Today must have been my lucky day - I had two letters, one fron the DIAN and the other from my Colombian Legal Consultant regarding my status with regard to the UGPP (EPS payments). I hate to think of what an unlucky day can bring.
Below is the full copy of my invitation from the DIAN (a few personal items have been blocked out).
As you will see, the DIAN have been informed I may be hiding data from them with a view to tax evasion. The allegation states an informant (The British West Indies - Cayman Islands) has exchanged information with them regarding assets I hold with them that have not been declared in Colombia. Fortunately, this is all hogwash as I have no financial interests in the Cayman Islands - but now I have to prove this to the DIAN. How do you prove a negative?
But more interesting for forum members I think is "Where did this information come from?" I think it proves pretty conclusively that a huge number of governments are now sharing tax related data AND THEY ARE ACTING ON IT.
Think about it; it is only a matter of days since I submitted our 2018 Colombian Tax Declarations (Complete with Formulario 160 - Assets held outside Colombia) and the DIAN has already matched the data received from the Cayman Islands with what they have on record.
Who says the DIAN is incapable of following up on tax evasion?
If those of you who have enough stomach for it are willing, I will submit a copy of the UGPP legal opinion I have just received. In this I have been advised to adjust the monthly EPS payments I make to something more in conformity with the incomes disclosed in my tax declarations. My Legal Advisor tried to calm my fears by stating the NEW EPS computations (using the BIC) have an upper threshold of 25 minimum salaries, so it will never be more than that.
Here is the DIAN "invitation". Good reading.
From: DIAN Sent: 30 July 2019 21:52 To: [email protected]
Subject: Invitación a Normalizar activos omitidos y/o pasivos inexistentes
Código de verificación de autenticidad 1909e611-eacf-43fa-900a-ee12bf521062
Bogotá D.C., 30 de julio de 2019 100209224 – 09554 Consecutivo No. 1.417
Señor(a) Fech NIT XXXXXXX [email protected]
Asunto: Invitación a Normalizar activos omitidos y/o pasivos inexistentes
A partir de la información obtenida en virtud de los convenios suscritos nacionales e internacionales, así como el intercambio de información reportada por terceros, se pudo establecer que Fech posiblemente, omitió el deber legal de reportar los siguientes activos que posee fuera del país en el Formulario 160 – Declaración de Activos en el Exterior del año gravable 2018:
País: CAIMAN, ISLAS; Banco: Best Meridian International Insurance Company SPC (FI017553); Cuenta: LP0028000 con un saldo por 25.995,8 US Dollar
País: CAIMAN, ISLAS; Banco: Best Meridian International Insurance Company SPC (FI017553); Cuenta: VR00512748 con un saldo por 7.891,8 US Dollar
De conformidad con lo establecido en los artículos 42 al 49 de la Ley 1943 de 2018, la Dirección de Impuestos y Aduanas Nacionales - DIAN lo invita a aprovechar esta última oportunidad de normalizar voluntariamente los posibles activos omitidos y/o pasivos inexistentes presentes en su declaración del Impuesto sobre la Renta y Complementarios por las vigencias anteriores, con una tarifa especial. Se denominan “Activos Omitidos” aquellos que no fueron incluidos en las declaraciones de impuestos existiendo la obligación legal de hacerlo y son “Pasivos inexistentes”, los declarados con el fin de disminuir la carga tributaria sin que exista un soporte válido sobre los mismos.
La tarifa a liquidar es del 13% sobre el costo fiscal histórico de los activos omitidos, o el autoevalúo comercial que se establezca con fundamento en un soporte técnico, el cual no podrá ser inferior, en ningún caso, al costo histórico; y en el caso de los pasivos inexistentes, al valor reportado en la última declaración de renta o según lo dispuesto en el Título I del Libro I del Estatuto Tributario.
En el caso de los activos omitidos del exterior, la base gravable del Impuesto Complementario de Normalización Tributaria podrá reducirse en 50%, siempre que antes del 31 de diciembre de 2019 se repatríen a Colombia, y/o que dentro del mismo periodo sean invertidos con vocación de permanencia en el país.
Para acceder al beneficio de la Normalización Tributaria, lo invitamos a presentar declaración a través de los Servicios Informáticos de la entidad, utilizando el Formulario 445 “Declaración del Impuesto Complementario de Normalización Tributaria”, antes del 25 de septiembre de 2019. Posterior a esa fecha, no será posible normalizar de manera voluntaria los activos omitidos o pasivos inexistentes, por lo que perderá el beneficio de aplicar la tarifa especial mencionada. Es de aclarar que esta declaración no puede presentarse de manera extemporánea ni tampoco puede ser objeto de corrección. En ese orden, los contribuyentes que no liquiden y paguen el Impuesto Complementario de Normalización Tributaria y que presenten indicio de inexactitud u omisión serán seleccionados para adelantar programa de Fiscalización que podrán conducir a la determinación oficial del impuesto de Renta por los años gravables 2016 a 2018 y la aplicación del régimen sancionatorio a que haya lugar.
Recuerde que la declaración y pago del Impuesto Complementario de Normalización Tributaria aplica sobre los activos omitidos o pasivos inexistentes poseídos al 1º de enero de 2019 y no dará lugar a determinación de renta gravable por el sistema de comparación patrimonial, ni generará renta líquida gravable ni sanción alguna en el impuesto sobre la renta y complementarios. Tampoco afectará la determinación del impuesto a la riqueza de los períodos gravables anteriores.
Esta es una invitación para que revise su realidad económica y determine el cumplimiento de sus obligaciones, así como el pago, si hay lugar a ello.
