded people from investing as well.

Oh, and we’re not even done yet…

The Wealth tax

This last tax is one that I know the least about. But basically here’s how it works…

If you have too much money, the Colombian government isn’t really happy about that. They will simply take a percentage of your net wealth every year. And if your business has too many assets, the Colombian government isn’t really happy about it either.

Apparently there was even a motion on the table recently to reduce the threshold for the wealth tax to 750 million pesos (right now about $375,000 USD) on individuals AND on companies. But this motion was scrapped.

There still remains a significant wealth tax, according to the news source Reuters.

The concept of a ‘wealth tax’ is repulsively absurd to me. It’s like you’re paying rent on your own freakin’ assets.

But regardless of what I think, why would any company or individual keep his wealth in the country if that is how they are treated?

This provides more reason for investors to keep their capital OUTSIDE of Colombia, and not let it flow in.



All of these tax grabs should give any expat or investor pause, especially any internationally minded investor.

Note: Obviously, you need to do your own due diligence, and what I have said above is not to be taken as legal or professional advice of any kind. Talk to your lawyer or accountant.

For me, I was previously considering Colombia as a place that I would spend time in year round, but these laws have got me significantly reconsidering. As one expat I know said, “Oh well, guess Colombia is a 6 month per year country for me now!”

Really it’s amazing how quickly the red carpet for investors has been retracted. These kinds of laws affect not just simple expats and travelers, but large institutional investors who control large amounts of money."

peggyjune
  11/5/2015 16:23 EST

Thank you for this. Wow, this does change the decision making. So much to consider when deciding where to re-locate.

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peggyjune
  11/5/2015 16:23 EST

Thank you for this. Wow, this does change the decision making. So much to consider when deciding where to re-locate.

Tyee44
  11/11/2015 16:24 EST

Maybe a better question to ask is how many expats pay income taxes in Colombia from there foreign investments received outside Colombia?

bigjailerman
  11/11/2015 17:36 EST

....an even better question is who will admit on a public forum that they are not paying taxes here lol

fecherklyn
  11/12/2015 17:27 EST

@peggyjune

You are right to give careful consideration to the tax aspect of coming to reside in Colombia. The tax legislation has changed significantly over the last couple of years and what was a privileged situation for “would be” expats has now been effectively REVERSED. THIS IS ESPECIALLY TRUE FOR FOREIGN PENSIONERS CONTEMPLATING RESIDENTIAL RETIREMENT IN COLOMBIA.

YES, it has long been the case that if a foreigner became a “resident” (more than 183 days per year in Colombia), then he would have to declare to the Colombian tax authorities his GLOBAL incomes and assets and be taxed in Colombia on them if they exceed the tax-free thresholds.

However, this was no obstacle to foreign pensioners IN THE PAST because pension incomes were effectively exonerated from tax in Colombia under the previous legislation (Pension incomes “a partir del 1 de Enero de 1998 estarán gravadas sólo en la parte del pago mensual que exceda de 1.000 UVT.”) .

Unfortunately, this “privileged” situation for foreign resident pensioners is now ending as Colombia seeks to increase its tax revenues by taxing pension incomes like most of the rest of the world. The only subtlety is Colombia is maintaining the exoneration from taxation for its own nationals whilst “profiting” from its foreign residents.

As this differentiation between local nationals and foreign residents looked like an evident case of discrimination, the proposal was examined by the Corte Constitutionale who came up with the following response:

“Por tanto, la Corte declarará la exequibilidad de la norma, respecto de los cargos analizados en el presente proceso.” (sic).
Luego, en atención a lo dispuesto por el artículo 27 del Código Civil, según el cual “[c]uando el sentido de la ley sea claro, no se desatenderá su tenor literal a pretexto de consultar su espíritu” – lo cual, conduce a aseverar que el beneficio previsto en el numeral 5° del artículo 206 ibídem únicamente se circunscribe a pensiones obtenidas en Colombia a través del Sistema de Seguridad Social Integral, toda vez que es requisito que el contribuyente cumpla los requisitos necesarios conforme la Ley 100 de 1993 – y estándose a lo resuelto por la Corte Constitucional en la sentencia previamente reseñada, este Despacho no encuentra mérito para reconsiderar el Oficio No. 016055 del 28 de febrero de 2007 frente al tratamiento tributario de las pensiones de jubilación del exterior, motivo por el cual se confirma la doctrina expresada en el mismo."

Thus, the Corte has ruled this cancellation of exoneration for foreign resident pensioners was not discriminatory.

What remained to be clarified is the date of effect of this new measure. The response I have just received in a 17-page letter from the DIAN is as follows:

“En ese sentido, la Ley 1739 fue publicada en el Diario Oficial No. 49.374 de 23 de diciembre de 2014, razón por la cual las modificaciones al artículo 254 del Estatuto Tributario que para efectos de la determinación del descuento establece una fórmula matemática, que permite calcularlo de manera proporcional para ser imputado tanto en la declaración del impuesto de renta y la del Impuesto sobre la renta para la equidad (CREE), aplican para el año gravable 2015 y siguientes.

No ocurre lo mismo para el año gravable 2014, donde el valor correspondiente al descuento tributario se toma en la declaración de renta del contribuyente, teniendo en cuenta la parte que corresponda al impuesto de renta y el impuesto de renta para la equidad (CREE) en las condiciones y límites previstos en los artículos 254 y 259 del Estatuto Tributario, tema que fue materia de análisis en el oficio 070386 del 5 de noviembre de 2013.

Para el caso materia de análisis respecto de los años gravables 2014 y anteriores, deberán considerarse las normas anteriormente citadas sin las modificaciones que trajo la Ley 1739 de 2014.”

This I understand to mean our foreign pensions will be taxable in Colombia from, and including, the 2015 tax year.

I personally am dissatisfied with this response as I feel it is unreasonable to tax the totality of our 2015 pension incomes based on rulings being communicated to the effected residents in October 2015. This, to my mind, is effectively imposing retroactive tax legislation.

dliss62
  11/12/2015 19:48 EST

Thank you fecherklyn for your research and insight. I have not done so yet, but I wonder if there is some type of relief we can claim on U.S. tax return? I know there is no treaty, but does some type of foreign credit/loss apply?

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fecherklyn
  11/12/2015 20:09 EST

@dliss62

Sorry, I am starting to understand the mysteries of Colombian taxation, but I understand nothing about USA taxes.

spank12
  11/12/2015 20:16 EST

I understand most are worried about their monthly checks,, but the other BIG issue is the wealth tax,,, the things the states do not tax,, the value of your home and other capital , still in the states... That can hurt a lot each year

dliss62
  11/12/2015 23:45 EST

True, but I think the consensus is establishing a "TRUST" to work around that issue.

bigjailerman
  11/13/2015 01:03 EST

I believe the foreign tax credit in irs returns tops out around 600 bucks or there about

Onionbreath
  11/14/2015 12:43 EST

Well if you were looking for a way to keep me from moving to Colombia you just found it. 33% of my income. It is cheaper to live in the USA. Even with Obama care over taxation. Too bad I love Colombia

thelocogringo
  11/14/2015 14:14 EST

Has anyone else received a letter from the DIANN requesting thier USA tax return?

fecherklyn
  11/14/2015 17:27 EST

@Onionbreath

Onionbreath, do not just look at the headlines, have a look at the detail behind.

In fact, taxes on income in Colombia go UP TO 33%. There are several lesser tax bands:

from 0 UVT to 1090 UVT = 0%
from 1090 UVT to 1700 UVT = 19%
from 1700 UVT to 4100 UVT = 28%
over 4100 UVT = 33%

The values of the UVT are:
2013 = COP 26,841
2014 = COP 27485
2015 = COP 28279

Thus you would need taxable incomes of over COP 115,943,900 in 2015 before you hit the 33% tate of taxation, say a little over US$3,200 per month.

WhoaNellie
  11/14/2015 20:55 EST

So using those figures, if your US income is over about $1335/month you hit the Colombia 28% tax bracket...

It's getting less and less appealing to me to stay in Colombia more than 183 days each year!

This seems to me to be pretty stupid on Colombia's part. I would think they'd want people with money (relatively speaking) to stick around instead of chasing them away...

fecherklyn
  11/16/2015 11:08 EST

@WhoaNellie.

That is correct Nellie, on the basis of US$/COP 3,000. Of course, from a Colombian worker's point of view he would not be paying at 28% unless he was earning more than COP 4,000,000 per month, and there are not too many who have that type of wage.

Do not forget these UVT values are based on Net taxable Incomes, thus after any tax deductions you may be eligible for. In this context, there are quite a few possibilities for deductions, such as mortgage interest, dependent relative allowances, medical insurance premiums....etc.

dliss62
  11/18/2015 00:13 EST

Wow...it have a projected retirement income of 7k a month. I'll get creamed in Colombia!

WhoaNellie
  11/18/2015 10:01 EST

Assuming an exchange rate of 1 USD = 3000 COP, you hit the 19% taxation rate at just about $856/month...

So for an income of about $3000 USD/month at the 3000 COP exchange rate, you'd be expected to pay a bit over $557 PER MONTH in taxes to Colombia...this does not take into account, however, any adjustments to income but hopefully having paid off my mortgage here in the US, I would not have that to deduct.

So say you spend 185 days in Colombia and you'd get hit with 12 x $557 = $6684 per year to pay to Colombia???

I'd like to be able to spend more than 183 days/year in Colombia but if things don't change I doubt I'd be able or willing to take the hit...

Patricio
  11/18/2015 11:12 EST

With my US Soc Security check at 1620USD about minus the 104$ deducted for Medicare I never owed 1040 IRS tax on this in the US.

What are some opinions on how this translates to a Colombian interpretation of tax liability as I am a Colombian for tax purposes. I currently have no income here.
Thanks in advance.

WhoaNellie
  11/18/2015 11:45 EST

Only a rough guess assuming 1 USD = 3000 COP, and assuming the $104 for Medicare is deductible not counting towards income, so you'd be taxed on about $1515/month:

$1335 - $855 = $480, @ 19% = $91
$1515 - $1335 = $180, @ 28% = $50

So monthly that's about $141 USD owed in tax,
and times 12 = $1692, just a bit more than 1 month's income you'd owe for one year.

Please note that I'm not any kind of tax expert in either country! So these figures only represent a guess according to the information I've seen.

Patricio
  11/18/2015 14:30 EST

Appreciate the feedback, Nellie.

dliss62
  11/18/2015 15:23 EST

Could not agree with you more WhoaNellie. It actually appears that the Colombian government wants to chase foreigners away! Go figure?

fecherklyn
  11/18/2015 17:13 EST

@dliss66, Patricio, WhoaNellie, etc.

"Yes", this IS a big change for retired foreigners wanting to reside in Colombia, especially as this radical change is so little known and disclosed by the Colombian Government.

However, we do all need to put this into perspective.

Up until 31/12/2014 the pension incomes of foreigners residing in Colombia were NOT taxed in Colombia (It looks like this new measure will formally take effect from 01/01/2015 unless they elect to postpone it until the projected 2016 tax Reform). This was a MAJOR INCENTIVE only found in a handful of other countries in the world. Now, Colombia has decided to rejoin the ranks and I do not think we have much room to criticize them.....maybe apart from the manner in which they are doing it.

What has happened of course, is that WE expats are now experiencing the factor of applying Colombian tax rate bands to our "developed" world pension incomes. IT IS PAINFUL, because we are finding out that a fairly derisory pension in the USA, or Europe, will be heavily taxed in Colombia, whereas it is not taxed at all in our source nation.

"Yes", we all have to reassess the advantages, and disadvantages, of residing in Colombia.

timllowe
  11/18/2015 17:27 EST

I don't know about you buy my social security is sure taxed in the US.

fecherklyn
  11/18/2015 18:19 EST

@timllowe.

"Yes" timllowe, you do well to correct me as I did not mean to say "our" source nations do not tax our security social/pension incomes.

What I was trying to intimate was that the tax level in Colombia will often be higher.

For example, my British pensions are eligible for a zero % tax rate on the first GBP 10,600 of taxable income, before falling into the first 20% taxable rate band. Clearly, this is far better than the Colombian 1,090 UVT exonerated tax band.

CaptMike
  11/19/2015 08:33 EST

This link might be helpful: http://www.medellinherald.com/ln/tax/item/201-colombia-taxes-on-expat-residents,-investors,-non-residents-legal-analysis

CaptMike
  11/19/2015 08:35 EST

COLOMBIA taxES ON EXPAT RESIDENTS, INVESTORS, NON-RESIDENTS: LEGAL ANALYSIS

taxes Written by Roberto Peckham OCTOBER 08 2015 font size decrease font size increase font size 0
Rate this item1 2 3 4 5 (3 votes)
tax filing requirements and taxpaying obligations for expat residents, foreign investors, non-resident visitors and even citizens in Colombia raise many questions – which explains the demand for expert accountants and (sometimes) specialized tax lawyers here.

What’s more, Colombian tax regulations – like USA tax regulations – periodically change, such as the new requirement for USA citizens living in Colombia and classified as “taxable residents” in Colombia to file a “digital mechanism” for automated tax reporting with DIAN, Colombia’s national tax agency.

The U.S. and Colombia also are recent signatories to the new “FATCA” treaty, which requires USA citizens to report their Colombian bank and investment assets to the IRS. Colombian banks and brokerages likewise are required to report this information to the IRS.

Similarly, Colombians living in the USA and subject to Colombian taxes likewise must report their USA bank and investment assets to DIAN. Under a new tax-reform law (article 43 of law 1739 of 2014), Colombian tax residents are subject to declaring their assets held worldwide.

Because of these changes – and because of many other provisions in Colombian tax law that would be confusing to most any foreigner living here or doing business here – Medellin Herald sought the advice of local tax attorney Andres Durango, of Medellin Legal Partners, which specializes in tax, corporate, foreign investment and intellectual property/trademark law.

Durango and associate attorney Nubia Ocampo also provide tax advice to clients of Medellin-based Casacol, a real-estate investment advisor, developer, property manager and legal advisor (see "Investing in Business, Real Estate: Opening Doors to Profits, Visas").

Full disclosure: My wife (a Colombia/USA dual citizen) and I (a USA citizen and permanent Colombian resident) have been using the services of another company, Contabler -- a long-established, reputable tax accountant here in Medellin -- for 10 years now.

The Contabler accountants here only speak Spanish, and only handle Colombia taxes. They don’t perform USA tax accounting services (for which we use a separate, U.S.-based tax accountant).

The Spanish-only language issue with Contabler isn’t a problem for either of us, as both my wife and I are bilingual (Spanish and English). We’ve always complied with all Colombian and USA tax laws and filing requirements -- and we have always ensured prompt, accurate tax payments.

As a result, we’ve never had any problems with tax authorities, as we use expert tax accountants both in the USA and in Colombia to guide us through this complex process.

Nevertheless, translating IRS tax lingo into the lingo used by Colombia’s “DIAN” tax agency – and vice-versa – is a challenge for anyone (taxpayers and accountants alike) who isn’t simultaneously a USA and Colombian tax expert.

What’s more, it’s likely that most IRS and DIAN agents would struggle to understand the complexities of each-others’ mind-boggling tax laws and regulations.