En caso que tenga consultas acerca de la información anteriormente referida por favor no dude en contactarnos a través del correo electrónico [email protected]
En nuestro portal web www.dian.gov.co en la sección Servicios a la Ciudadanía/Verificación de correos DIAN , puede comprobar la autenticidad de este correo, tomando el código alfanumérico ubicado en la parte superior derecha del comunicado.
Jefe Coordinación de Control Extensivo de Obligaciones
If no financial interests in the Cayman Islands, call their bluff. Although I am not familiar with the Colombian system, if in Canada or USA, I would force them to make an actual binding decision and them formally appeal that decision. They then have the onus to prove your financial interest in Cayman Island.
You do not give much credit to my denial, do you? ("Hmmm...).
I also wonder who/how/why the data from the Cayman Islands came about. I have written to the company in the Cayman Islands to send me a letter confirming I am NOT their client - just hoping they will cooperate because the DIAN are known to shoot first, and worry about survivors later.
"If this account does not belong to you, I would not admit to it, otherwise you open yourself to other problems with your parent Country for tax evasion. Please contact an attorney immediately."
Would be the correct grammar, as the message was intended for the person who referenced this initial post. My mistakes were missing commas.
"If the account does NOT belong to him, why wouldn't he admit it does NOT belong to him???"
Is not what I intended to convey, so I don't see how this corrects the grammar in any form. Honestly, you have no understanding of the English language if you do think this is the correct grammatical interpretation of my sentence.
"If the account does NOT belong to him, certainly he would NOT claim it DOES belong to him." This too, is not what I intended to convey either.
The only corrections were the commas, as I omitted them in a prompt reply on my phone.
“If the account does NOT belong to him, certainly he would NOT claim it DOES belong to him.”
It's not always certain, I've seen people accept liability for taxes that weren't theirs, for the sake of not having to appeal. Assuming the tax liability was minimal. Only to find out that they were facing evasion charges in their parent country.
I don't think I have any serious issues because I have zero relationships with the Cayman Islands and proof otherwise cannot exist.
My main intention in sharing this information was to demonstrate the sharing of information between governments really does exist AND they do follow up on it.
I have almost identical problems relating to EPS monthly payments where the DIAN and UGPP are sharing data to identify people who are NOT paying enough (The latest rules require persons with incomes exceeding one monthly minimum salary to adjust their EPS payments to a basis of 12.5% of their personal IBC, Ingreso Base de Cotizacion - which is itself set at a level of 40% of their Ingresos Nets). Again, this is a tricky process which requires everybody with EPS to suddenly become proficient in the manipulation of financial data. Good luck everybody.
Or perhaps 5% of your net ingresos is just an easier way to think about it?
So that would suggest $50 a month (say COP162,500) for each $1,000 in monthly income.
Or does the first minimum salary have a different percentage that has to be used to adjust the formula?
When they do the comparison for expats not paying tax but paying EPS will they a) presume that your income is at or below the minimum wage or b) think that you need to filing taxes? I don’t know the answer but it’s another example of how this cross referencing of data is going to make ‘flying under the radar’ in some areas like taxes more complicated if in other areas you aren’t, like EPS.
fech…..You asked how did the information become shared ? It began worldwide with a little act that the U.S. Congress called FATCA(which demanded that countries doing business with the U.S.A. sign) & other countries began to actively "search" for offshore assets also. FATCA made tremendous changes to worldwide banking disclosure rules & regulations.
And currently the country of Colombia's economy may not be quite as rosy as it may appear...hence the active "search" for $$$. Currently Duque is in China, trying to drum-up some more exports for Colombia=$$$ Buena Suerte !
DIAN certainly has the tools to access data in Colombia and from the US but when they might have the ability and diligence to do this is another matter- and whether officials at Dian or Colombian accountants even understand Colombian tax law themselves or as it applies to Expats is another matter.
Just anecdotal experience since 2004 I havent met any Expat, or Colombian with income or assets abroad encounter any issues- but for businesses yes I have seen issues arise.
Once I was in a business meeting with Dian, bank official, and two of top law firms in Colombia - it was almost hilarious hearing the discussion went on for hours none of them showed any consensus understanding of the tax law. I got bored so I pulled one lawyer aside and said we would pay an additional $20,000 to his firm and I left room - 10 minutes later they all left room smiling and the matter miraculously was resolved. Even Mexico more efficient.
jalva321 wrote: " Honestly, you have no understanding of the English language if you do think this is the correct grammatical interpretation of my sentence. "
It's hard to tell what you intended to say as your sentence construction shows that YOU have no clear understanding of the English language, nor how to say what you mean in a clear and unequivocal way.
You say this is correct:
"If this account does not belong to you, I would not admit to it, otherwise you open yourself to other problems with your parent Country for tax evasion."
If this is your example of a clear and grammatical sentence...it really does not make sense - apparently you are advising people not to admit they did something bad, when they really didn't do it. Duh!
And just to underscore the information sharing - here is one source that says as of 2017, DIAN shares info with 36 other countries. I am sure that number has increased:
It’s usually a bad idea to tell someone they aren’t expressing themselves very well in English. We are (almost) all in glass houses on that one. Between hurrying too much, lack of proofreading, bad autocorrect, malicious spellcheckers and fat fingers we all wind up looking a little deficient.
But hey, were doing better than ElEx, that poor guy gets hammered on almost every post.
You stated "If this is your example of a clear and grammatical sentence...it really does not make sense - apparently you are advising people not to admit they did something bad, when they really didn't do it. Duh!"
Are you reading your own sentence in relation to mine?
Let me break it down for you in simple terms since you're lack of intellect is bewildering...
"If this account does not belong to you, I would not admit to it,"
You would be surprised how many people agree to an account that isn't theirs, or things they didn't do. You assume based on your limited experience that isn't the case. I explained the causes or reasons why often someone would agree to an account that isn't theirs but you obviously didn't read it, or you just wanted to point out how further retarded you are.
No problem. I stand corrected, you proved my point, you are a dumbass!
Well, Mr Jalva321, I have just read 2 threads where you have burst upon the forum, creating controversy, but your insulting attitudes, regarding other posters’ lack of intelligence or literacy are actually a joke.
Some of your own comments …..
“I'm implying that *their* are ways around this”
“I think *their* would be an exodus of Expats”
Please *stope* trying to come off all knowing when it’s clear *your* stating nonsensical BS. Clown!
They are more corrupt *then* my left *but*.
“you have no understanding of the English language.” And you think you do? With all your own mistakes, I would never have thought you were an attorney.
“I'm a tax attorney.” But I had always thought you had to be intelligent to be an attorney.
“but I was *thought* that words have meanings in law, and a misinterpretation of a word carries a legal precedence or technicality in how it’s used” If you really were TAUGHT law, your teacher should be sacked, and the examinations board should be fired for passing your English, when in fact its sub-standard.
“words carry consequences in terms of law.” Yes, you’re right. For example, if I said the following …… “I would rather screw your wife then stick mine up your a$$”, it’s not the same as using the correct word “than”, and so a whole criminal trial could collapse by such a small mistake caused by an illiterate attorney such as yourself.
“At the end of the day guys, consult an attorney and not some band of misfits that think they have all the answers.” You’re having a laugh? Yes, consult an attorney, but one who can read and write, and can spell, and has an understanding of the English language. But that rules you out.
If you really are a tax attorney, I sincerely hope that your adding up is better than your English.
Boo Hoo, I’m sorry did I hurt your feelings? Come on!!! Are you that sensitive? I personally could wipe my culo with your comments. Grow a pair! As my Drill Sergeant would say “Two tears in a bucket, Fuc$it!”
Boo Hoo, I’m sorry did I hurt your feelings? Come on!!! Are you that sensitive? I personally could wipe my culo with your comments. Grow a pair! As my Drill Sergeant would say “Two tears in a bucket, Fuc$it!”
@skyman there are other ways of looking at Duque’s visit. Yes, Colombia’s economy stumbles along and will continue to do so with the depressed levels oil. Short of Bolton getting that was in the Middle East I cant see how oil gets any better. And then presumably it’s only temporary.
But as I’ve said as the US becomes a less, let’s call it stable counterpart, countries are going to look for back ups and alternatives. China as it has done for years will be looking to expand influence in the region.
Remember if Duque is in China that must have been at China’s invitation, not just Duque getting on a ‘plane with sample packages of Obleas and Torta de Natas.
Such a high level visit, around the noise of Mexico, Guatemala and Venezuela might not just be coincidence.
Now I’m not the expert on different types of oil grades but as the US becomes more self sufficient, and Colombia needs buyers for its oil could China look to Colombia as a non Middle East source of crude?
I’m sure some of the oil industry people will point out why that won’t work (refining, light/heavy, shipping etc.)
So bottom line I don’t think Duque went to China on his knees.
......and meanwhile, the subject of my OP meanders along, not getting anywhere fast.
It looks more and more like a case of "stolen identity" with my wife's details being used to set up offshore accounts for some illegal purpose (Money laundering?)
Also what seems highly probable is this is not some high level international crime, but something much more local, i.e.Instigated from within Colombia. Although the offshore accounts were located in the Cayman Islands in US$, it is likely the scheme was created by a society headquartered in Miami and using identity theft from persons residing in Colombia.
fecherclyn, if you've never been to the Cayman's nor made enemies there maybe you should take a hard look at your Colombian legal consultant. It may just be possible he is in cahoots with DIAN, maybe he owes them favor. Both parties writing on the same day would make me suspicious. Identity theft just to put you on the wrong side with DIAN sounds remote. You must be curious how the DIAN source in the Cayman's got your personal information, SS security number, etc.
@vikingo why would the legal consultant be in cahoots with the DIAN? He owes them a favor?
The total amount of the two accounts, listed in Fech’s message is around $35k. Even if the fines are paid it wouldn’t be a huge amount. Why would anyone in the DIAN do that for such a relatively small amount? How would a DIAN staff benefit from such a scam?
The letter in format to me seems pretty much the same as the ones that went out with the Panama Accounts. Clearly the Colombians now have data from Cayman. It’s the standard pay the fine now or pay more later. In the case of the Panama Accounts people didn’t have to bring the money back, just pay the fine (which I guess you could look at as some sort of catch up tax) and then report the money going forward on their Colombian taxes.
Obviously Fetch has an issue as he’s going to have to clean this up which probably is going to be a lot of hassle and work. As with any identity theft case there’s also the issue of its not so much what you know about, but what you don’t know about. At least the items in question are assets and not liabilities like loans.
Opening an offshore account isn’t meant to be easy these days.
Banks and Financial companies are meant to screen their clients and get documents like passports. Rather than being a ‘DIAN scam’ this is far more likely to be someone working for the Financial company or one of their agents who facilitated opening the account. This isn’t like getting a Macy’s credit card with your SSN and a driving license. And as Fech had no awareness of the account what address was used? My guess is that it’ll be a PO Box and that’s not best practice.
Hi Vikingo, lets give each other a pat on the back by saying "great minds think alike".
And what is that film where everybody consciously avoids talking about "he who cannot be named"? But you went and did it - we must not speculate in public about "xIxN", something awful might happen and then the forum might get closed down.
Lets just say the DIAN has plenty of things to work on at its own end before we can refer to it as a Public Service without rolling our eyes.
Hi PL, my effort to bring a little light humour to the subject crossed with your more serious contribution - thank you.