So, unless there’s a strong suspicion of criminal behavior involving large sums -- such as money-laundering and drug-dealing, for example – then it’s unlikely that IRS would share information with DIAN (or vice-versa) on most individual taxpayers, Durango explained.

However, if there are glaring inconsistencies on a tax declaration, then it’s possible that DIAN could ask a taxpayer -- or the taxpayer’s accountant -- to provide further proof of a declaration, such as statements made on certain line-items for questionable deductions, or questionable income-and-expense claims.

This could mean providing to DIAN information that the taxpayer may already have reported to the IRS, Durango added.

Expats Working for Foreign Companies

A growing number of expats here in Medellin are working for foreign companies, just as I did (until recently). So, if you’re a foreigner living in Medellin but working for USA company, then that means USA taxes would be paid directly to IRS through your employer’s routine payroll deductions -- just as if you were still living in the USA, rather than living and working here.

Your U.S. tax payments would be deductible (up to a certain point) against Colombian tax obligations, as specified by current Colombian tax regulations – although there’s no specific law yet that clarifies this point. Rather, there is only an exotic formula established in Article 254 of the Colombian tax Statute that governs this provision, Durango explained.

In addition, if and when you start drawing U.S. Social Security (or other government retirement funds) -- and if and when you start withdrawing from private retirement accounts (such as the popular “401k” plans in the U.S.) or other investment accounts -- then you’ll also be subject to Colombian tax declarations (in addition to USA taxes, if you’re a U.S. citizen).

USA taxes paid on Social Security payments and USA taxes paid on USA investment-account withdrawals also would be deductible against Colombian tax obligations, under current regulations. However, depending on the amount of income received from foreign sources, you may or may not actually owe additional Colombian taxes.

You’ll also face Colombian taxes on any Colombia-derived income (if this hasn’t already been withheld from your paycheck from a Colombian company) and you’ll have to declare Colombian assets to DIAN as well.

In my case, that includes declaring my investments in a Colombian “voluntary pension” fund administered by “Proteccion,” one of Colombia’s top pension-fund administrators and investment advisors. My annual contributions to this fund help reduce my Colombian income tax liabilities.

‘Double-tax Agreement’

However, neither the U.S. nor Colombia have enacted mirror-image “double tax agreement” (DTA) laws covering U.S. citizens residing in Colombia as well as Colombian citizens residing the USA.

This situation stands in contrast to the DTA laws between Colombia and several other nations including Canada, Mexico, Switzerland, Brazil, Spain, Germany, and Chile. Czech Republic, Portugal and India also would join this “DTA” list once certain court rulings in those countries have become final, Durango explained to Medellin Herald.

If on the other hand you’re a foreigner working for a Colombian company, then it’s likely that you’ll be paying taxes directly to DIAN via withholding tax (“retencion en la fuente") – and then (in some cases) filing an annual tax declaration with DIAN as well as IRS.

Note: If you are a USA citizen, this means your world-wide income – including Colombia income -- must be declared every year, no matter if such income is derived from a USA employer or a foreign employer.

Asked to elaborate on these issues, Durango and associate attorney Nubia Ocampo told Medellin Herald the following:

Medellin Herald: Have tax-filing requirements for foreigners in Colombia changed dramatically in recent years?

Durango/Ocampo: For foreigners in Colombia who are USA citizens, they must comply with the FATCA-USA regulation, which aims to find income and assets held by USA persons in offshore accounts, either directly or indirectly through participation in foreign entities. This regulation ensures that this income and these assets are reported to the IRS.

Regarding the fiscal situation in Colombia, one must consider whether this person is a “taxable resident” in Colombia as defined by Article 10 of the tax Code.

If you are a “nonresident alien” in Colombia, but you are earning income here, then you would be considered as a “taxable contributor.” tax would be withheld from your salary, as “domestic-source income” earned in Colombia in accordance with the rates set out in Articles 406 to 419 of the Tributary Statute (Colombia Estatuto Tributario, or “ET”).

Depending on the tax retention system being used, you may or may not have to submit a separate declaration on income tax and supplementary tax to DIAN.

In the event that you are bound by employment contract here in Colombia, then two situations with different tax effects may occur: 1) you are classified as a foreign worker that is a resident in Colombia or 2) you are a “nonresident alien.” The residence criteria for foreigners is determined by your presence in the country, it noted in paragraph 1 of Article 20 of the ET.

Residence Criteria is not only determined by your presence in the country but via the following situations:

Article 10 of Decree 624/1989 (Colombia tax Statute) establishes the different situations where a foreign citizen becomes a tax subject for DIAN:
1. Staying continuously or non-continuously in Colombian jurisdiction for more than 183 calendar days during a 365 day period (1 year);
2. 50% or more of your income comes from Colombian sources;
3. 50% or more of your assets are held in Colombian Territory;
4. 50% or more of your assets are managed from Colombian Territory;
5. Having a tax residence in a jurisdiction declared as “tax haven” by the Colombian government.

In line with the above, when a foreign worker is a taxable resident in Colombia, then the worker will be governed by rules established under Colombian labor law. From a tax point of view, this means that the foreign worker will be taxed at the same rates and under the same procedures that apply to Colombian employees identified in the tax Code. In that sense, the resident foreign worker is assumed to be a Colombian worker.

Now, if you are a foreign worker who is not a taxable resident in Colombia, then it is not appropriate to apply same the tax rules that apply to foreign residents or to domestic employees.

However, in the case of non-resident foreigners who come from a country that has signed the New York Convention or the Andean Community of Nations treaty, then these treaties that protect the rights of migrant workers apply.

In the case of a USA foreign national, the worker will be protected by the International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families, in which case the tax rates and procedures for domestic and foreign residents shall apply, by express provision of that Convention.

Medellin Herald: Is it correct that all foreigners residing in Colombia now have to file a tax declaration with the DIAN each year – starting from their first year in Colombia – even though all their revenues come from an employer or business or a pension in the USA (or other country)?

Durango/Ocampo: Until 2012, a rule covering foreign residents in Colombia meant that these residents were only subject to Colombian income tax and complementary taxes on their foreign sources of income – and would declare equity owned abroad -- starting from the fifth year of taxable continuous or discontinuous residence in Colombia.

Now, however, under current tax regulations, a nonresident alien must declare to DIAN their Colombian domestic-source income, as specified in Article 24 of the ET.

If the same income is taxed in the United States and also in Colombia, then this person can deduct from Colombian income taxes the taxes paid abroad on such income, according to the formula set out in Article 254 of the ET.

Starting from the moment a foreigner becomes a Colombian tax “resident,” according to the “criteria of permanence” as indicated in paragraph 1 of Article 10 of the ET, then the foreigner must declare income from worldwide sources as well as income and assets in Colombia.

Medellin Herald: Why is DIAN requiring that foreigners who are Colombia tax “residents” file the new “digital mechanism” form with DIAN?

Durango/Ocampo: With the understanding that this is a situation of a resident alien who is a Colombian taxable resident and therefore is subject to Colombian income tax and complementary taxes, then it must be noted that this resident alien’s tax declaration must disclose income from worldwide sources as well as assets owned in Colombia and worldwide.

Also, under Law 1739 of 2014 in Article 43, there is a new obligation applying to those paying Colombian income and supplementary taxes, which requires that such persons must report assets of any nature held abroad as of January 1 of each year.

To comply with this formal obligation, respondents now must do this “virtually” – meaning that it is now necessary for the taxpayer to request from DIAN a “digital mechanism” signature certificate.

Medellin Herald: For foreigners who invest in real estate or other business here -- via a "Simplified Stock Company" ("SAS") entity – must they declare to DIAN their financial holdings abroad?

Durango/Ocampo: The last paragraph of Article 9 of the Colombian tax Code states: “Natural persons – [including] natural, national or foreign, who do not reside in [Colombia] and without causing illiquid succession of residence [estate tax] in the country at the time of death, are only subject to income tax and complementary tax regarding their income and capital gains from national sources.”

In that sense, if you are not a foreign tax resident in Colombia, but you nevertheless earn income from national sources -- and all of that income was not subject to withholding tax -- then you will be reporting Colombian income tax and complementary tax.

From this it follows that foreign individuals not resident in Colombia are not required to declare to DIAN:

a) when they are not income tax payers or complementary taxpayers. This situation applies when there is no Colombian domestic-source income; and

b) when the taxpayer is subject to withholding on income and complementary tax, as specified under Articles 407 to 411.

When a foreigner that isn’t a taxable resident in Colombia has assets in Colombia, but these assets don’t generate income, then this foreigner is not obliged to declare these assets.

WhoaNellie
  11/19/2015 09:25 EST

I want to revise and extend my remarks, as they say...

In the US you can take the Standard Deduction which varies according to your situation, but for a married couple filing jointly can be over $12K. So that would be subtracted from your income (perhaps along with other deductions) to get your Adjusted Gross Income, on which you would be taxed in the US (and presumably also by Colombia?).

So for someone married filing jointly with a $1500/mo USD income, or $18K/year, their taxable income could be reduced to just $6K or about $500 USD/month - so theoretically they would never reach the 19% rate in Colombia which starts at about $855 USD/month. They would pay ZERO.

Someone married filing jointly with $3K/month income or $36K/year USD, could have an AGI of $24K/year or $2K/month which would result in a very approximate Colombia tax liability of $270/month or about $3200/year.

This is if Colombia bases their tax on the AGI.

In any case for many it still would not pay to be a year-round resident, unfortunately. Instead of paying $3200/year to Colombia, that money could pay for round-trip airfare for two each year...

Again I must stress that because the tax laws are so screwed up that everyone's situation can be complicated and different, this is only a rough guess on my part. And it depends so much on how Colombia views foreigners as "cash cows" and on what gross or net amount they will tax.

Exbury
  11/19/2015 10:22 EST

Interesting response. However in relation to the last part, I noticed this on the PWC website under the Net Wealth tax section:

taxpayers now include not only resident companies but non-residents directly or indirectly (through branches or permanent establishments) holding wealth in Colombia.

To me that reads even if I move away from Colombia and live overseas, if I have an apartment exclusively for me in Colombia I will not pay income tax here as it doesnt generate any income. However, I will have to declare wealth tax on assets overseas (if over $US 465,000).

However, if the investment is an office generating income then I will have to declare and pay not only the Wealth tax (if applicable) but (according to the KPMG site) I will have to pay 33% of the office rent (minus maybe some applicable) taxes.

Ouch, so it suggests (to me) better to be all-in in Colombia or all out......

fecherklyn
  11/19/2015 11:12 EST

@CaptMike.

Your (long) post is very informative and corresponds with my findings in every respect EXCEPT ONE. Unfortunately, that exception relates to a very important point that needs to be corrected, or it will leave a misunderstanding.

Your post states:

“In line with the above, when a foreign worker is a taxable resident in Colombia, then the worker will be governed by rules established under Colombian labor law. From a tax point of view, this means that the foreign worker will be taxed at the same rates and under the same procedures that apply to Colombian employees identified in the tax Code. In that sense, the resident foreign worker is assumed to be a Colombian worker.”

On the above basis, as pension incomes for Colombian nationals below 1,000 UVT in value are exonerated from Colombian income tax, then it would follow that the foreign source pension incomes of foreign tax residents in Colombia would be similarly exonerated. Unfortunately, although this was the case until recently, this “privilege” has just been withdrawn for foreign resident pensioners. (I.E. Colombian nationals retain the exoneration, but not “expats”). Accordingly, resident foreign pensioners must now declare in Colombia 100% of their foreign source pensions.

See following laws for further information:

The benefit provided for in paragraph 5 of Article 206 (“exoneration”) is limited in Colombia through the Comprehensive Social Security System under the requirements of Act 100 of 1993. This ruling has since been endorsed by the Colombian Constitutional Court under Office No 016 055 28 of February 28, 2007 and most recently Office 058 213 of October 10, 2014.

fecherklyn
  11/19/2015 11:23 EST

@Exbury.

"yep", I noticed that also.

However, I think it is yet another case of Colombia starting to conform more closely with international tax customs.

Put more simply, I think it just means that, even if you are a non-resident for tax purposes in Colombia, you will still be taxed there on incomes and wealth maintained there (subject to Double taxation Agreements).

This is, I think, pretty much the custom everywhere else?

Exbury
  11/19/2015 11:58 EST

Yes, but 33% tax is very high (and (correct me if I am wrong) there is little offsetable allowances in Colombia against this tax) although its unlikely at that rate you would be paying any more tax on this income if e.g. in the UK as the Colombian tax would all be offsetable. What I mean is that being hit for the wealth tax and 33% of the income suggests for me to sell up the investments and move the money out of Colombia. Or stay here, transfer the UK assets to a Trust for the children and vastly reduce my exposure. Anyway, time to run up a spreadsheet comparing countries I think, I need to do something, staying at home and looking after the ninos seems likely to lead to a tax bill of $24million or so......not what was in my plans.

Andresen
  11/19/2015 12:48 EST

Let's cut to the chase. If this is as serious as it sounds, what country do we all move to instead? Any ideas out there?

Exbury
  11/19/2015 13:10 EST

=)

Its not all about tax though, I guess we all have different needs, I have two ninos (with a desired 3rd) to consider putting through school.....in Bogota that could be over 8million a month without the Bono.......but housing here is a darn site cheaper than anywhere near London. Europe, though seems to have a way nicer tax rate for UK citizens, although in the past has not worked out great for many (plus everything changes regularly, what is good now may be poorer later (the recent changes in Colombia being an example) ......
http://www.telegraph.co.uk/finance/personalfinance/special-reports/11519095/The-ultimate-pension-freedom-Retire-in-Portugal-and-reduce-your-tax.html

Placestogo6
  11/19/2015 13:18 EST

i am asking myself the same question! Stage in life may matter: people w little kids are SO BUSY.. but staing out of the system of this global takeover : this is global governance... fascist in nature :(
I recently read in Simon Black site that Argentina now charges non-residents who own a property in Argentina .5-1.5% wealth tax, Residents - wealth tax globally ! I know most countries of S America charge income tax globally... what i find really objectionable is being in their system ! a sitting duck for the next step...so far i beleive panama and Caymans may not be involved in global taxation ? i do not know - pls make suggestions. I have some understanding of the Sovereign approach that takes people out of their system in US.. but no idea in South America w civil law...

fecherklyn
  11/19/2015 15:51 EST

@Andresen. Exbury, etc

You suggest "Let's cut to the chase. If this is as serious as it sounds, what country do we all move to instead? Any ideas out there? "

Well, I have been on this wavelength for some time and my spreadsheet finds the following marginal rates of taxation for my level of pension incomes:

Spain - 28.45%
Colombia - 24.2%
UK - 20.53%
France - 17.3%

So, shall we all meet up in France?

bigjailerman
  11/19/2015 15:53 EST

Panama Costa Rica?

spank12
  11/19/2015 16:05 EST

Ok,,, I have been following this topic for awhile,,, but has anyone had a rock solid answer from a government official or a true Colombian accountant? After being here ,, I have come to understand,,, just wait till they are standing in front of you with their hand out stating give me this of get on a plane? I have come to really doubt that too many rich Colombians actually pay very much in taxes

Placestogo6
  11/19/2015 16:16 EST

what about Paraguay ? ( i have not yet been there )..but hear good things abour easily acquired residency... NO wealth tax... but this is only what hear... have not deeply checked.

fecherklyn
  11/19/2015 17:11 EST

@spank12

"Is this rock solid?"