In fact, we have now communicated with the HQ company in Miami and the local subsidiary in Bogota and they have both been very helpful and understanding. Both are launching investigations to determine who submitted the data to the DIAN because, at first sight it was another national tax agency if DIAN's letter is accurate.
PL, flech's tax bracket on the $34k would be at least 27% plus 13% in late fees like DIAN states which roughly comes to $10.400 DIAN is offering a 50% discount on the tax base though if the outstanding funds are paid before the end of the year or invested in Colombia by then. Now we are talking roughly $5000. This DIAN letter really would need to be explained by a tax professional. Regardless, if I'm reading this correctly, $5000 buys a lot of steaks. A niece of my Colombian wife is an accountant (yes, she finished her education with a genuine diploma). She is in Chile now, making three times the money she made in Colombia. She told me to keep my money out of the banks as the banks may have to share information with DIAN. So what's a man to do, maybe buy a heavy enough safe which two strong guys can't carry off? But now you have to worry about the men who deliver the safe to your home. If it comes right down to it, can you really trust anybody in Colombia, even some family members who might be envious of the gringo? Happened to the wife and I.
I agree for someone like me retiring next year who loves Colombia. I will make sure I stay only 180 days. I am also interested in Ecuador. I know many have soured on Costa Rica but I have over 20 years invested there so that can also be a fall back
@vikingo why is it 40%.? You’re presuming the full amount of investment would be treated as income as well as the 13%. In the case of the Panama Accounts it was 13%, and with a little work tax accountants managed to chip away a small amount of that. As in the past people have been quite happy for me to post personal information but then thrown their hands up in horror when I’ve asked them their personal experience I’m not going to say more.
Generally the DIAN does stick and carrot. If you don’t pay up within a reasonable timeframe they’ll effectively confiscate all or more of the notional but the first offer generally isn’t too bad. 13% sounds high but as the offshore accounts generally are in dollars and or dollar assets they’ve done well in Peso terms over the past few years. Although it varies with different timeframes 50% growth in peso terms wouldn’t be unusual, and therefore 13% of the notional is what the Colombians might have expected to receive as tax over the same period. Part of whole idea of the Panama Accounts that the Colombian banks run is having the ability to run dollar based accounts with full access to the US stock market.
As for your wife’s niece advice banks everywhere (other than some of the more slimy financial locations in the world) share information with their local or overseas tax authorities. Any concept you have that banks or financial companies don’t share your information and aren’t going to continue sharing your information is wrong.
As for making three times more in Chile from my experience working in Santiago costs there are significantly higher than Colombia. She may be better off but it will be nothing like a 3:1 ratio.
Tax havens like Cayman are living on borrowed time. They might not deduct tax at source but if they now report information to tax authorities their ‘value’ disappears.
There’s this concept that in some way Colombia is more intrusive than other tax authorities. If you’re a US tax payer and you’ve money in a offshore tax haven it’s meant to be reported via FACTA. Read the likely outcomes of omitting accounts from FACTA. The US is far less pleasant with dealing with omissions than the Colombians.
This concept that you’ll save a lot by avoiding tax residence for most people isn’t true. Colombia for the most part allows the offset of taxes paid in your home country. Most expats end up with small Colombian tax bills because they’re just paying the differential. Let’s say a couple of thousand dollars probably less.
By having more than one location you end up with additional expense. Higher rents with short term rentals, having to maintain more than one health system, transportation costs, storage costs, if the climate is different additional clothing sets etc. etc.
Most expats don’t do the equation. They don’t sit down with a tax professional for an estimate on what the tax will be, instead deciding that it will be unreasonable.
There are some people where Colombia is a bad choice. The principal one is where you’ve set up your home country taxes to be very low through all sorts of tax saving strategies. That increases the differential between the Colombian and US taxes.
But for most people who don’t have complicated taxes Colombian taxes are for the most part not that significant.
Now if you’ve an aversion to providing information on your assets I guess that’s another reason, but it’s not an economic one. Colombia may ask you your net worth, but you think the US (with better computer records) doesn’t already know it?
If a lifestyle in having two homes appeals to you, then go for it. But this idea that the only cost to maintain that is a R/T ticket between the locations on a low cost airline isn’t correct.
If you’ve done the math and it works for you that’s great but for many it’s just an emotive decision.
Getting a tax professional to help figure out exactly what your taxes will be in Colombia can be difficult. I spoke with an accountant and DIAN and was told by both that I didn’t have to do anything since I had no Colombian income. They will not help you calculate your tax when they know you don’t owe anything. My Spanish isn’t great but I could read the law well enough to know that was wrong.
It makes me wonder, if they can get something that basic and that obvious wrong, what else are they getting wrong?
I would be interested in getting contact information for an accountant who has read the tax law. Ideally in Manizales.
PL, the way I've read the DIAN letter, the 13% pertain to late-charges and interest. After inserting that section into the Google translator I see now that I most likely was wrong. The translation says: 'The rate to be settled is 13% on the historical fiscal cost of the omitted assets...' What is meant by 'historical fiscal cost' is still not clear though. DIAN is offering a 50% discount on the amount of $34k presumably unreported if paid by the end of 2019. So are we talking about 13% of half of $34k? That would come to 'only' $2200, it's not the end of the world, if the wording 'historical fiscal cost' is of no importance. They sure don't make it easy, do they? And if fech pays it to have peace of mind with DIAN, he would have to pay it in subsequent years as well, because the amount is on the books and can't be cashed out from the Cayman source because it doesn't really exist. How crazy is that?
PL, thanks for shedding light on this tax situation. Some of us may be in a similar situation as fech in days ahead with accounts in the US when forced to 'declarar renta' (file income taxes). Am wondering though what the Statute of Limitations is with DIAN, in case someone had once a say $50k savings account in the US but spent most of it in the last three years.
@vikingo remember that Fetch’s Issue is the discovery of an account that hasn’t previously been declared (as he didn’t know about it).
Generally your tax liability on the foreign accounts is the income from it. With interest rates at the miserable levels they are these days (low rates may help businesses but they don’t help savers and retirees) that generally isn’t a lot of money.
So take a $50k account paying 2% a year in interest that’s $1,000 in interest. So the tax liability would be around $270. However if you’ve paid tax on the interest in the US that US tax might be deductible.
There’s also the global asset calculation. $50k accounts aren’t going to impact that with any significance.
I’m not sure how far DIAN can look back, but it’s probably more driven by the scale of the evasion. A $50k that’s been reducing isn’t going to be high on their hit list.
Remember as well Fech’s case is around offshore ‘tax free’ centers, not an account in the US. Those tax havens have always been a place to hide illicit or gray money, including the proceeds of crime. That’s why the Colombian’s (among others) have been so interested in finding out what monies their citizens and residents have there. It’s not just a tax collection issue, it increases pressure on the narcos as to where they can put money without it being seen.
So Fech’s issue with ‘his’ account is more about the location and the tax free status. If you’ve an account in the US you’ve not been hiding it and you’ve been paying taxes on it. Yes you should declare the existence of the account to the DIAN and the income from it but it’s not the same sort of issue.
I have not added anything recently as we are still waiting for BMI Miami, the parent company of BMI Cayman Islands, to send us a formal clearance that we have ZERO funds, or accounts with them. Unfortunately, BMI are "taking their time" about this so we remain "on the hook" as far as the DIAN are concerned.
From all of these accounts, I see a couple of issues: the unreliability of information given out by Colombian tax "professionals"; and therefore, the uncertainty of tax residents as to their liabilities.
Perhaps it has to do with Anglo attitudes of needing everything spelled out for them in black and white, as opposed to the more laid-back Colombian attitudes about these matters.
I think for a lot of pensioners from the US and elsewhere, they are not really taxed much in their home countries, so the offset may not really help them that much. That is another source of anxiety and uncertainty; plus the fact that one wants to start off on the right foot, so to speak, with one's new country.
Deliberately concealing certain assets or avoiding filing altogether would not be an auspicious beginning for me, as I have this stupid responsibility thing ingrained in me since childhood.
And yes, I realize that the oldies on here scoff at the newbies and their silly worries.
@fredo is percentage of the Colombian population who pay tax is pretty small. As a result the level at which you start paying tax probably isn’t that much different to what you’re used to in your home country. The bands and percentages are different, but it’s not as if you start paying tax from the first peso.
One area that might be different is if you’re a pensioner with a low income but lots of worldwide assets (say $500k)
One reason pensioners come to Colombia is the low medical costs, particularly for those on more modest incomes. That together with the lower cost of living generally makes any incremental tax burden not a big issue.
it may not be a big issue to you, but someone who actually follows the printed rules and files may well be liable for over $200 a month on a $25000 annual income which is no small potatoes for someone on a fixed income. Of course, if the tax experts are right (which is something you do not know) and foreign income is not taxed, then they have nothing to worry about...
Anyone who says foreign income cannot be taxed by Colombia, is ignorant of Colombian tax law.
The Colombian laws are, foreign-sourced income IS taxed, if you are a fiscal resident of Colombia, or if you are a Colombian national working overseas under certain circumstances. Just as the US does for its nationals, Colombia asserts the right to tax the WORLD-WIDE income of its nationals.
Here, DIAN, the Colombian taxing authority, spells out for Colombian nationals who reside outside the country, conditions under which they will have tax liability for income earned outside Colombia:
Here, the law is explained on what is considered fiscal residence for foreigners, which makes them subject to Colombia's taxation on income from a foreign source ("fuente extranjera") . In addition, as you might suspect, anyone with income in Colombia ("fuente nacional") is also subject to possible taxation, whether you are a foreigner or not.
By the way, FWIW here's a site that guarantees you correct tax preparation for Colombia. I don't know if this also includes gringos...
I have no interest, financial or otherwise, in the above site, except I'd be interested to know what, exactly, they guarantee, especially if their low low price of only 99000 COP really applies to gringo tax returns too...if they also guarantee to go to bat for you against DIAN for less than $30 USD it'd be worthwhile!
Nicely put Fredonia, the big word expats in Colombia have to juggle with is "IF"" - and your take on this matter very much depends upon your attitude to the law and how far to go in respecting it.
Undoubtedly expats can be comfortable about the danger from double taxation IF the taxes paid in your "home"country are allowed as tax credits in Colombia.
Equally, expats can feel comfortable IF they accept the assurances of those forum members who argue the DIAN is incapable of getting its act together in identifying tax evasion.
Unfortunately, if you are one of those expats who has a natural respect for the law where ever they may be, AND who are uncomfortable about the probability of "IF" always prevailing (like me), then we find the answer to the equation about "the advantages of living in Colombia" that much more difficult to answer.
@fredonia I’m also going to agree that foreign income is taxable. My one caveat is going to be that ‘foreign income’ may be impacted as to whether your country of origin has a tax treaty with Colombia. I presume you’re talking about the US and they don’t, so that’s taxable.
I’ve come across no ‘experts’ who can show you any documentation that foreign income isn’t taxed. All i’ve seen are verbal indications that there’s no need to declare the income. As you can see in the posts above it is documented that it’s taxable.
For those of us who do pay tax here it’s frustrating to see the continual assertions that tax doesn’t apply. Perhaps it’s worth suggesting to look for outside professional help and there’s one suggestion above.
I’m going to offer up another name.
I’ve been having my taxes done here in Colombia by a big law/accounting company and my US tax preparer that I’ve used for years in the states. Both are fine but the issue is there’s no communication between them. My guess is that I’m not optimizing my overall taxes as the filings may not be in harmony, plus I get to submit two lots of information to two different people.