I would say I got it in gravel!!

I wrote to the DIAN last month querying "Pension Income exoneration" and got back a formal 17 page reply.

The problem is their reply is tiresomely vague and written in a legalize that might cause many to commit suicide. It is no wonder hardly anybody understands the subject.

The DIAN reply gives a legal opinion on the constitutionality of refusing exoneration of foreign source pensions and confirms they should be taxable in Colombia BUT IT DOES NOT STATE A DATE OF EFFECT DESPITE MY SPECIFICALLY ASKING FOR IT.

If anybody wants to see this DIAN reply, then PM me and I will email it to them. It really is not a document for mass distribution.

dliss62
  11/19/2015 17:32 EST

@fecherklyn /@spank12

To be clear, If I were to have Colombian citizenship would my U.S. pension be exonerated?

I know the wealth tax is not, but a trust can help there.

I looked into Panama and Costa Rica as an option, but just not the same! Tropical living and Colombia is where my heart is at.

bigjailerman
  11/19/2015 18:36 EST

Pensions here, even as a Colombian, are not exempt.

fecherklyn
  11/19/2015 18:50 EST

@dliss62

As I understand the Colombian tax legislation, you WOULD obtain exoneration from tax in Colombia of any Colombian source pension income if you took Colombian nationality.

However, even if you took Colombian nationality, any foreign source pension incomes (thus your US pension) would be REFUSED exoneration in Colombia as they are not compliant with Colombian Social Security rules.

That is my understanding, but confirmation from a Colombian tax lawyer is advisable.

dliss62
  11/19/2015 19:05 EST

@bigjailerman

Thank you for clarification. I guess time will tell how this plays out in the long run. I wrote the Colombia Consular General here in NYC just for giggles to see his response.

bigjailerman
  11/19/2015 19:23 EST

Good move...

I also just spoke to a rooted abogado several days ago and he is posed because his pension is not exempt anymore. Colombian pension from Colombian earned funds.

fecherklyn
  11/19/2015 19:27 EST

@dliss62

Do not hold your breath. I asked for advice from both British and French Embassies in Bogota and they do not want to know.

Exbury
  11/19/2015 19:28 EST

Cyprus has a flat rate of 5% after 3420 euros on pensions, or choose the standard Income rate. There are other issues and not everyone would like it there.

leo8530
  11/19/2015 19:31 EST

Do you know how many people are moving out of or deciding not to move to Colombia because of this tax?

leo8530
  11/19/2015 19:31 EST

Do you know how many people are moving out of or deciding not to move to Colombia because of this tax?

leo8530
  11/19/2015 19:31 EST

Do you know how many people are moving out of or deciding not to move to Colombia because of this tax?

dliss62
  11/19/2015 20:10 EST

@leo8530

That's going be difficult to determine in the short run.

spank12
  11/19/2015 20:17 EST

Has anyone really paid the supposed taxes yet??

Exbury
  11/19/2015 20:27 EST

Well, I dont mind paying a bit of tax, but with the change of the exchange rate, the high tax on overseas income and things like the wealth tax and with schooling looming its becoming less likely I will stay even if I could find a decent job. Calculating the tax and schooling fees would leave us both around 200% better of in the UK which seems bizzare but there it is. While there are other good things in Colombia that dont have a price, and housing is far lower on balance, especially in Bogota its becoming a no-sense decision to stay. Maybe its becoming more of a holiday destination for us.

Exbury
  11/19/2015 20:42 EST

Like everywhere with taxes, I guess its up to the individual and the risk in getting caught. I dont mind paying a bit of tax on income earned, but having worked hard and saved up a couple of rental houses in the UK and one small office here I am already subject to tax it seems. Pretty much any salaried income would be then taxed at 28%. Then the massive school fees. The UK offers maybe not a perfect life but certainly a little less hit in the pocket. Luckily we have the option to move, many others dont. I could choose not to declare foreign income but I prefer to abide close to the rules, however with rates that seem unfair based on one rate for citizens and one rate for foreigners I certainly would be looking for some more creative offsets. After all, the country generally loses if you are not there at all, not only on tax but the money you bring into and spend. Just my thoughts though, at the end of the day most of us have a choice and will be weighing up different things.

leo8530
  11/19/2015 20:43 EST

Yes, with this tax it went from a retirement home to a vacation home sadly.

leo8530
  11/19/2015 20:44 EST

Is Colombia so stupid that they don't see this is going to make them loose more money in the long run.

dliss62
  11/20/2015 03:54 EST

@spank12

not paying the tax would most likely cause me sleepless nights. It's just me and my silly conscious.

dliss62
  11/20/2015 03:57 EST

@fecherklyn

Thank you for your explanation. Sounds right and logical. It appears the Colombian government wants their cut on any assets outside of Colombia and have closed any possible loophole.

WhoaNellie
  11/20/2015 09:51 EST

I love Colombia and want to be able to spend as much time as I can there, with my wife's family.

But now it looks like full-time residency is not an economical option.

Tentatively a plan seems to be to pay off my mortgage here in the US which then makes the cost of living here quite low, with my US tax burden minimal because my pension simply won't be that much (for the US), and to spend less than 183 days/year in Colombia. The money I save by not having to pay Colombia taxes will be sufficient to pay for round-trip airfare for us both, once a year to and from Colombia...

fecherklyn
  11/20/2015 10:18 EST

@WhoaNellie,

It is an option, and I am looking at something similar myself.

However, I would advise you not to rush into things as the tax situation here in Colombia is not clear.

It really does seem the DIAN has cleared the deck, with a view to taxing resident expats' pension incomes "sometime". To the best of my knowledge nobody has actually had to pay anything on their overseas pensions yet. But that is the part I do not like as presently we have no formal notice of when this measure will kick-in and I think this is unacceptable for persons who have important decisions to make.

Placestogo6
  11/20/2015 13:07 EST

... a wicked thought: and or get together with several people and arrange several residencies to swapt every so often... some countrieds it is 3 months ! US - 4 months... called PT (permanent traveler ) :)

fecherklyn
  11/20/2015 20:27 EST

@Placetogo6.

Oh, you really are wicked Placetogo!

However, I am not sure it would work. It seems like the different tax regimes have it worked out in such a manner as to ensure that every taxpayer becomes "resident" for tax purposes somewhere. Look at this para of CaptMike's post of 19/11"

“Article 10 of Decree 624/1989 (Colombia tax Statute) establishes the different situations where a foreign citizen becomes a tax subject for DIAN:
1. Staying continuously or non-continuously in Colombian jurisdiction for more than 183 calendar days during a 365 day period (1 year);
2. 50% or more of your income comes from Colombian sources;
3. 50% or more of your assets are held in Colombian Territory;
4. 50% or more of your assets are managed from Colombian Territory;
5. Having a tax residence in a jurisdiction declared as “tax haven” by the Colombian government.”

So, it seems when you do not get trapped by the 183 day rule, they find some other way. “Your principle centre of interests” is the ultimate “catch-all”.

Placestogo6
  11/20/2015 21:17 EST

I am also trying to figure it out... what about residency in Paraguay... i do not know a lot about the tax laws yet..but surely they are low and there is definitely so far no global wealth tax... so a co in a tax heaven with a very low tax jurisdiction such as paraguay or other ? How does that sound ? with 3 -5 friends with residencies in diff jurisdictions ?.. although deep inside ( seen during mediation ) .. time may come that travel may be very restricted/ dangerous/impractical... the current situation in europe now coming to to US.. this is not happening by accident..so i have seen severe world austerity.. with self sufficiency as a definite benefit.. when it comes to that i think "music will stop".. i do not know the timing...certainly after 2017.. ? It would be good to have an international attorney to consult.. i do have one in P...

leo8530
  11/21/2015 11:59 EST

Many people have told me they were going to retire in Colombia and are not going to now because of the double taxation. I think Colombia is shooting themselves in the foot and may even go into recession because of this.

HalS
  11/24/2015 09:40 EST

I do not know how the Colombian government would find out how much money you have, if you do not report it. There is very little to no cooperation between banks in Colombia much less cooperation between the Colombian government and U.S. banks and other financial institutions

WhoaNellie
  11/24/2015 10:25 EST

If you are a foreigner and a resident of Colombia more than 183 days per year, but do not report any income, don't you think that would eventually come to light, and be known by DIAN? And not to your benefit, I'd think...

bigjailerman
  11/24/2015 10:51 EST

The USA and Colombia does not have a double taxation treaty, HOWEVER the signed an agreement to exchange info between IRS & DIAN.
Granted it wasn't meant to target the small fish but this would not be the first time a little one got caught in a big net..
You don't want to get tagged one.day in the future in the airport trying to leave and you get detained. More likely though, when you try to RE up your visa/cedula.
Also REMEMBER you are posting on a PUBLIC forum.

HalS
  11/24/2015 14:11 EST

Please do not misinterpret my post, I would never suggest not to report earnings or etc., especially on a public forum. My intent was to say that I am not sure that DIAN and the IRS have an agreement to share information between the two agencies, since the IRS is suppose to be confidential in its' reporting or securing of this confidential materials.

bigjailerman
  11/24/2015 14:42 EST

They definitely signed an agreement, I will look for it again and post it up

bigjailerman
  11/24/2015 14:44 EST

http://bogota.usembassy.gov/mobile//embassy-news/press-releases-2019/united-states-and-colombia-sign-facta-intergovernmental-agreement.html

saiid20
  11/24/2015 16:50 EST

Its kind of a moot point as one of the documents needed to file Colombian taxes is yoir current USA tax return...they see everything anyway.

dliss62
  11/24/2015 17:28 EST

@saiid20

You’re absolutely correct saiid20. taxes are something that you just don’t want to mess with even in Colombia. I worked at the U.S. Embassy for seven years and the IRS has a Legat Attaché office on post who works closely with DIAN on matters of tax evasion. There is a lot of money being moved between Colombia and the U.S. ; don’t be naïve and think that banks do not exchange information, in fact, because of the drug trade and money laundering , banks frequently flag accounts and refer suspicious activity to Colombian and U.S. authorities.

Patricio
  11/24/2015 17:38 EST

Even for folks considering sitting tight and not doing anything until the air clears more on this matter, speaking for myself, to receive my Colombian visa as a pensionado in the first place I had to provide a copy of the monthly social security benefit I receive from EEUU so they definitely have that.

Andresen
  11/24/2015 18:04 EST

Of course. I'll be renewing my Pensionado Visa next month so I'll find out if this becomes an issue.

BrandonBP
  11/24/2015 21:53 EST

Well, this is unfortunate. I've been saving as much money as possible the last years to move to Colombia to open a business. But this all seems futile now. I'm coming back to Colombia in January for three months for vacation, but I suppose I'll just vacation in Colombia instead of invest in it.

I think I'll look into Ecuador as a retirement haven. It's not a libertarian paradise by any means, but taxes are cheap, for now. And I love it there so much. I love Colombia, too, but I despise thieves. If I stole your hard-earned money, I'd be a thief, right? So are they for demanding your money.

Every politician thinks they can steal from the man/woman that's worked hard all their lives to earn a living. If you've ever read "Atlas Shrugged" then you know we don't have to stand for it. I can merely take me and my money somewhere else. And I will.

dliss62
  11/25/2015 14:38 EST

@BrandonBP
I can fully understand your frustration and I feel equally discontent. I would urge everyone on this forum to write a complaint on the COLOMBIANCONSULATE.COM web page, which is under the authority of the Cancilleria. It may not have an immediate impact, but it may get it on the radar.

Been to Ecuador many times myself and lived for a short time in Quito, Guayaquill and Manta, but like you BrandonBP, I prefer Colombia. The big issue in Ecuador for me would be medical; not that I have any issues, but Colombia’s medical care (stratus 5/6) is superior to Ecuador. Another issue in Ecuador is the government (Rafael Correa) which I fear could become a real problem. In contrast, Colombia is Latin America's oldest and most stable democracy for more than a century in spite of conflict with the FARC. I would not consider buying property in Ecuador or making a major investment.

Exbury
  11/25/2015 16:32 EST

I suppose in all reality everyone needs to examine their own situation as best they see fit. Nearly everywhere is going to have some sort of tax penalty, but the benefits (e.g. generally lower cost of living, weather, beauty of Colombia etc.) may outweigh some of the tax penalties. Also like everywhere, the situation changes regularly, especially with new governments and new tax policies. You could invest somewhere like Ecuador and find it goes the same way as Venezula, who knows. Still the information has been useful for more, and I guess others. I like the idea of the perpetual traveller though, I might start aiming for that for my retirement.........

BrandonBP
  11/25/2015 22:25 EST

Dliss, I agree about Correa. He worries me a bit. He acts like a teenager, and I'm worried that he's stacked the court justices in his favor. It does concern me that Ecuador could decide to "nationalize" all properties one day. But, I don't feel like I'm free in the USA either, so it's truly a gamble to live anywhere unless I win the lotto and buy my own island.

I wouldn't worry about medical care in Ecuador. I had a procedure done in Quito since it's so cheap to get medical care. It was state of the art, and the doctors were very professional and comforting. The clinic had all the latest equipment that you'd find in the U.S. I was very pleased with the medical system and the doctors.

brson
  11/27/2015 16:40 EST

Now this is puzzling. Been here for years, filing timely tax statements. Never was asked for US tax return ever. What is the reference for this requirement.


Paying quarterly property taxes is also news. I can't imagine obtaining the 10% annual property tax discount if you paid quarterly.


Been to Ecuador, Uruguay, Argentina, Chile, Venezuela, Mexico, Costa Rica, Panama etc. etc. Wouldn't trade Colombia.for none never (triple negative, ya lo sé). -- Priscilla

saiid20
  11/27/2015 18:33 EST

The "reference for this requirement" was that the accountant doing my taxes asked me to supply my current return. Sorry I cant furnish name and number of applicable tax code.

bigjailerman
  11/27/2015 19:23 EST

My accountant asks sour that also

fecherklyn
  11/27/2015 19:48 EST

I wonder if we do not get mixed sometimes because it is not clear "What" taxes are being discussed......USA taxes, or Colombian taxes?

I was looking at the last few posts with "Colombian" taxes in mind, but then had the revelation you were probably talking about your USA tax returns?

saiid20
  11/28/2015 06:50 EST

...My Colombiam acct. doing my Colombian taxes, needed my USA tax return for 2014 to complete his work, copy of which was included in the nice packet he copied for me (copy of that which was filed with DIAN.

bigjailerman
  12/3/2015 19:56 EST

I dont know if this was posted before but this is the agreement details of the US IRS and Colombia DIAN agreement of sharing of information..


https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/FATCA-Agreement-Colombia-5-20-2015.pdf

http://bogota.usembassy.gov/embassy-news/press-releases-2019/united-states-and-colombia-sign-facta-intergovernmental-agreement.html

MAHINASHEILA
  12/4/2015 19:46 EST

HOW DOES COLOMBIA KNOW HOW LONG YOU ARE IN THE COUNTRY?? I have dual citizenship and I breezed in July 5 and I'm cruising out Dec. 9, so I'm under the 183 days, but who is checking this sh*t? If you need a visa or a work permit or are earning money in Colombia, I can see the problem, but I can't imagine how they could ascertain how long I have been here.
Look forward to your response.

bigjailerman
  12/4/2015 20:03 EST

It's really a simple thing allot less difficult than the USA. MIGRACION has all of us in a database. If you ever need to conduct business requiring your/our movement referring our exiting the country is really available to them and you can purchase a report as well.
Now this database of expats contains the expiration date of our cedulas, visas etc. It's called a relational database just like Microsoft Access. They can easily to reports, daily, weekly, quarterly, monthly etc on any data contained. Takes three minutes to run a million names.