I’ve been talking to a company in Medellin called USATax. They have one partner in Colombia who does the local taxes and one in the US that prepares them for the US.
Now I’ve not enough experience with them to give them my complete recommendation and there’s still a chance that I won’t use them. The US partner seemed pretty down to earth, I think most people would find him easy to talk to. He also comes to Medellin from time to time. We talked about my situation and he did not say that I am mistaken in filing and paying taxes here in Colombia on my income.. Quite the opposite in fact.
We talked about their rates for filing Colombian returns and again it did not seem unreasonable. I’ve little doubt that for most people it would be a fine service. I think with the coordinated filings there’s a good chance that any additional tax might not be significant.
I don’t advertise for others but you’ll easily find their website with google. There are also several blog postings on there that might help people in particular about US citizens filing US taxes from abroad. That’s often an overlooked issue.
There’s a web page contact form. The only thing is that we’re now in tax filing season so they’re going to be busy.
Thanks for sharing your experience. This is the 1st I have heard of something like this happening. Were you contacted by DIAN via email or delivered letter? Sometimes I receive phishing scam emails allegedly from DIAN/National Police/Migration. Check the source. With the small dollar amounts listed seems unlikely a professional money laundering ring would be involved. Hate to say it, but you might look a little bit closer to home like a family member. Best wishes.
I haven't been on the Forum for a while, and have just read through this topic with interest, having just finished submitting my Renta for 2018.
It has been an interesting year, I had an Uncle die in the UK a few months ago, and he left me a small legacy 'free of tax', (That is all taxes are paid on the Estate before it is divided up) so the rest of the family get to enjoy their inheritance, but my Accountant asked DIAN how I stood, and they said I will have to pay 30% in tax to them... sorry but I have no intention of doing that, so am donating my legacy to my Nephew, who will gift me some of it from time to time.
I was lucky this year, because the Taxes I paid on my UK Government (Occupational) Pension were more than my liabilities here, so I have COP300k credit for the next bill.
What has really pissed me off is that the Government are changing the Tax rules yet again, and from next year we cant claim for our EPS and PAC Payments, which in my case is nearly $5m colombian. Anything to moneygrab, without hurting the pockets of the Politicos.
If they keep hitting everyones pockets (because it's not only Foreigners targeted) Foreigners are going to say enough is enough and move out, which considering the amount of money we put into the economy is very short sighted.
The only thing that has cheered me up is the payments to EPS, on the figures you are all quoting I am paying well over what I needed to even with the minimum allowed, but then, I am one of the relatively poor immigrants here!
40 or 50 years ago there was a guy who went hunting for sunken treasure. He found it, he was very excited. Then he found out he had to pay a fairly enormous tax, don't recall what it was but it was huge. He threw the jewels, silver and gold back into the ocean. He was being interview for the evening news while he did it. The news organization asked the IRS what they thought of this. They said they intended to use the TV footage to estimate the value of the treasure and bill the guy for the taxes on it. The fact that he threw it back was immaterial. He found it, he had it in his position, it was his and it was income, so the taxes were due.
There was a British man who's parents were living in the USA when he was born, so he was also a US citizen. Left when he was 2 and never worried about it. Then the family sold the country house that had been in the family for 5 generations. The IRS wanted capital gains on the man's part of the proceeds. US citizen, world wide income, pay up. The man renounced his US citizenship, it isn't like he felt like a citizen, he's British. I don't know if he is considered a tax evader or not. I think his kids are US citizens also, children of a citizen.
I'm told that a lot of folks who work for the IRS lie when asked who they work for.
@felipe58 if you’ve already received that legacy donating it won’t change anything. You still show the cash flow in, taxable, but I don’t think you’ll get credit for the gift.
If the estate isn’t settled or the payments not made then of course you’re fine.
It is a problem with the Colombian tax system than unexpected events can carry big tax burdens. I’ve suggested in the past that for anyone expecting significant inheritances, whether cash or assets Colombian is unlikely to be a good location for retirement.
On timing if you do fall into an overseas event that has big tax consequences in Colombia, if it happens in the first part of the year you can play the 180 day game for that year. So, if the cost of going outside Colombia ‘on holiday’ is less than the tax you’re going to pay it might be worth spending time outside Colombia for that tax year.
Like PL says and like the treasure hunter found out, if the money was ever yours, then the tax man will view it as income, regardless of how little time it was yours, that is what the law in the USA says anyway and likely Colombia as well. I don’t know the rules regarding rejecting an inheritance, I’m hoping they are reasonable. I wouldn’t want to be forced to be the owner of something just because some dead relative wanted me to be.
I haven’t looked at it in a while and might be mistaken in any case but I think if the money was yours while you were a tax resident of Colombia then leaving Colombia will not help.
As I recall, the law says that if you are in the Colombia for more than 183 days in any 365 day period you are a tax resident and at least have to file. If that 183 days is spread over 2 tax years then you become a resident in the second year. So, say you inherit the money on the first day of the tax year in 2019. You should go back 365 days and count up the number of days in Colombia, if the total is more than 183 days then you are a tax resident for 2019.
If you live in Colombia then I think you have to leave Colombia 183 days before you come into the money and stay out for 183 days after you get it. I have an acquaintance who made an enormous capital gain in a blockchain currency and decided not to leave the country, he decided it was worth paying to not have to leave Colombia for a year.
@justsomeguy you may be right on how the day count works. It’s not easy to manage anyway. People don’t die at convenient tax times. It’s also not polite to leave Colombia for tax purposes if Aunty Joan looks a bit sickly and you’re expecting something from her will.
The problem is once things happen in Colombia, that is when the cash flows, it’s very difficult to undo the situation.
I wonder if one strategy, if you can employ it, I would be to defer any cash flow until you can manage the tax residency issue. I think for Colombian taxes the day you get the cash rather than the day you become entitled to it would be the tax driver. Could you ask the manager of the estate to delay the cashflow or asset transfer if it allowed you to organize your Colombian taxes?
Of course any bequest not only has tax implications it also drives your health care contributions. Receiving a bequest will be income in that month and therefore drives your health contribution for that month. It’s a one off an limited to 25x the minimum salary payment, but it’s another detail.
I've started withdrawing money from my IRA now, while I'm not a tax resident to completely remove the possibility that one day Colombia would want to tax my IRA withdrawals. Paying the tax on it also reduces my wealth, in case they decide to tax that one way or another.
That is the one income stream I can alter the timing on.
I think these guys thst tell DIAN about sll their wordly income and all their worldly possesions are like the farmer who puts the fox in chsrge of the henhouse with a detailed itinerary.. And the fox has no intetest or inclination as to what happens in the henhouse..but these farmers keep.poking him with a stick, pointing him at the Hen house and keep nagging to him that he needs to act like a real fox and eat all the chickens..because thst is what the " law of the foxes" say.."so start acting like a fox and ear my freaking chickens you lazy fox !!"
It’s not just the farmer who doesn’t have any sense of reality. Like chickens flapping their wings together in sort of hoppy attempt at flying expats can’t ‘fly’ under the radar anymore.
How can an expat ‘fly under the radar’ if he subscribes to the National health plan?
This whole concept of ‘flying under the radar’ is just for expats who dodge paying tax trying to find some comfort that they’ve actually got a thought out plan. Then there’s the thought that ‘everyone’ (except of course the ‘stupid’ ones) does exactly the same.
As for the idea that expats ‘offer up their information to press the DIAN to take action’ you’ve clearly never met with the DIAN or a competent tax preparer here.
I’ll guess that most of those who don’t file taxes don’t even know what their submission date should be or even how that date is determined.
One counter point to that would be that while the owners aren’t so bad the manager is a thief and will steal most of what he take in and use much of the money for something bad anyway. So paying in is actually wrong in a moral sense.
Given my low opinion of politicians in general I would find that to be kind of a reasonable defense, if it wasn’t so self serving.
Personally I’m in favor of rationalizing. There are a lot of possible lazy mental habits, some of them are really quite bad. People are lazy and are going to employ one or more of those habits so it might as well be rationalizing, it’s the least objectionable after all.
I started this thread so I imagine you have me in mind when you refer to " these guys that tell DIAN about their wordly income and all their worldly possesions are like the farmer who puts the fox in chsrge of the henhouse with a detailed itinerary".
Did you read what this was all about? This is NOT a case of the DIAN voraciously slobbering over all the juicy information I have given them; it is about data the DIAN has received about me from third parties!!!!
Fredonia. Nothing wrong with Boris. He's the only one who stands up to Drunkner.
All the other politicians are wimps who are afraid of losing their income from the corrupt EU gravy train. (Ever since the EU was first created, maybe 70 years ago, the auditors have refused to sign off their accounts, due to corruption). Note how most of the remainers make most of their personal wealth from the EU. So they put about all those scare stories, to frighten the public into supporting "remain", and to protect their own wealth.
The coalition to prevent "no deal", even with support from other Tories only served to tie May's hands, so the EU could impose whatever terms they liked on her, and she had no ace up her sleeve to force negotiation. So they damaged their own power to get a fair deal. With Boris' freedom to leave come what may, then The EU will HAVE to negotiate on far better terms, or suffer the consequences.
Imagine if they tried to play it dirty. We could simply refuse to accept ALL European goods. Peugeots, Citroens, Volvos, Mercedes, Volkswagens, BMWs, Renaults, Audis, Fiats, and hundreds more. The EU would lose out, as they send more to the UK than we export to them. Do they really want to lose a trade war with us?
@elexpatriodo yep, that's obviously where the DIAN gets it's 'information' about people. They use the 'stuff' that people send in.
I mean any forum member who might have a grudge against someone just has to send in some bogus information. How was it reported - what name did they use 'Fech' or 'Fecherklyn? Of course it wasn't his - it was in his wife's name - so I guess they reported it as 'Mrs. Fech'
And there was me thinking that they used your NIT or your cedula and used information sent to them by agencies abroad.
Finally I got a reply from BMI and, thankfully, it confirmed the reality of this absurd situation - the allegations with the DIAN "invitation" have nothing to do with them (See copy below).
Now I have this letter, I will send it to the DIAN asking "what was the basis of your allegations?"; although I doubt they will disclose their source.
What could it be? I tend to think it was a mistake within DIAN although it is difficult to imagine how such an error could occur. It has been suggested that perhaps I offended some other forum member - I think not.
Estimada Señora Fech,
Por medio de la presente nos permitimos informarle que la compañía mencionada no cuenta con ninguna información a su persona. Tampoco hemos enviado información alguna indicando que usted tiene una relacion comercial con nosotros.
Dado que no contamos con ningún tipo de información suya en nuestros registros, no existe posibilidad alguna de que esta haya sido compartida con ninguna entidad.
Usted deberá dirigirse a la entidad gubernamental que le contacto informándole algo distinto al mencionado anteriormente para que puedan corregir su información.
elexpatriado, that's a pretty outrageous statement you made about me. you directly advise people to ignore/break the law, advise to abuse females and run from any obligation since they're too poor to come after you. i have no inkling to figure out who's who on internet forums ... could care less. but with you, i HOPE you cross the wrong person even at your old age. . .
elexpatriado, one day the government monitors of this forum may track you down and tax/fine your hidden income. but of course you're not worried since in you said that they never will ... since they're too stupid and lazy
Jonrod I dont worry myself as I am 100% in compliance with the Colombian Canadian tax treaty..and have no assets ob Colombia anyway.