Now even if you are on a tourist visit you can be tracked through your passport number and whatever info you gave them. Well they track a person who is here 185 days? I doubt it but they can. If you run into any type of issue, it's easy to run your number. Now for you and others with a dual citizenship, you come in visa you.Colombian passport and they track you visa your full cedulla number. If you arrived on auda passport as a dual citizen, it is illegal and same a you exit

MAHINASHEILA
  12/4/2015 20:14 EST

Creo que usted no entiendes. Lleve con mi Passaporte Colombian.
I arrived in Colombia using my Colombian passport and they stamped it. I leave Colombia and enter the USA on my US Passport. The US doesn't know that I left the US, unless the Colombian government tells them. When I return to the US, they don't know how long I have been away because I did not show my US passport when I left the US or when I entered Colombia.

MAHINASHEILA
  12/4/2015 20:15 EST

Creo que usted no entiendes. Lleve con mi Passaporte Colombian.
I arrived in Colombia using my Colombian passport and they stamped it. I leave Colombia and enter the USA on my US Passport. The US doesn't know that I left the US, unless the Colombian government tells them. When I return to the US, they don't know how long I have been away because I did not show my US passport when I left the US or when I entered Colombia.

bigjailerman
  12/4/2015 20:23 EST

Do you truly think they cannot track anyone's comings and goings? All newer passports ate electronically chipped. They know when you arrive in any airport. You provide a passport number when you purchase an airline ticket too. The previous post though was referring to how long Colombia knows he is in Colombia I believe.

Also on my last few lines of my last post I meant to say passport not visa, apologies..

bigjailerman
  12/4/2015 20:25 EST

...Also don't they stamp your passport when you leave?

zak023
  12/4/2015 20:43 EST

Not to get off topic..But I entered Colombia on a tourist Visa and on the second trip to Medellin I married my fiancee..She now is in the USA legally with a marriage visa [I-130] I filed..Now in the future I plan to retire in Colombia and get a marriage visa..I was advised by the notary who married us in Medellin he can file the paperwork when I am ready for my residency visa in Colombia..How does this whole thing affect me ? Ther are so many conflicting replys here...BJM what is your input as a fellow New Yorker ?

pocopelo
  12/4/2015 21:06 EST

So you figure that they aren't able to keep track? I pass through regularly and frequently. Dates of entry and departure are entered into the computers at the immigration checkpoints. Easily done amigo.

bigjailerman
  12/4/2015 21:26 EST

When you leave a country it stamps it, When you arrive in a country they stramp it. Those stamped dates line up. It's not only in the passport either, info is recorded electronically. This day and age, countries are far from stupid. They know when you go, where you go and when you return.

bigjailerman
  12/4/2015 22:26 EST

Do you know if you get married on a tourist visa it is illegal in the USA.... Not sure if it goes both ways but just fyi

zak023
  12/4/2015 22:48 EST

No you misunderstand..

I went to Colombia and got married there on my tourist visa to Colombia..

Came back and filed the I-130 for my wife and it was approved at the US Embassy in Bogota with No issues.. I did everything the right way.. I was referring to me getting my AT-10 Visa in Colombia in the future..

bigjailerman
  12/4/2015 23:16 EST

I think that the treaty will be assigned for usa and Colombia regarding double taxation. The knee jerk reaction to the taxation thing was oh sh*t, here we go. But I've spoken to an attorney recently who said that we won't be double taxed, don't put our necks out and serve yourself up but make sure we file in the states asks maintain documentation and won't have an issue. Also, a former teacher of my wife when she was young, now works in DIAN. He and I have a meeting next week one day to discuss this but with a conversation between him and my mother in law made a point that we are not being focused on at all . Now I know you and probably everyone else would say. You can't take it to the bank and I agree but we all know many gray areas are traversed every day.
Now for Colombia, I enjoy it here. There are a few things can fray my nerves sometimes but I like the lifestyle and the economic relief here. I think for me I need some kind of balance living both places.
Since now I have one done at 2, her son is 11 and we have another son due in the next few days I'm thinking more about how should they live. Jobs here are a nightmare now, in ten or twenty years might be better but probably not. I'm thinking of their lives, schooling etc. I may go the other way and school them in the USA and spend some holidays asks summer months in Colombia and in the states the rest of the year. That's a big hurdle because my wife hasn't even been to the states yet. Holding of to have the baby to pursue the visa, xray, interview and all that stuff.

bigjailerman
  12/5/2015 10:29 EST

Sorry buddy. I understand now. I now have a RE myself now I had a pensionado, fter my sin was born here I asked for and obtained a RE very quickly. I actually got that in NY. Till a while hour lo, very fast. I don't feel any particular visa is any better or worse than others but I was glad to get it.

zak023
  12/5/2015 11:42 EST

BJM...My original question was not worded correctl..I wanted to know how it will work for my wife working here in the USA till I retire in a few years and return to Medellin where my wife has a 3 bedroom apt. in estrada 5..The money she makes here has to be reported to DIAN in Colombia ?

bigjailerman
  12/5/2015 15:10 EST

Technically yes, I don't believe as a national, she doesn't have to hit the 183 day criteria. As far as I know, (technically again) she is supposed to report her worldwide income.
I don't know her deal going on and I'dR she pays to IRS but she can get an up to 600'credit (max for married persons)'on her usa return but only if she paid DIAN or if she actually incurs an amount to be paid to claim it.
It seems Colombia doesn't like worldwide income from their Nationals but, again, if the treaty does get put into place, it has to work both ways.. If you'd like, I'll ask that question this week with DIAN.

zak023
  12/5/2015 16:10 EST

Yes my friend...Please ask that question..

MAHINASHEILA
  12/5/2015 17:36 EST

After following this subject and the different opinions and takes on the subject that certain people have voiced, I am losing faith in this blog.
To me it sounds like a bunch of people sharing and spreading gossip and tall tales that are unsubstantiated. I am not going to be a victim of this banter anymore. My CPA in the USA can figure it out. That's what I pay her for.

bigjailerman
  12/5/2015 18:13 EST

There are many opinions and offshoots from the original posts Some things are factual and some are conjectures, just like real life. Good ideas and possiblities fuels the fire which to me is a good thing. Please let us know what your CPA figures out what needs to done here in Colombia and DIAN.

fecherklyn
  12/5/2015 19:07 EST

@BJM/Mahinasheila.

I second what you have just said BJM...."Please Mahinasheila, let us know what your USA CPA has to add when she has reviewed everything"

Lots of people have contributed to this forum with lots of time and unselfish effort and it is NOT their fault that the Colombian tax situation is such a mess.

So, we shall be very interested to see what your CPA has to say. If he/she is anything like as good as you hope she is, then I think both you and he/she are in for a surprise.

Onionbreath
  12/6/2015 13:30 EST

I wanted to move to Medellin with a retirement of $4000 a month. I love it there. However, that would be taxed and it would cost me about $11,000 a year to live there, right?

Onionbreath
  12/6/2015 13:39 EST

Andresen: I'm staying here in the USA. Looks like this world tax thing cut my dreams of living anywhere nicer/cheaper.

Onionbreath
  12/6/2015 13:44 EST

Reminds of New York. They got crazy with taxing the wealthy and most moved out of New York, thus costing them a big loss in revenue.

bigjailerman
  12/6/2015 15:59 EST

Isn't the first 10I a pass... ?

bigjailerman
  12/6/2015 16:47 EST

10,000k I mean

Andresen
  12/6/2015 17:54 EST

onion breath. I'm not sure what I said to warrant this directed to me but I'm not aware of anyone who has actually had to pay these taxes so I'm in a holding pattern.

bigjailerman
  12/6/2015 18:37 EST

Haha, aren't we all?
Everybody makes their own decisions and their own reasons and excuses

saiid20
  12/6/2015 19:08 EST

Three quick comments then I'm out of this discussion: Andressen...A rereading of parts of this blog should reveal there ARE people here(myself included) who have had to pay the Colombian tax. Mahinasheila...Your USA acct. advising you re Colombian tax law sounds like a recipe for disaster. Secondly, (and maybe I'm just nor understanding your point), The time limits you need to spend in Colombia are of course needed to be known by Colombia. The US could care less when and how long you're gone. Colombia knows this because your Colombian passport is stamped when you go and when you come. If I've misunderstood your point, I apologise ...this whole topic is confusing, maddening, and very important because its apparantly affecting some peoples decision to move here.

donchrisml
  12/6/2015 19:31 EST

It's a complicated subject, discussing it publicly on a forum will cause confusion..

In my opinion, the tax situation is not so grim as described above..

In my country (Germany) i would have to pay about 42% income tax. In Colombia the maximum tax level is 33%.

Regarding tax residency, Colombia is just adjusting its tax system to international standards.

Germany for example also taxes its tax residents (people who live in Germany) on their worldwide income.

So, why shouldn't Colombia do the same?

Thanks @ fecherklyn who told us about DIAN's new treatment of foreign source pensions (a point that was not covered in the media and I am sure 98% of foreign pensioners are not aware.)

Andresen
  12/6/2015 20:35 EST

Saiid20. Are you here on a Pensionado Visa? Are you living exclusively on your Social Security with no other income or assets to declare? That's all I'm interested in.

leo8530
  12/6/2015 23:25 EST

Every German I know complains endlessly how expensive taxes are there so comparing Colombia to Germany is not comforting to me.

leo8530
  12/6/2015 23:25 EST

Every German I know complains endlessly how expensive taxes are there so comparing Colombia to Germany is not comforting to me.

leo8530
  12/6/2015 23:25 EST

Every German I know complains endlessly how expensive taxes are there so comparing Colombia to Germany is not comforting to me.

CaptMike
  12/7/2015 08:26 EST

OnionBreath - I would not make such a decision/conclusion without actually hiring an attorney/accountant in COLOMBIA to review my specific situation and give me actual advice based on my specific situation. These forums are helpful generally, but not to address any specific situation. There are many solutions/configurations of your incomes and assets that can be adjusted to eliminate or minimize your taxable profile in Colombia just like in the USA.

donchrisml
  12/7/2015 09:28 EST

I am German and have been working for 3 years in Colombia. I have no reason to complain for taxes (I am lawyer though, so I know how to legally save some money :)

Generally, in Colombia people tend to claim for company taxes. But regarding natural persons, taxes are not a big deal, at least if you know how to design your salary components..

Google "bonificación no constitutiva de salario"..

Enjoy Colombia

WhoaNellie
  12/7/2015 10:40 EST

For many of us who aren't lawyers and who will not be working in Colombia but retiring, Colombia taxes are a big deal - a 19% rate for income starting about $850 USD/month, a 28% rate for anything over about $1350 USD/month, and then the 33% rate for anything over about $3200 USD/month is a lot for US people with modest retirement pensions.

I estimate I would be paying on my Adjusted Gross Income (assuming that Colombia would use that lower figure) something over $5K/year in taxes to Colombia and to me that's a lot, about 15% of my total gross income before taxes - so it would be even a higher percentage of net income, what I actually have to spend.

My US taxes at my pension income level will be minimal. In essence I would be paying almost all my taxes to Colombia and it really would hurt. I am not used to paying German income tax rates and don't want to or expect to, not in the US!

It still looks like I'd come out way ahead just visiting, for no more than 183 days at a time. But of course I will await further developments!

guestuser
  12/7/2015 14:55 EST

Just a few thoughts

- I pay taxes and know others that do. This isn't I think a negotiable situation with the Colombians!
- I'm unsure on this strategy (other than going forward) that in the future people will only spend 180 days in the country and therefore avoid the global income. Isn't the issue that it's 2015 that's the issue? If you've been here more than 180 days you owe tax; going abroad next year avoids duplicating the problem but at this point in time you owe taxes. Leave without paying and I think that's tax evasion?
- Equally I can understand people leaving and not coming back but if you do owe for prior years what risk are you taking in coming back for 6 months a year? Is there a risk that at some point in the future - either on entry or on leaving that immigration will query your tax status whilst resident?
- for those that pay taxes there's a pretty big risk this year around the Peso. When the end of year exchange rates for taxes are set if the peso strengthens it will increase expat tax bills. At the moment we are at the happy rate of 3300 to the $. So lets say the expat owes $10k. That's 33 million pesos. The ex pat pays taxes in Colombia later in 2016 and moves dollars to pay those taxes. Let's say the rate has moved back to 2700. Then the expat would need to sell $12,200 to pay the taxes. So with the extreme volatility we're seeing with the peso some buying around the end of rate might make sense.

And lastly as sad as this whole issue with the taxes is just remember that exchange rate of 3,300. For anyone who has been here long enough to pay taxes as a resident has seen a very pleasant increase in the buying power of their dollars for the majority of items that they use daily.

Stewmanfu
  12/9/2015 05:43 EST

MIght be some relief coming - look at the end of the article

Colombia Declares Panama a “tax Haven”

The Colombian National tax and Customs Authority (DIAN) added Panama to its list of “tax havens” on October 7after Panama failed to sign a bilateral agreement to exchange tax information. The goal of the bilateral agreement, according to officials, is to receive greater clarity on Colombian assets in Panama so that information can be included in a tax overhaul bill being debated in Congress. Due to its favorable tax laws, Panama is the largest foreign investment market for Colombians.

As a result of this declaration, taxes on money transfers to Panama will be raised from 10 percent to 33 percent, and Colombians will be barred from deducting purchases made in Panama on their tax returns. The government of Panama decried the decision. The United States and Colombia are currently negotiating a double taxation treaty that will create a solid framework for investors and authorities of the two countries and provide a reciprocal agreement not to re-tax repatriated income earned; negotiations are expected to conclude in 2015.

WhoaNellie
  12/9/2015 08:27 EST

The October in the article appears to be 2014, not 2015. You can find many similar articles around that timeframe such as this one:
http://www.reuters.com/article/colombia-panama-tax-evasion-idUSL2N0S30ZI20141008

Unfortunately i can't find much that's newer that gives any definite info. It's worth noting though that:
"Colombia's Congress, dominated by a coalition that backs President Juan Manuel Santos, is likely to approve a package of tax reforms aimed at raising an additional $26 billion in revenue and recovering $10 billion lost to tax evasion during the next four years."

So the bottom line is, they (Colombia and the US) are not looking to let you keep more of your money - they are looking to take more of it.

WhoaNellie
  12/9/2015 08:28 EST

The October in the article appears to be 2014, not 2015. You can find many similar articles around that timeframe such as this one:
http://www.reuters.com/article/colombia-panama-tax-evasion-idUSL2N0S30ZI20141008

Unfortunately i can't find much that's newer that gives any definite info. It's worth noting though that:
"Colombia's Congress, dominated by a coalition that backs President Juan Manuel Santos, is likely to approve a package of tax reforms aimed at raising an additional $26 billion in revenue and recovering $10 billion lost to tax evasion during the next four years."

So the bottom line is, they (Colombia and the US) are not looking to let you keep more of your money - they are looking to take more of it.

Exbury
  12/9/2015 10:26 EST

Also, correct me if I am wrong, but the DIAN can claim up to 100% above the value of the unpaid taxes, so if you are late the repayment could be a lot higher........going to see my accountant soon.

dliss62
  12/9/2015 20:00 EST

@WhoaNellie

Maybe...but Colombia has to keep in mind foreign investment when combating tax evasion.I think the current policy has raised eyebrows because it has the potential to discourage investment that exponentially exceeds tax evasion. Colombia wants to be an economic superpower and is implementing G-7 tax policies, but not ready for prime time. It appears to be the work of greedy legislators looking for additional income sources.
We'll just have to wait for the final verdict and see what these negotiations produce. Got my fingers crossed because I don't want to live in Panama! (LOL)

zak023
  12/26/2015 08:43 EST

BJM..Hope your Christmas was a good one.. 3 weeks ago you last told me you were going to ask someone about my wife reporting any income earned here in the US to Dian in Colombia..I guess you forgot.. also for some reason I stopped getting notifications for posts in my e-mail inbox 2 weeks ago..tried to fix it but cannot..any ideas on what happened ?

bigjailerman
  12/26/2015 18:52 EST

Hey buddy, yes I had to cancel that meeting because my fiance have birth to our second a couple weeks back also. He is going to come by the house but knowing a Colombian schedule nothing is locked into place yet. I will definitely flew up because it's important to me and of course will fill you guys in and pm you. With regard to the notifications, mine have been weird lately, some days I get none and get three days worth on othersj other days.

8901
  12/28/2015 04:42 EST

I am 5 years from retirement and my plan was to buy a condo in 2 years and reside in Colombia 6 to 8 months of the year.

My pension will be about U.S. $7,000/month. based on what I am reading I will either find another place "OR" rent a place for maybe 4 to 5 months a year.

Colombia is foolish. A pensioner does not work and therefore does not take any jobs from a Colombian and the monies a pensioner spends goes directly into the economy consuming goods and paying tax on them but even more important by this consumption he or she is creating jobs which the worker also pays taxes

I believe Colombia has made a bad decision hurting both the expat but themselves as well. I for one have heard enough.

leo8530
  12/28/2015 09:41 EST

I think Colombia shot itself in the foot with this and will.be limping for a long time as a result.

leo8530
  12/28/2015 09:41 EST

I think Colombia shot itself in the foot with this and will.be limping for a long time as a result.

leo8530
  12/28/2015 09:41 EST

I think Colombia shot itself in the foot with this and will.be limping for a long time as a result.

bigjailerman
  12/28/2015 09:46 EST

You might be right, time will tell. I don't think we will get the knee jerk reaction to"fix"this issue from Dian/Govt we all hoped for BUT I still am hoping for a loophole or work around.

WhoaNellie
  12/28/2015 10:03 EST

One thing that you can almost count on - things can change! Not always for the better, and not always quickly...but hopefully Colombia will realize the error of their ways and take steps to attract rather than repel the "free money" that pensioners would spend there.

In the meantime 6 months in Colombia and 6 months in the US could be the best of both worlds.

8901
  12/28/2015 11:50 EST

Now that they eliminated my original plan. What kind of a visa would I need to stay in Colombia 5 to 6 months and how much of a hassle and expensive is it ?

bigjailerman
  12/28/2015 13:43 EST

Sounds to me like a tourist visa will work for you. Up to 180 days per year. 90 days to start, you can extend to 180 if you prefect yourself to migracion for the extension. Without knowing your circumstances I can't advise another type of visa. You should review the Cancilleria website to determine what works for you. It's both in Spanish and English.

saiid20
  12/28/2015 16:58 EST

Said I was done with this thread but some comments just beg for a retort::Some of you have an overly inflated sense of what you can "bring to the table" in Colombia.
Believe me, this country will not miss you one bit if you get mad, take your income and go home.

Stewmanfu
  12/28/2015 17:16 EST

@Saiid

Can't get my mind around your hostility. If someone has worked very hard to earn a pension, why wouldn't it be prudent of them to make retirement location decisions based on who is going to tax and how much?

Colombia has a chance to really grow in terms of investment if they adjust their tax laws to be more similar to Ecuador, Panama, Costa Rica, etc. I am hoping that by the time we move to Medellin there will be some changes. If not, we'll have to be very careful how we structure any potential investment in Colombia and how our income is going to be affected.

I can assure you from what I've seen in Ecuador, there are 1,000's of people who would be very upset if the foreigners would pack up and go home.

No hostilities, no bashing Colombia, just making prudent decisions.

bigjailerman
  12/28/2015 17:21 EST

Don't sweat it Stew, looks like he just likes to poke and go, like a kid with a stick and a bee hive lol...

saiid20
  12/28/2015 17:27 EST

not hostility, reality. btw...how many US states tax your pension? Think its more than 10...
i do understand the frustration..feel it too..but I sense in more than one comment something akin to "ok, now its time to punish Colombia for their audacity in taxing my benefits".

thelocogringo
  12/28/2015 17:38 EST

Saiid is Absolutely Correct. After living here more than 10 years, owning a business, property and so forth, the Colombians could care less if we stay or go. We make no differences to thier economy. They are not interested in any form of "multicultural society" and have no interest in what we foreigners have to offer.

I like living here, I am having a great time, making money and get to be free from all the trapings of my northern societal constraints.

When that ends or I need somthing different, "hasta la vista baby".

All foreigners leave sooner or later, unless they die from alcohol abuse, drug overdose or thier novia does them in.

That is just the way it is, has been and will be.

Enjoy your time here, do whatever you want, and don't believe for one minute they really care if you come or go.

If you think the tax man is going to come after you and that makes you loose sleep at night, than this is not the place for you. Move along........

Martin

mattinnorfolk
  12/28/2015 17:53 EST

I suspect your right, but they will not know they are wrong until it's too late to get people back. Ask Detroit, Chicago and other cities and country's that shot the goose that lays a golden age. They're former residents now live in Arizona, Florida or other lower cost places. I am sure Europeans, and Canadians have the same vibe about taxes. We don't mind paying our fair share, but when our fair share is 60% of what we earn! Politicians can go to hell! Look at a gallon of gas or an airline ticket. The government gets more than the company that take the risk to start a business. Some of us our tired of it,,, Sorry for venting...

thelocogringo
  12/28/2015 18:48 EST

Mattin, sounds a little like Martin.

None of us likes to pay taxes.

The people in charge will never give a sh*t. They only care about thier ego and wallet. Colombians are not a patriotic bunch beyond ther Socar Team and beauty queen. Just look at thier supreme court as a shinning example.

Hey, how many mayors, governors and congressmen are either banned from politics, in jail or on the lam.

No one is interested in doing good for the sake of doing good. To them, only a sappo sacrifices for the better.

So in short, no one making these new laws is thinking beyond next years budget and staying in office.

dliss62
  12/29/2015 14:55 EST

To say that Colombia does not care and “Believe me, this country will not miss you one bit if you get mad, take your income and go home” seems a bit ham-fisted.

tax laws that regulate foreigner’s pensions and investments have a significant impact on a country’s economy. These laws not only affect retired expat folks, they affect investors and companies doing business in Colombia.

Colombia like any other country wants to attract foreign investment vital to maintaining a healthy economy and promoting growth, especially in the recent tanking of oil prices.

Don’t think I’m right? Ask Venezuela!

fecherklyn
  12/29/2015 18:24 EST

Hi Loco,

I wonder how much of what you just said (28/12) could be equally applied to other countries. Most of it I would think.

I would give some hope for Colombia where I believe there are a few senior officers that can correctly add 2 plus 2 and come to the conclusion it is better to have expat pensioners "with us", rather than "against us".

If I look at the TOTAL amount of taxes I pay in Colombia (including Iva, Retefuent, etc.,) it makes a nice little packet and I doubt they will not be interested in trying to find some compromise. Of course, if all the concerned expats keep their mouths shut and make no effort to complain, then.......!!!

dliss62
  12/29/2015 19:47 EST

I know I did complain....anyone? anyone? Bueller?

8901
  12/30/2015 01:32 EST

" Believe me, this country will not miss you one bit if you get mad, take your income and go home. "

Oh I do believe you ... and I also believe that this attitude is a big part of why Colombia is still a third world country in spite of all it has.

I will spend 5 months (just to be sure) and not pay one penny in tax. Now Colombia will loose out on the properties that myself and others like me would have bought. The maids we would of hired. And the countless businesses we would have supported.

For me it will only be the inconvenience of having to scout a place to rent every year but in short time I'll have that worked out and now thinking about probably will be financially better off. I know allot of really good properties that will offer a super nice discount to a 60 year old looking to rent for 5 months.

guestuser
  12/30/2015 04:50 EST

I think that our impact on the Colombian economy is - in the scale of things - probably fairly modest.

So Colombia's GDP is around $400 billion. Let's guess that the number of US residents is say 30,000 and let's say that they each contribute in terms of spending around $40,000 a year. That gives a total 'spend' of $1.2 billion or about 0.3% of total GDP. That's of course a guesstimate and not a 'tax' number.

Given the budget deficit problem that the Colombian's face with the drop in the price of oil the number of expats coming to the country to reside is something of a non-issue. Even if the number of residents were to significantly decline it would not have a meaningful impact. On the other hand the number of new residents that they would need to attract to make a significant difference would be both huge and unlikely.

Investment in property would not be included in my figures but given the amount of new build going on I doubt if pushing foreign investment there is a big priority for the authorities.

Equally although the tax burden may have increased our spending (and wealth) in COP terms has significantly increased in the last year with the change in exchange rate.

So as much as we might complain I'm not sure where the leverage is?

thelocogringo
  12/30/2015 06:29 EST

Good morning Paradise,

I think you are on the right track here but your numbers are way over what is really happening.

Perhaps some one has the actual numbers however I would think that the number of non Colombian pensioners living in Colombia permanently is closer to 3,000 than 30,000.

I would also estimates their incomes to be closer to $24,000 a year. So little income that it can't be counted.

A more interesting number would be the number of Colombians who have lived abroad, earned a pension and have returned to Colombia to retire. That number must be in the hundreds of thousands or perhaps a million or more. Those are the new tax payers who this these new regs are focused on.

Work those numbers around and see what you come up with.

It would be interesting if some one had the actual numbers, I would like to hear them.

thelocogringo
  12/30/2015 06:34 EST

Hey, 8901,

If you marry a whore, don't be surprised when a year later she is out turning tricks.

guestuser
  12/30/2015 06:46 EST

Yes I purposely used high estimates. Even with those I think it makes the point. There was a posting on the thread where someone indicated $7k a month in pension.
At $24k and 3,000 residents you have $72 million and 0.015% of GDP. Effectively a rounding error.

Agree on the returning Colombians and their pensions - that is what the law is focused on.

If there is a problem for the Colombians is that the present level of the exchange rate is making it prohibitive to hire 'expert' advice from overseas. That will create issues in development. I've carried out consulting work here on a $ basis. My experience is that work has nearly completely dried up at least for US and European nationals - or is subject to long negotiations on the rate.. That work if it exists now is going to India and Mexico. So with the low rates on offer and the taxation once residency is triggered they're going to find it difficult to get the expertise they need to move technology and infrastructure efforts forward. That's more of an issue than pensioners threatening to return to the US.

leo8530
  12/30/2015 08:43 EST

I think Americans are very industrious and many start businesses in their retirement (like FARM) so I think it's hard to guess the loss of revenue in the Colombian economy with American s choosing not to retire in Colombia due to the double taxation. Many of them might have started multi million dollar business in Colombia that will not happen now. So the impact could be a huge loss to Colombia and a loss of millions of jobs to Colombians.

bigjailerman
  12/30/2015 08:49 EST

You guys are bringing up very good points. For me, I tend to believe or"impact" may not be on the overall Colombian economy but a bigger impact on the local businesses. L we tend to frequent the fame supermarkets, mom and pop shops, local bars, taxi drivers etc. On a smaller scale, or money would be missed after the fact.

guestuser
  12/30/2015 09:17 EST

I'm not sure about this concept of retirees founding multi million dollar businesses employing millions of Colombians. Most of the ex pats I know running businesses struggle to make them pay. However it is true that the dual taxation does discourage investment.
On the other hand think of this from the Colombian's point of view. Imagine for one moment that you are a local politician. Are you going to propose that foreigners don't pay tax in Colombia? That someone with a pension of $7K a month - which would make that persons income extremely high by local standards would be exempt from tax? Even someone on a US pension - as I've stated before - has a very good income by local standards. Local salaries for many of the middle class are $1,000 or less a month and they pay tax. But foreigners (the ones that can't help the politician with a vote) should have no taxes because we want their dollars? Imagine a US politician proposing the same that foreigners should be exempt from tax.
Add into the equation that unfortunately being a foreigner here attracts at least a little suspicion as to ones motives (e.g. being here to play with the local females) probably doesn't provide much political capital for anyone to go to bat on our behalf.
Ultimately the people most impacted are those on an offshore pension that would attract no tax in the US. They go from a tax rate of 0% to whatever the current local level is. Those investing and building multi million dollar businesses aren't in that same situation. Bringing capital into Colombia isn't that difficult if the money is clean; getting the money out is.

LongTimeTexan
  12/30/2015 09:39 EST

taxation in the ‘Land of Free’
To add insult to the injury – All US Citizens are required to report their world-wide income to IRS regardless where it was earned even if you NEVER lived in the USA. In the case of Columbia, there will be double taxation since there is no tax treaty between USA and Columbia.

Furthermore, as a result of FATCA, the foreign banks are required to report all the financial activity of US citizens to the Treasury – as a result of which it has become more difficult for US citizens to have foreign bank accounts. Financial activity includes having a signature authority, i.e. a US citizen working for a foreign company overseas and has signature authority on the business account – that account must be reported.
• How many millions of US citizens live overseas, many of whom are married to foreign nationals – the join bank accounts, mortgages etc. must be reported regardless of the host country regulations
• Lord Mayor of London (UK) is an ‘accidental’ US citizens having born in New York City – he sold his apartment in London, and IRS went after $167,000 capital gains tax
• In addition to the Income tax filing, you are also required to report all of your foreign financial assets to the Treasury ($10,000 if you live in the USA, and higher limits if you are a resident of a foreign country) – the penalties for non-compliance are severe (up to 50% per year)

Foreign Earned Income Exclusion up to $101,300 in 2016 applies only to income such as wages, salaries, tips, and other taxable employee pay; net earnings from self-employment. However, this is only for income tax, not FICA; and there are certain restrictions as to the time you are out of the country.

fecherklyn
  12/30/2015 10:47 EST

@Paradise.

You state several times "Are you going to propose that foreigners don't pay tax in Colombia?"

That I feel is misrepresenting the debate. Nobody is suggesting foreigners should not pay taxes. The point at issue is whether foreign pensioners should be taxed in Colombia on their foreign source pension incomes whilst local Colombian pensioners are to all extent exempted....I.E, it becomes a form of discrimination against foreigners.