And you are pretty freakin naive and green to Colombia if you think those barrio girls are so "innocent"....and are not the devious manipulating ones in.most cases with relations with expats (at least with the honest sincere and naive expats)
I was just making my statement based on a post you made stating exactly that..you threatened to rat to DIAN about posters you alleged or asumed ( must be smarter than the high paid accountants at Price-Waterhouse) where negligent in their.tax oblgations in Colombia.
You also made the outrageous and ludricrously impractical.statement that you were going to contact lawyers in the States and try to get them.to take cases for women in Colombia who broke up with expats without "adequate" compensation ( as if there would be any lawyer in the US stupid enough to take such a case).
I know you were just spouting off false bravado, as no one would consider anything so silly and impractical, and even if they did, and had a bit of sucsess in their endeavours..they would be looking over their shoulders daily for 2 guys aproaching on a motor bike, because as everybody knows, people that rat on other people dont live very long in Colombia.
So you make ridiculous , outrageous, stupid posts, I have the right to reply in kind. OK? Peace.
"But hey, were doing better than ElEx, that poor guy gets hammered on almost every post."
Who gives a rats mutilated left testicle what they all say..
Bunch of crotchedy old anally retentive obsessive OCD sufferiing ex Lit Majors ( or Lit Major wannabees) with too.much time on their hands no hobbies , passions or outside interests, hanging around Juan Valdez in Lleras with thier budfies , thier balls hsnging to the floor.because they forgot their "nut bras"..
If only things were so simple about Brexit- I am not a big fan of the EU or May but hardly is Johnson's approach appearing to bring the EU to the table, and Brexiters afraid of another referendum, Both Johnson and Javid running around the country promising to give billions here and there to deal with negative effects of Brexit so it looks like choppy waters for the British pound this fall.
I agree quite possible the pound will drop to near the dollar and maybe less. Almost daily on British some minister or the other promising a billions pounds here and a billions pounds here to deal with projected problems to be caused by Brexit.
I doubt there will be any deal by October 31st, this lot in power seem hell-bent on leaving regardless of consequences.
Pony .... I think these massive "giveaways" to the NHS, prisons, policing, and funds for the Brexit aftermath, etc, could be a sweetener, leading up to a general election. If the media is right, and a vote of confidence is called, he could well lose, (Backstabbing by even the Tories). So the likelihood of a 1st November election has to be a possibility, ..... after we have left. Remember, its the PM who has the power to name the date. And I think there's a good chance he will win.
But its a game of bluff too. No-one is going to give ground until very close to the deadline. Both sides claim they won't budge an inch, but we will see who blinks first. My guess is the EU will, but worded in such a way that they don't lose face.
Paradise ..... As regards the pound, its strange, but have you noticed when the pounds drops against the dollar, we get more pesos. Maybe its because the peso is tied to the dollar more strongly than to the pound.
But whatever happens, I think we'll be just fine, especially here in Colombia.
PL .... But Nigel was right, wasn't he? And I think many of the Brits actually agree with him.
The "family", or "the Firm", as its so aptly called, is actually getting some well needed criticism lately, and to be honest, I think there should be an overhaul of the entire Monarchy. Too many hangers-on, (plus paedos?). Too many "Air Miles Andies", whist lecturing us all on climate change. How hypocritical that they all took private jets to the Google convention on climate change, and then had the brass neck to lecture all of us.
I don’t have much time for the younger members of the Royal Family although it’s difficult to criticize Liz and Phil.
But Farage did cross a boundary. It’s unusual for politicians (at least mainstream ones) to poke at the Royal Family.
Farage clearly wants to be a ‘disruptor’ and ‘say what he thinks’ mimicking Trump’s style. That brashness might have far less appeal in the UK than it does in the US. His comments on Charles, who could be King at any moment, could come back And be a problem for him.
If any U.K. politician wants to challenge the Royal Family they should wait until Liz is gone. There will be little political support for any changes until she’s passed.
Quite agree many will not have liked his making such comments but Charles is an easy target, read a poll recently that some 40% of those polled wished he not become King and instead his son William. And as far as Harry and his Hollywood bride while inappropriate his comments I think many would agree.
In any case he is amusing and one way or another making a living at all this. He always looks like he is having fun at all this.
I had thought my brush with the DIAN was over and done with once their initial allegations (see opening post) had been proven wrong (The accounts they claimed my wife had not declared in the Caiman Islands were proven to have nothing to do with my wife), but how wrong we were.
Yesterday we received another “invitation” from the DIAN; this time claiming I had not declared some bank accounts in Europe within my Colombian tax declaration Formulario 160 (Declaración de Activos en el Exterior del año 2018). This time there was no mystery, the DIAN are clearly misinformed. What had happened was the bank accounts information they had received from the UK tax authorities related to joint accounts held in the names of me AND my wife. The DIAN have not taken into account the fact these accounts are “shared” between my wife and I, and thus we seperately declare our individual 50% quote parts. Result: The DIAN were looking for the full 100% account balances whilst they only appear in our seperate Formulario 160 declarations at the lesser 50% values.
Why do I relate this? Because it does add to the notion the DIAN is getting it’s act together on tax evasion. Yes, like many members on this forum, they are “newbies” and they make many errors as they try to find their way, but we can no longer ignore their presence.
Expats living in Medellin, Colombia report that there are safe places to live - and that the nightlife is fun, too. Read about how to live in Medellin - a city that has become quite a popular destination for expats.
Expats living in Medellin, Colombia report that there are safe places to live - and that the nightlife is fun, too. Read about how to live in Medellin - a city that has become quite a popular destina...