Alas, I do not have figures about the incidence on Colombian statistics if foreign pensioners were to seek other pastures, but I think the calculation that makes the most sense is the incidence on the tax deficit. It is the tax deficit which is giving Colombia the greatest problem at the moment and I feel the loss of foreigners tax contributions (remember, including Iva, retefuente, arancel, GMF, etc) would materially effect their problem. Not all expats in Colombia live on US$ 1,000 - 2,000 monthly. I know I have brought in several billions of pesos into the country and I know others in the same case.

leo8530
  12/30/2015 11:13 EST

Very good points. Retirees generally do not use a iot of free government services ie schools for their children and generally please pour money into a country without taking much out. That's why countries like Panama are so retiree friendly especially when retirees are paying so much for IVA Get a clue Colombia and buy a vowel.

WhoaNellie
  12/30/2015 11:42 EST

Let's not forget about perception, even though it's not always the reality.

Around the world for retirees, Ecuador now is seen as welcoming them and as being a wonderful place for them - even though in my opinion, it is in so many ways inferior to what Colombia has to offer in almost every aspect. But Ecuador makes it easy to retire there and has attractive policies and is reaping the harvest of being open and welcoming, and is now attracting retirees from around the world.

Even though it's only a small part of the overall economy, it's free money for any country! And all they have to do is put up with the gringos...

guestuser
  12/30/2015 11:58 EST

But it isn't discrimination against foreigners is it? Colombian's who have foreign pensions who live in Colombia are also liable to tax on those pensions. What is exempt is local pensions. If a foreigner works in Colombia for a local entity and has a 'local' pension now or in the future will they have to pay tax on that? And a not unimportant point - how much are those local pensions in comparison to US pensions? So your argument would be that if a local got tax exemption on say $300 a month then the foreigner should automatically qualify for an exemption on their $2,000 worth of monthly income?

spank12
  12/30/2015 12:22 EST

Ok,,, I have a wrinkle to this question,,,, I have several Colombian friends, that have relatives that worked in the states when, they are younger. They are now retired and of course came home to live, but are collecting American SS or other US government pension. But I got a very strange look and got no real reply if they were paying Colombian tax on their US income. Are they somehow exempt or simply not reporting???

guestuser
  12/30/2015 12:49 EST

My understanding to the US income (and it would also apply to company pensions or 401k/IRA plans) is that it's worldwide income and needs to be reported. I can't see that it's exempt. People of course may not be reporting it and taking the income into US bank accounts which may explain the increased information exchange between the US and Colombia. That's the real income that I think the change in law was going after. It's a potentially much deeper funding source for the tax system given the numbers of Colombians currently living overseas.
If you want another twist it's on the US tax credit system. If you pay US taxes and have to pay additional Colombian taxes then you can apply a foreign tax credit to your US tax return. That reduces your US taxes. However I can see that it can be applied as a CREDIT against US taxes, but I can't see that it is can be repatriated as a REFUND. The refund is what US pensioners would need if they're not paying taxes. A credit that takes you to less than zero (in that you're not paying taxes) is useless if it can't be cashed out.
However the use of the credit reduces your US taxes, which will then increases the differential to future Colombian taxes so you potentially end up paying more in Colombia!. However presumably if there is a tax treaty in the future at some point the rolled credit could be recaptured by the payer?

fecherklyn
  12/30/2015 12:57 EST

@Paradise.

Yes, you are correct, it would be more accurate to say the 'discrimination" is against foreign source pensions. But having said that, I have been paying taxes in Colombia these last 30 months at a rate of COP 1,500,000 per month (*), which will now increase to COP 5.0 million per month if they start taxing my pension incomes. Of course I am rankled.

(*) Colombian taxes I have paid these last 30 months:

Iva, at various rates up to 16%, but probably increasing in 2016 to 18%, or 19%.

Impuesto Consumo

Gravamen mouvimiento Financiero (GMF)

Contribuciones EPM on untilities

Predial

Impuestos Vehiculo

Arancel on Amazon imports

Retefuent on rendimientos financieros.

Impuestos sobre ganancias

Impuestos sobre patrimonios.

Altogether this makes Colombia rather expensive from a tax point of view in my opinion.

I intend to prepare a new thread on "How costly is Colombia" where I will detail the typical costs of residing here. I hope it will attract lots of comments.

dliss62
  12/30/2015 14:30 EST

Interesting point about "returning Colombians" that I never considered. There are millions of Colombians living and working abroad that dream/plan of returning. Unfavorable tax consequences for these citizens (who vote) could put this issue in the forefront. Maybe too optimistic, but will just have to wait and see...

spank12
  12/30/2015 14:39 EST

I doubt there is anyone (government) American or Colombian that has a clue how much money is coming into country via SSI, 401, or anything else legal via the USA

guestuser
  12/30/2015 15:03 EST

On the collection of information about income on the US side I think it's pretty tight. Actually I think it's very tight. So a Colombian who has returned home could be using a US address to avoid revealing that they have returned home but
- he's going to get the Federal deduction
- in most states he may end up with state taxes and in some cities local tax
- he has to make a decision about affordable care and the penalties for not enrolling
- plus any money that he has in the US becomes painful to move to Colombia as he has to explain the source

I haven't got a clue how the US decides who's data to share with Colombia but they've got plenty of data points that they could use (for example if people have correctly disclosed foreign bank accounts, foreign investments etc.in the past)
My tax attorney here suggested to me that at the moment (2015 returns) that the process wasn't completely in place yet to trap exceptions but that going forward they expected it to be. All the developments you see like mandatory chipped passports all have a reason. And Colombia - given a) it's history of drug money laundering and b) the need for the Colombians to raise revenue we should probably guess that more than normal efforts are going into collecting and sharing financial information.

Colombian taxes are high but having come from a situation in the US that I paid Federal, State, NY Local taxes and SS that all adds up to a pretty good total.

dliss62
  12/30/2015 18:27 EST

Paradise, No doubt about that coming from a fellow New Yorker!

Viajero48
  12/31/2015 13:02 EST

I've worked my way through this lengthy thread forward and backward and there are still a couple of points on which I am unclear.

Regarding taxation of both total assets (wealth) maintained in the USA and pensions and social security incomes received from the USA...my impression is that one must exceed something around $250,000.00 before the wealth tax is implemented. Is this accurate?

Also, is there a threshold amount before taxation commences on US pensions and social security benefits or are these assets taxed from the first dollar?

bigjailerman
  12/31/2015 15:21 EST

I believe it is NOT from the first dollar, you have a 10,000 threshold before taxation on pensions/ss kicks in.

WhoaNellie
  12/31/2015 16:41 EST

Only approximate for the marginal tax rates, assuming about $1 USD = $3000 COP:

Under $855 USD/mo is not taxed
Over $855 USD/mo is taxed at 19%
Over $1335 USD/mo is taxed at 28%
Over $3200 USD/mo is taxed at 33%

This applies only if you are in-country for 183 days or more in any 365 day period. You are then taxed on your worldwide income.

WhoaNellie
  12/31/2015 16:45 EST

From Wikipedia at

https://en.wikipedia.org/wiki/taxation_in_Colombia

The table below shows the tax rate in units of UVT (Unidad de Valor Tributario), in which 1 UVT = $29,753 COP for 2016.

Income Range in UVT tax Rate
0 to 1,400 0%
>1,400 to 1,700 19%
>1,700 to 4,100 28%
>4,100 33%

WhoaNellie
  12/31/2015 16:56 EST

So I "did the math" assuming 3000 COP = 1 USD:

1400 UVT = 41654200 COP = 1157 USD/mo
1700 UVT = 50580100 COP = 1405 USD/mo
4100 UVT = 121987300 COP = 3389 USD/mo

MAHINASHEILA
  1/1/2016 01:19 EST

Finally someone posted an site with information! (Wikipedia). Too much speculation without substantiation. Unless you know the facts, please don't waste our time on this forum

8901
  1/1/2016 02:01 EST

OBVIOUSLY There are posters on here with limited resources and have put all their eggs in one basket ( Colombia) and are trapped.

Ignore them and use and enjoy this country for what it is.... a 5 month a year vacation.

guestuser
  1/1/2016 12:04 EST

From that Wikipedia page

'Individuals: Colombian citizens and foreign nationals who have lived continuously in Colombia for a total of five years are thereafter subject to individual Income tax based on a system of graduated marginal tax rates.'

So according to that any foreign national doesn't need to pay tax until they've been in the country for five years? Is that correct? Or does it replace some other unstated scale? Continuously -how is that measured?

Perhaps there's a little less substantiation in that page that some might suggest. To the original poster thanks for linking to it. It's useful but to others I'm not sure it's the Holy Grail nor complete enough to suggest that others of us shouldn't post (or 'speculate') on the forum.

saiid20
  1/1/2016 13:15 EST

Outdated and very wrong info. I'd seriously wotty about people who make life decisions bases on Wiki...

Stewmanfu
  1/1/2016 13:56 EST

Other form of "taxation" in Honduras we knew of parts of towns where residents were extorted with a "tax" by some group or another (delinquients) for living in a particular neighborhood. Has anybody ran across this in any of the barrios en Medellin?

bigjailerman
  1/1/2016 13:58 EST

Took the words right out of my mouth.

WhoaNellie
  1/1/2016 15:33 EST

Yes, some of the info on the Wiki page is outdated...but not the part I posted. What I posted is correct and up-to-date. I posted it in English because not everyone reads and understands Spanish.

The 5-year period is out the window. If you spend more than 183 days in Colombia in any 365 day period you can be taxed on your worldwide income, no waiting period.

The UVT info is up to date. You can easily search for it yourselves, for instance 'colombia uvt' gives you many hits, and if you search for 'colombia impuesto 183' the very first hit that appears on Google is about the law.

You just can't win on this forum - if you post something, someone whines it's unsubstantiated. If you then back it up with a link, someone complains about that too!

Of course no one should make life decisions based on what someone posts on the internet. I seriously doubt anyone does, so that criticism is pretty weak. I'm trying to be helpful, others don't seem to have that goal...

WhoaNellie
  1/1/2016 15:43 EST

Oops, apparently it's now after the second year, not the 5th year, that the tax scheme may be imposed. It was in my own mind that I was already planning not to spend more than 183 days from the start, in any case, just to make things simpler.

But please don't take my word for it, read it for yourself.

bigjailerman
  1/1/2016 16:08 EST

Yes it is instituted in your second year here. Uvt changes every year to check in on the exact amount. Your addition to the forum, like many others it is appreciated. This particular discussion had been going on for quite a while and there are lots of side discussions as well. I think most everyone will agree with the basic facts, the number of days here, the uvt amounts etc. Some lesser known may be the second year rule, the threshold amount, and what the legal loopholes might be available, what of any write is are available etc. Most people are sitting back to some extent I believe to see how this pans out.

fecherklyn
  1/1/2016 18:33 EST

@Stewmanfu.

You asked if extortion exists in Medellim. "Yes", and has done so in the barrios and lower estratos for years.
However, my wife's uncle who left to go back to California earlier this year has just informed me the practice has now reached Laurels where he lived whilst in Medellin.
Some of his old neighbors have just told him his apartment building now pays a "protection" fee of COP one million per month.
He says he could see this coming and it was a major factor in his decision to leave.
Poblado next?

Stewmanfu
  1/2/2016 13:14 EST

@fecherklyn

Thanks for your insight. This has been a concern for my wife and I as we consider buying a place or just renting. Things can start out at $1M a month and once they realize Gringo's are in the building can escalate rapidly. Sad really...

fecherklyn
  1/2/2016 18:28 EST

@The person who gave a "thumbs down" to my response about extortion.

Whoever you may be, man up and identify yourself, preferably with an explanation why you do not want to hear THE TRUTH.

A question was asked and I responded with what I KNOW. If you doubt my word, I am quite prepared to pm you with my wife's uncle USA phone and you can ask him to corroborate.

I saw the murder artes in Medellin went down significantly in 2015. This is the good news. What it does nothing to elucidate is what has happened to criminal activity.

8901
  1/2/2016 18:39 EST

@Fecherklyn Pay him no mind. I for one appreciate the valuable input you shared.

I enjoy my time in Colombia and with 5 years left to retire it still is #1 on my list. That being said the move could be renting for 6 months.

I always planned on spending at least one to two months a year by the ocean anyways ( probably in the D.R. ) so I can make the U.S. my base for the other 4 to 5 months.

Some people are or feel trapped in Colombia and are living the same or just slightly above the average Colombian and the truth is to devastating to admit so they will attack anyone who shines a light on the truth and reveals their misfortunes.

Please keep sharing.

8901
  2/2/2016 22:00 EST

Anyone have any new information to share on this new tax status ?

Viajero48
  2/3/2016 08:11 EST

The threshold is in excess of $300,000 so if your assets exceed that amount you have something to worry about...if not you can forget about it.

Tyee44
  2/3/2016 09:08 EST

It would appear your Social Security or other pensions will not be taxed until they reach at least 25,000,000 COP per month or about $7,500 USD based on the current exchange rate.

En Colombia las pensiones o pagos por pensión están exentos del impuesto de renta en la parte que no supere el límite establecido por la ley.
En las pensiones altas el 100% no está exento de impuesto de renta, según la limitación contenida en el artículo 206 del estatuto tributario.
En efecto, respecto a las rentas de trabajo exentas, el numeral del artículo 26 del estatuto tributario contempla que:
Las pensiones de jubilación, invalidez, vejez, de sobrevivientes y sobre Riesgos Profesionales, hasta el año gravable de 1997. A partir del 1 de Enero de 1998 estarán gravadas sólo en la parte del pago mensual que exceda de 1.000 UVT.
El mismo tratamiento tendrán las Indemnizaciones Sustitutivas de las Pensiones o las devoluciones de saldos de ahorro pensional. Para el efecto, el valor exonerado del impuesto será el que resulte de multiplicar la suma equivalente a 1.000 UVT, calculados al momento de recibir la indemnización, por el número de meses a los cuales ésta corresponda.
Quiere decir esto que las pensiones cuya mesada mensual tenga un monto igual o inferior a 1.000 Uvt, están exentas del impuesto de renta en su totalidad. El exceso de ese límite está gravado con el impuesto de renta.
Para la declaración de renta del año gravable 2011 con un Uvt a $25.132, el monto máximo exento de renta es de $25.132.000.
Supongamos una pensión de $30.000.000 mensuales como la de un congresista. El monto exento será de $25.132.000 y el resto, esto es 4.868.000 está gravado con el impuesto a la renta.

Pensiones exentas de renta en Colombia | Gerencie.com

Leyes desde 1992 - Vigencia expresa y control de constitucionalidad [ESTATUTO_TRIBUTARIO]

Tyee44
  2/3/2016 09:12 EST

I've lived here 5 years, married here as well. The least of my problems is worrying about double taxation. If I had the money to worry about it I would be on the beach in Hawaii or at leat Del Mar California...lol

fecherklyn
  2/3/2016 09:21 EST

@Tyee44

Well done Tyee44, you have given the perfect example of what I find a problem with this forum.....that sometimes the number of posts are so numerous that newcomers have little idea of what was the initial intent of a thread.

In this case, the thread was started with a view to examining the NEW tax measures in Colombia that could hit expat residents. You have managed to "lose the thread" and are reporting on the OLD tax rules that are now in the process of change.

What you have stated was about a previous tax rule (Exoneration of pension incomes) that is now being abolished.

WhoaNellie
  2/3/2016 09:53 EST

Also for 2016 the UVT is $29753 COP, considerably higher.

http://actualicese.com/actualidad/2015/10/15/unidad-de-valor-tributario-uvt-2016/

You can also search for 'colombia uvt 2016' and see the DIAN PDF as well, as the second hit which confirms this.

WhoaNellie
  2/3/2016 10:08 EST

I'll be happy if Tyee44 is correct. This link from gerencie.com says pensions of foreigners are to be treated the same as Colombia pensions, and subject to the 1000 UVT per month threshold:

http://www.gerencie.com/tratamiento-de-la-pension-extranjera-de-residentes-en-colombia.html

Let's hope then that this does not change with the new "reforma tributaria".

Fecherklyn, I agree that we get lost in the weeds - but also it is extremely difficult to get accurate information. This is why it's important to me to provide links (for what they are worth!)...

fecherklyn
  2/3/2016 11:59 EST

@WhoaNellie

The link from gerencia you provided seems clear enough as (in the last paras) it states the "old" exonerations are NO LONGER valid for pension incomes sourced from overseas pension schemes. The text was issued by the DIAN in their "oficio 58213 de 2014" and the only thing remaining to be debated is whether, or not, this oficio is "worthy" of a formal governmental decree, and what is the date of effect.

In other words....it is not very clear at all!!!!!!!!!!!!!!!

WhoaNellie
  2/3/2016 12:05 EST

I agree it's not very clear.

Here's some more up-to-date information, admittedly it's a newspaper article, that states pensions could be taxed when they exceed 8.6 million COP:

http://www.eltiempo.com/economia/finanzas-personales/impuestos-para-el-2016-que-pagarian-los-colombianos/16474336

The point in the other link I gave was, foreign pensions would be treated the same as internal, Colombian pensions. Or maybe not.

I think we'll just have to wait and see what happens.

dliss62
  2/3/2016 16:11 EST

fecherklyn, This is concerning because "Laureles" is an area that I have been contemplating. I love the greenery, serenity and convenience in that part of Medellin.

Excuse my ignorance on this matter, but how exactly does the extortion racket on big residential buildings work?

I was insulated from this during my time down rage because of the embassy, but was aware that it was common with finca and landowners. This may be another reason to consider renting over buying.

fecherklyn
  2/3/2016 17:33 EST

@dliss62

Yes, it is scary and I have much the same thoughts, converting to rental rather than ownership, IF we elect to stay in Colombia.

This type of extortion, well, as you can imagine, there are no signed, authenticated agreements.

To my understanding this type of extortion is largely "gangland", although the extortioners are not necessarily locals and may come from some distant barrio. The problem is these "gangs" are becoming larger and slicker.

The approach seems to be to the residence security/porter service with the condominium administrator taking the "offer" to the owner committees for consideration and approval. The "consideration" is often clarified with a few example of what can happen if the owners do not like it. The "fee" is then entered into the monthly condominium bill and paid by all owners.

This tendency was reported quite thoroughly recently by El Colombiano who confirm its arrival to Laureles and Poblado.

This situation has led my residence to put in an (expensive) system of camera security and arm all the 24 hr security guards.

guestuser
  2/3/2016 17:39 EST

Do you have a link to that El Colombia article? Must have missed it.
Going to be interesting in my building if it's true. There a pretty big politico here and there are usually Police stationed inside the parking area. Not sure that the bad guys are going to win if the shooting starts.

bigjailerman
  2/3/2016 17:53 EST

The more prosperous areas receive more attention for "fees".

The ones who deliver the messages are generally on bigger more powerful off road motos.. They have been doing this nasty sh*t.for years, they just changed their Farc clothes to something else.
It's sad but true..

LaPiranha
  2/3/2016 18:55 EST

Seems Bogota does have something going for it, after all then.

Not only the "protection" rackets, but also with this zika carrying mosquito. They don't like the higher altitudes, and are not usually found above 2,200 metres. Pity Medellin is about 1500m and plenty of water around, but Bogota is about 2,640m.

Well maybe its worth putting up a bit of pollution? :)

8901
  2/3/2016 19:12 EST

Medellin. In development of military operations carried out under the Sword of Honor Campaign Plan carried out by troops from the Military Gaula Antioquia and members of the Technical Investigations Unit of the Attorney General's Office, captures occurred in two areas of the Valley of Aburrá to two subjects, alias alias Cobi Pachonegro and belonging to a criminal gang which came extortion, systematically, to the owners of the properties that make up the division Popalito the municipality of Barbosa, north of the Valley of Aburrá; and some neighboring farms to such allotment.

The capture of these two individuals thanks to the research work, developed jointly by military intelligence of the Fourth Brigade and the CTI of the Office, which it was established that these two people extorted was given to each of the owners some land in and around Popalito Parcelación a monthly sum of 200,000 pesos, as established by the authorities, amounted to approximately 34 million pesos, obtaining sufficient evidentiary material.

With this background, the municipal guarantees third Medellin judge founded acts issued an arrest warrant against these two individuals, on charges of aggravated and consummate extortion and conspiracy for ransom; and processes were captured in raid carried out in the municipalities of Barbosa and Itagui, Antioquia.

The process of investigation and intelligence who developed Gaula Military troops of the Fourth Brigade and agents of the Attorney CTI began after receiving a number of complaints against the media by the owners of the Parcelación Popalito and some neighbors who They indicated that they were still victims of extortion from the first months of this year.

The diligence of raid carried out in the municipality of Barbosa, were recovered a large sum of cash proceeds from these extortions a camouflage uniform of private use of the Military Forces of Colombia, a calendar with a phone book with number of various owners of property in Popalito, a notebook with some names of people who had been extorted, detailed with the name of each of the property owners in this subdivision and two cellphones list from which performed the extortion calls , material that was made available to the Attorney General's Office for prosecution. Meanwhile, the two were captured and accused of crimes they committed and were issued as of intramural assurance.

So far in 2014, the Military Gaula Fourth Brigade has managed to capture more than 92 people involved in the crimes of extortion and conspiracy.

The Fourth Brigade, organic from the Seventh Division of the Army, will continue to work together, coordinated interagency way with all state agencies to continue the consolidation of security and tranquility of the department of Antioquia and invites the community to report any type of extortion toll free 147. This helps to carry out the constitutional mission that has been entrusted to the Constitution by the Colombian people.

https://www.ejercito.mil.co/index.php?idcategoria=369203#sthash.IWFOuftM

dliss62
  2/4/2016 17:56 EST

fecherklyn, this is definitely another reason for me to abandon buying plans. As I said in other posts... " I love Colombia", but the tax issue(s) and now this!, compels me to conclude that renting is the best strategy for now.

Colombia is always changing and having the option to cut bait and run is not a bad thing. Renting will also provide the opportunity to explore different areas and possibly wait out all these issues.

I've always been happier "owning my own", which gives me a feeling of stability, but in this instance, common sense should rule the day.

Thank you for your valuable insight!

8901
  2/4/2016 18:29 EST

My plan was to buy a high end condo and a car and spend 7 to 8 months a year in Colombia. Of course that's out now.

Unless this changes this is how I see this playing out. A percentage of expats that were going to buy and plant roots in Colombia will simply pick another country as they want to own but not at this price.

Since this situation will eliminate Colombia as a retirement destination for a group of expats that in turn will soften the demand for rentals as many will not even be interested in having a look-feel of the country. Owners will be competing for a smaller number of renters and long term
( 3+ month) renters will be at a premium and get great deals.

If these are an indication of the fiscal path Colombia is going to choose (wealth tax , pension tax etc. ) the country's economy will slow further and the dollar will be even stronger.

Long story short is there may be a silver lining in this for the expat who feels good with adopting a 5 month a year rental strategy.

LaPiranha
  2/4/2016 19:39 EST

Undoubtedly some will leave, but I don't think the number will be that high.

One of the main reasons for folk to migrate to Colombia is the fact that many men from the US, Europe, and UK married a Colombiana. (Well, who wouldn't? They are some of the prettiest, sexiest and loveliest women in the world). Whilst the girls enjoy our lifestyle, and many would like to stay in their new country, most women do feel homesick, and miss their families enormously, and so many couples have planned that when the husband retires, they will come back to Colombia to live, so that the girl can be with her family, and the man finds that he can live a more comfortable lifestyle for a lot less money.

I think that will still be the case for many couples. Maybe the ones who might be tempted to up-sticks will be the single guy who doesn't have the family ties here. Those that chose to move here for other reasons, like climate, cheap cost of living, availability of girlfriends, or any other temptation.

I certainly don't plan on moving. I also feel that the situation will ease in time, as the economy recovers. We must remember, that if the price of oil didn't fall through the floor, the government would have had no need to try to raise money to complete its spending program that it had committed to. I feel that it shouldn't be too long before the world economy starts to get better, and Colombia's economy should be one of the first to start growing again.

Another reason for many to stay, is that if they sell their apartment/house here, and move back to the US/UK, not only is the exchange rate against them, but also the inflation in house prices back home is growing fast, and they will find themselves lower down the housing ladder than when they left.

Just my opinion.

peggyjune
  2/4/2016 22:58 EST

This situation has made me look else where for a retirement destination. Such a pity as the country is so beautiful.

guestuser
  2/5/2016 09:31 EST

While the tax situation is something of an issue for people - although less so than I think some believe - any impact on expats living here has been more than offset by the fall in the peso. If you look at an 18 month view the peso has gone from 1,800 to 3,300. There has been some local inflation (say 7%) and if you buy a lot of imported goods yes you'll have seen bigger increases more in line with the rate move. My costs - in $ terms which were already low have fallen about 40% in the past year.
In terms of the extortion against property, as the article that's in this thread shows, it does exist in some parts of the country. The location given is in the vicinity of a farm that we own. A few years ago that wasn't the safest area to go to, but has improved enormously over the past few years. As for extortion in the city we had some Colombian friends here for dinner the other night and not a single one of them knew of any apartment building in Medellin that was paying extortion money. Of course that doesn't mean 'none', but I question if it is really widespread.
One thing I think we're going to see in the country, once the peace process is complete, is the use of the army to 'help' the police in cleaning up areas where gangs are prevalent. There's already been some signs of that starting.
A tax treaty with the US is also not impossible - although it probably isn't seen as a huge priority at this time. As one other post said the country is in desperate need of revenue with the oil price fall. Until that problem goes away (which may not be soon) fiscally it's going to be a little more demanding for people living here.

JasonWriter
  2/6/2016 12:56 EST

This thread is important and cool, thanks. I've only read about 2/3 of it, because it's huge. I'm like the slow kid in class asking this question, I realize that, but please excuse me. Here's my situation:

I'm getting a 27,000 dollar book advance soon, and I was planning on spending a year in Colombia, at least, while writing the book. So I'd enter Colombia with 27,000 USD in my bank account, that's all the money to my name at that point. So given this tax situation, after 183 days I have to hand over a good portion of that?

bigjailerman
  2/6/2016 13:01 EST

My advice is keep your money in a USA account and live here if your off of your credit/debit cards. The 183 tax days doesn't hit until you ate Herr two years

bigjailerman
  2/6/2016 13:08 EST

Until you are here two years

guestuser
  2/6/2016 13:23 EST

Why two years? I understand that very often in the first year you won't qualify as a resident because you won't meet the 180 day 'residency' definition (say you arrive in July), but if you arrive in say February won't you trip the residency test in say August?

JasonWriter
  2/6/2016 13:23 EST

Cool, thanks. My friend is a Medellin native/businessman and knows a few Colombian lawyers, so yeah. For now, I'll just head on over for 6 months-1 year and play it by ear. With any luck this tax situation gets a little brighter at some point in the future.

JasonWriter
  2/6/2016 13:26 EST

My plan for now is to arrive in July and keep an eye on the whole situation while enjoying Colombia while I got it, lol

broncoII
  2/6/2016 14:39 EST

What Pollution ?

JasonWriter
  2/7/2016 00:01 EST

(Small side note: Did I actually see people in this forum fretting over whether their comments were down-thumbed? Oh man, classic sign that one has become wrapped up in the petty aspects of an online space. Seriously, who cares if someone downvotes your comment? It's always fascinating to watch rooms full of very grown humans go all middle school, like "he was mean to my comment!!!"

JasonWriter
  2/8/2016 02:37 EST

I'd like to apologize. It was recently brought to my attention, via private message, that I was wrong to trivialize the matter of downvoted comments. Upon reflection, I have realized that the downvoting of comments is no laughing matter.

And so henceforth, whosoever anonymously clicks the downthumb on my, or anyone's, comments, shall shed thy cowardly veil, O scoundrel, and make thine identity known! Dost thou fear that publicly airing thy grievance should endanger thy name, or body? Into the light, rogue! Do not click thine thumby button down in such feeble fashion. Meet me in Poblado; the choice of weapon shall be thine. Take thine downturned thumb and bring it to arms! A duel, a duel, and honor returneth to the forum.

Hark, I take flight now to Medellin, to see to it that satisfaction is gained.

pocopelo
  2/8/2016 07:18 EST

Hey dude, thanks for pointing out the thumbs up/down feature. I wasn't even aware of it, I usually read new posts diect from my inbox. A cursory glance at a few threads shows that it is rarely used. That is fitting for such a juvenile feature in any case. Must have been part of the "upgrade" to the site made several months ago.

bigjailerman
  2/8/2016 11:30 EST

My weapon of choice will be alcohol consumption, lart man standing wins!!!

ocostich
  2/3/2017 22:13 EST

Glad I found this. I was considering finishing out my retirement in Colombia with my Colombia born wife. I'm now scratching it off the list. Compare this insanity with Panama.

https://internationalliving.com/countries/panama/taxes/
and http://panamainfo.com/en/best-retiree-benefit-program-world-panama

Colombia apparently doesn't want retirees.

cccmedia
  2/3/2017 22:37 EST

I clicked over to your two links, Ocostich.

Neither page disparages Colombia. In fact, it’s not even mentioned at either link. These pages are about Panama and only Panama.

--------

You may be bailing on Colombia too fast. tax pros here can show some Expats that they are not liable for heavy taxes. Depends on various factors such as source of income and taxes paid elsewhere, among other things.

The COL wealth tax, which apparently has now been abolished, was only for folks with a billion pesos worth of worldwide assets.

--------

If you must choose Panama, better go uphill to Chiriquí province. The rest of the country is schvitz-f@c%in’ hot.

cccmedia

ocostich
  2/3/2017 23:13 EST

I was replying to the tax info about Colombia's pouring on new and exorbitant taxes, The Panama links were to show the difference in how the two countries treat retirees. I think Colombia is making a big mistake with the wealth tax. That's real socialist stuff.

8901
  2/3/2017 23:49 EST

Isn't a billion pesos now only
$ 333,000 USD ?

CaptMike
  2/4/2017 08:19 EST

Well, as is the case in the USA, there are many ways to structure your finances in Colombia to minimize your tax profile and obligations. As in the USA it would be to your advantage to consult with a qualified Attorney and Accountant here in Colombia. they can advise you how to minimize your tax profile here. Just reading the text of the law without professional advise on how to interpret and manage and structure your financial profile is not sufficient.

canpandave
  2/4/2017 08:33 EST

In Colombia, a billion is a million million.....

cccmedia
  2/4/2017 08:52 EST

One billion:

1,000,000,000

One million:

1,000,000

As you can see, a billion is a thousand million, not a million million.

-----

Yes, COP 1 billion is currently worth about $333,000.

But “just $333,000”?

Most Expat arrivals in Colombia do not have assets (less liabilities) above that amount.

If the wealth tax has already been abolished in the 2016-17 “reforma tributaria” -- which is difficult to ascertain so far from English-language websites -- the question is moot.

The wealth tax was never made a permanent tax anyway.

Captain Mike’s brilliant post about getting a professional to look at your individual situation is highly recommended. I suggest everybody read it again.

cccmedia in La Zona Cafetera

novato1953
  2/4/2017 08:52 EST

So this is a recently re-started old thread from about 15 months ago. Has any foreigner visiting Colombia under any visa status ever paid any of the feared and loathed Colombian taxes that were then at issue?

Andresen
  2/4/2017 08:58 EST

What? A billion is a thousand million - everywhere.

novato1953
  2/4/2017 09:00 EST

A trillion by any other name isn't really the same, at least not in Colombia. Original poster on this is correct, as I was recently schooled about by a 22-year old hotel front desk clerk.

canpandave
  2/4/2017 09:04 EST

A million million in Colombia, they use the long scale...

https://en.wikipedia.org/wiki/Long_and_short_scales#Current_usage

cccmedia
  2/4/2017 09:40 EST

The contradictory opinions about what constitutes one billion is further evidence of this reality....

A propertied Expat needs a professional assessment before writing off Colombia.

Hats off to Captain Mike.

cccmedia in La Zona

guestuser
  2/4/2017 09:46 EST

The wealth tax that's being abolished was to finance the war and it rarely if ever applied to ex-pats as when it was extended one of the conditions was that it couldn't apply to anyone new. So, unless you'd been here for years and had a good amount of assets it was always a red herring.

The method of calculating income taxes on either your income or your assets (whichever gives the higher results) has not gone away. That's expats still need to focus on..

On some of the earlier comments

'Colombia's pouring on new and exorbitant taxes'

Really? In fact the changes to taxes are far less than expected. One of the things people have focused on is the 'new' 19% tax. That's the new level of IVA which is a tax on goods and services (so, kind of a Value Added tax). Yes it is 19% - but then it was 16% before. Most taxes like IVA around the world are in the 15-20% band so yes, it's towards the high end but it's not extreme.

Actually ex-pats (who are for the very most part at the richer end of the Colombian economy) if there has to be increases in taxes - should welcome increases in taxes like IVA. Rather than increasing the taxation on the wealthy IVA gets spread very broadly and impacts the whole population. If the money had been raised through increases in income tax it would likely have had a much greater impact on ex pats. And Colombia needed the tax increases as the revenue from oil has collapsed so badly.

'Colombia apparently doesn't want retirees'

The ability to become resident in the country, through the Pensionado visa would suggest otherwise. It's not a high hurdle to meet. What Colombia hasn't done is extend some program of tax saving to attract ex-pats. So why not?

- Colombia has a pretty broad and big economy unlike some other countries that offer a program
- Although some other countries have offered goodies to ex-pats notably there hasn't been a rush from other nearby countries to offer the same. Why? Well my guess is that the existing programs aren't producing much in the way of revenue to the countries and what they may do (for example distort real estate prices in pretty Colonial towns or on the coast) has a pretty limited impact. Attracting tourists from abroad is likely a far better way to bring money into the country. Colombia is 'spending' it's money through programs such as IVA not being payable on hotel bills by foreigners.
- There's a general misconception that retirees add a huge amount to the economy. Most retirees don't spend a huge amount of money here. I'd describe most of their expenditures as being consistent with middle class couples in country. Not nothing, but not anything that moves the dial in a huge country like this. Of course they can invest in real estate or pay rent, but it's not as if retirees are out every night at fancy restaurants or buying expensive local goods. Outside what is spent many retirees don't stimulate other parts of the economy. Many ex-pats don't even have a local bank account, even fewer own local bonds or stocks - there's little investment from retirees in Colombia. Yes, the Pesos that they pull from the ATM from their account in the US is bringing money in, but in the scale of things again it's not that meaningful. Most retirees don't add much to employment (other than buying a coffee in a cafe). There are a few who have businesses but most don't even have full time maids (as locals do) or other 'staff' like drivers.
- Colombia has a much lower cost of living than say Panama and that should attract retirees on it's own. Why does Colombia have to have a better tax program for retirees as well?


So the benefits to Colombia of having retirees isn't huge economically so there's no real need to forgo tax revenues to attract them.

And as others have said understanding taxes in Colombia can have benefits. The other week I suggested that people might consider antiques when looking for furniture when moving to Colombia and it was instantly dismissed. Yes you can go and buy a new sofa and you'll pay that 19%. But something from an antique shop - 0%. And that old sofa in 5 years time will be worth zip, but the antique one probably at least what you paid for it. Antique shops here are really busy, both with local and foreign buyers. One painting I'd been considering is now hanging on a wall in Boston because I hesitated too long.

cccmedia
  2/4/2017 10:25 EST

Great post, Paradise.

--------

The hotels’ waiving of IVA for “foreigners” actually applies to folks on tourist stamps.

COL Expat residents with true visas (for instance, TP-7 one-year visa) can expect to pay 19 percent IVA tax when staying in ‘hospedajes.’

cccmedia in La Zona

novato1953
  2/4/2017 10:39 EST

This is one of those fields where conventional neo-liberal economic thinking actually works. Tourism's worth about 6% of Colombia's GDP. A recession is often defined as a contraction in a nation's GDP of at least 5%. To the extent permanent foreign residents spend money remitted from offshore, they are pure gravy to a consumer-based economy.

guestuser
  2/4/2017 11:27 EST

@n1953 I don't get that link between the 6% of GDP and the 5% that would suggest a recession. Can you help me out there?

While not disagreeing that foreign residents spending is to some extent 'gravy' my argument was that in Colombia it's a pretty thin covering.

You also have to allow that residents do carry costs (public services etc) which are hopefully covered when expats pay taxes.

There's also a political optic. When to raise revenue you're having the expand the tax base (increasing the number of people captured under the tax system) removing or reducing taxes on foreign residents isn't exactly a vote winner.

Andresen
  2/4/2017 11:54 EST

I've often heard mil millón used here but not millón millón.

suadel
  2/4/2017 12:00 EST

I agree with novato . Gravy money.

suadel
  2/4/2017 12:00 EST

I agree with novato . Gravy money.

suadel
  2/4/2017 12:00 EST

I agree with novato . Gravy money.

guestuser
  2/4/2017 12:21 EST

And Suadel there was no disagreement that it was gravy money. But how much?

Let's say there are 5,000 ex pat Retirees here (yes I know that it's a guess but fill your own number in) and each one spends $15,000 a year (so a couple would spend $30,000). So that would be $75 million - not a small amount we'd agree.

GDP number for Colombia? For 2015 it looks to be around $300 BILLION (US terms).

So, I'm sure from the Colombians point of view it's welcome, but it's not exactly driving the economy is it?

novato1953
  2/4/2017 12:22 EST

Paradise, I see no cause for confusion. Every imported dollar spent in Colombia is fresh meat, i.e., it counts toward GDP. Withdraw 6% of GDP and you cross one threshold of economic recession. As consumers and not producers, residents with foreign-sourced incomes are cash cows not permitted to feed in the labor market. They are not plastic surgeons; they are plastic surgery patients.

Andresen
  2/4/2017 13:00 EST

Novato. Very well said. I agree.

guestuser
  2/4/2017 13:37 EST

Still plenty of room for confusion Novato. The 6% GDP number you are quoting is for tourism not for ex pat retirees.

You can't just 'borrow' the tourism number to justify why ex pats are valuable to Colombia. It isn't even true that if there were no foreign visitors then GDP would drop 6% and a recession would be triggered. Why? Because the 6% you are quoting isn't what foreigners spend in Colombia - it's what everyone including Colombians spend on tourism in the country. So when someone from Bogota goes on a trip to the Salt Cathedral, it's in that number. When someone in Medellin goes with his family to Cartagena, it's in that number. My guess is that MOST of that number is in fact spending by locals.

One point I will give you is that the 183 day guys ARE in the tourism number. But then they pay 0% tax as it is.

Interesting to see you on the thread Andresen. From your blog you're a full time resident but you've also posted I think on here that you don't file taxes in Colombia and would return back to the US if you were ever forced to. So you've made Medellin your own Monaco like tax haven. As long as you're spending money then there's no need to pay taxes for services like the police, fire, the army etc. etc. on the basis that you're contributing to the economy with your spending? Even in the best situation (short of the Colombians giving money to people to come here) your situation can't improve. You are indifferent as you already have your own 'program'.

Bottom line:

The amount that ex pat retirees contribute is a rounding error in the overall GDP picture. Even if there were no expats you wouldn't even see the impact in published GDP numbers.

cccmedia
  2/4/2017 14:06 EST

What?! Andresen has a blog?

Yes, he does:

A Gringo in Medellin, Colombia, blog.

I just skimmed the first post, which mentions dust bunnies and a trip to a bank.

Looking forward to perusing.

cccmedia in La Zona Cafetera

guestuser
  2/4/2017 14:17 EST

Although Andresen and I don't always see eye to eye I've often thought that his an excellent primer or insight into what being a retired ex pat is like in Medellin.

The amount of detail - he just about records every peso he spends and the background about daily activities like going to the doctors - could be very useful in people understanding what being here in Medellin is like.

I presume that his gf is either the most understanding woman or she doesn't have enough english to read his blog because there will generally be commentary in there about some woman that he's seen or met on the street on that day!

edgardiser
  2/4/2017 21:44 EST

I may have missed this answer
But
If you leave at 182 consecutive days to avoid paying the Colombia's Income tax
How long does one need to stay outside of Colombia before returning ?

cccmedia
  2/4/2017 22:33 EST

184 days, give or take a day.

Adjust by one (more) day in leap years.

Paradise may be along in the morning to make a slight adjustment in my math.

cccmedia in La Zona Cafeteria

cccmedia
  2/4/2017 22:35 EST

Darned spell-check keeps giving me a hard time spelling Cafetera correctly.

cccmedia in Quindío

ocostich
  2/5/2017 05:25 EST

The comparison of cost of living when there's a wealth tax has to include it. If your worldwide assets are in the millions (of US dollars) it could tip it one way or the other.

guestuser
  2/5/2017 09:43 EST

@ccm not sure that I'm going to correct your math but think of it this way. 183 days is (adjusted for leap years) 50% of a year. So the Colombian rule is actually pretty simple - if you are here for more than half the year (the 183.1 day) then you pay tax as a resident on your world wide income and assets.

If you spend less than 183 days you will only be taxed -if you have Colombian income or assets - as a non-resident. Note that if you have an investment property in Colombia that you let out and spend NO time in the country you still are subject to the non-resident taxation.

However (and keeping a watch on the conditions of your visa) there's no reason why one year you can't be resident and non-resident the next.

What is wrong in the statement is the idea that it's done on a continuous basis and therefore can be 'reset' by leaving the country and returning. It's a count of the number of days in Colombia in a tax year.

That's a reason to be careful. You've spent the 183 days in Colombia and you are at the airport and your 11:00 p.m. flight is delayed until 2 a.m. Congratulations, you're now a resident tax payer.

@oco it is true that there are scenarios that you can construct (and the assets might not need to be in the 'millions') where Colombian tax might offset any cost of living. But then Colombia doesn't tend to be a destination for wealthy retirees -who have a choice of many places outside their host country to live. The obvious reason is Colombia's reputation for security issues. So my guess is that the Colombians have considered that setting up tax benefits to attract wealthy retirees probably isn't going to produce a lot of returns.

For anyone retiring here it's important not just to think about your assets now but what they might be in the future. I'll give you a personal example. Trump is talking about some changes that might result (and lots of things have to fall into place) where I might have a very significant windfall in one of my investments. Now, in the US, if it was to unfold as I'd imagine - that gain would likely avoid taxation in the US, at least for the present. But equally my guess is that I'd have a huge immediate tax bill in Colombia. The only 'strategy' at that point might be to try to go non-resident for that tax year.

So, one of the issues for anyone coming to Colombia is not 'what's my tax going to be if I move to Colombia' it's 'what could my tax be in the future if I move to Colombia'.

If

- you've a lot of assets

- you make a lot of money at some point in the future

- you've got a really clever tax structure in the US

at some point Colombian tax is likely to make you unhappy.

8901
  2/5/2017 09:53 EST

I concur with PL and it is a personal decision for everyone.

For me I will keep it uncomplicated and be a 5 month a year visitor.

5 months just to be safe in case of an unforeseen event hospitalization etc. I want a cushion.

WhoaNellie
  2/5/2017 10:39 EST

It's not 183 days or more in a calendar year to trigger tax residency, although that would do it - it's 183 days or more in ANY 365 day period, to be considered a tax resident of Colombia.

See the table from DIAN, the first line:

http://www.dian.gov.co/DIAN/12SobreD.nsf/pages/Residentes

And then point 1 here:

http://www.gerencie.com/residencia-y-periodo-fiscal-para-el-caso-de-una-persona-natural-extranjera.html

SunsetSteve
  2/5/2017 10:43 EST

That's the only way it could work, logically. Otherwise you could arrive in July and stay non-res until the following June.

WhoaNellie
  2/5/2017 10:49 EST

So for instance if you spent 92 days in Colombia in 2016 starting 1 October ending 31 December, and then 91 days in Colombia in 2017 say from 1 January to 1 April and left.

If you then came back again in 2017 anytime before 1 October, you'd have 183 days in the 365 day period from 1 October 2016 to whenever you came back in 2017 after 1 April and would be considered a tax resident, and presumably would have to file a "declaración de renta".

WhoaNellie
  2/5/2017 10:51 EST

Uh, my math is off by a day - maybe more - but you get the point. The 183 days or more in 365 consecutive days can span calendar years.

guestuser
  2/5/2017 10:51 EST

Agreed - corrected. So let's say someone arrives in June 2015 and gets to 183 days into June 2016.

Is the tax obligation for 2015, 2016 or both?

WhoaNellie
  2/5/2017 12:30 EST

Only an assumption on my part and you know what they say about that -

I would think you'd have to file for the year in which you triggered the tax residency, and report the amount of worldwide income for the whole previous 365 day period from the date tax residency was triggered.

This is just a guess based on the fact that Colombia seems to want to maximize the tax hit and they are not giving anyone any breaks.

I'd certainly want a professional opinion and even then you might get several different answers!

guestuser
  2/5/2017 12:53 EST

Like you I don't know the answer but I doubt it's a 'broken' period - that is the 'year' covered by 183 in country. I think Colombian tax is pretty fixed around annual tax years. There's also the issue that in some cases getting usable numbers for a tax return are difficult over broken dates (in some cases investments following quarterly or annual reporting periods).

You're probably right that it's the year it is triggered (2016 in my example) and so therefore you could complete your 183 days say in January 2o16 and then owe taxes on world wide income - even if you didn't return to Colombia for the rest of the year - for the entire period of 2016.

But as you say anyone falling into the issue would be well advised to get professional help.

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