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Am I "Already" a tax resident for 2021 ?

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Bogota
  12/10/2020 09:30 EST

I am thinking of leaving Colombia before year's end to break the tax residency cycle.....
Here's a question for you...
...am I already a tax resident for fiscal 2021 ?
Why do I ask you may say. Well from my understanding a person is a tax resident after spending more than 183 days in Colombia during "any" continuous 365 day period. So, I have been in Colombia 330 days. If I leave before the end of the year, on January 1st, counting back 365 days from January 1st, I will have spent like 320-ish days of those 365 days in Colombia. I also understand the law is that when the 365 days measured fall over 2 years, the 2nd year is the year one becomes a tax resident. So for example...a measure from dec 31 2020 looking back makes me a tax resident for 2020, and a different measure from January 1 looking back makes me a tax resident for 2021. This may be, (and I think it is), regardless of whether I even re-enter Colombia in all of 2021.

What say you all ?

Bogotá

PS. Elex... I know, I know already.

WhoaNellie
  12/10/2020 11:13 EST

You are not already a tax resident for 2021, if you leave before 2021. But as you said you have been in Colombia for 330 days now, still in 2020, you are already a tax resident for 2020 (tax, if any, to be paid in 2021).

If you stay until 2021, then you would be a tax resident for 2021 (paying taxes if any in 2022).

My understanding is that you would in no case be a tax resident for both 2020 and 2021 - unless you stick around in 2021 long enough to pass the "more than 183 days in any 365 day period" rule, and had more than 183 days in 2020 as well as in 2021.

I'd get out a calendar and a day-counting app and try to figure it out, and with the help of a Colombian tax accountant...

Or you can ask LX and he'll tell you you're crazy for even caring...

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dbarnwell
  12/10/2020 16:03 EST

I wonder is the Dian making any allowance for folks who were stuck here in quarantine? Someone could easily have run up 183 days just by being unable to get out of Colombia from March to September. I myself got out after about 150 days, and I am most certainly not a tax resident of Colombia.

SeñorCajero
  12/11/2020 10:38 EST

Dbarnwell

You really seriously worry about that type of stuff????

man o man..

SkyMan
  12/11/2020 10:59 EST

I seriously doubt that DIAN cares about anything virus-related...*other than all the taxes they have not collected from businesses that were closed during the quarantine. Colombia's IRS just wants the COP. Stay Well. Buena Suerte !

Landofvanilla
  12/31/2020 15:05 EST

Hi @WhoaNellie,

I am in a similar boat to OP. I've been a tax resident for 3+ straight years now and basically was in Colombia for all of 2020.

Your comment of tax residency NOT applying to 2021 if I don't spend 183 days of 2021 in Colombia is extremely relevant to me, as I expect to sell off some investments next year. I really hope to not already be screwed, as in 12 hours I will technically have been in Colombia for 183 days of the last 365, straddling two calendar years.

Where did you get your understanding from? Who is LX who I can consult with?

I hope the rule only applies to make determinations for people who are just becoming tax residents for the first time.

Thanks in advance.

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WhoaNellie
  12/31/2020 17:55 EST

The rule for who is a tax resident in Colombia is simple and clear. You are considered a tax resident if you spend more than 183 days total in Colombia in any 365 day period.

You can read it from Colombia's tax agency DIAN here:

https://www.dian.gov.co/impuestos/personas/RentaNaturales/2016/Paginas/residente.aspx

Here is the relevant quote:

"Se consideran residentes en Colombia para efectos tributarios las personas naturales que cumplan con cualquiera de las siguientes condiciones:

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) días 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."

It goes on to list other conditions that will make you a tax resident but paragraph 1 above is the time requirement.

If you do a search for
colombia residencia fiscal
you will get many hits and read the same thing from many different websites, all quoting what DIAN says.

Also this may be of interest for tax considerations - DIAN is hiring up to 1500 more tax agents and technical people beginning in January 2021:

https://www.semana.com/economia/articulo/abren-convocatoria-para-1500-empleos-en-la-dian-asi-podra-aplicar/202008/

Many of these positions are part of the re-structuring of DIAN, and many are converting existing provisional positions to regular employees - but still, they are stepping up their game. And the name of their game is "sanguijuelas sacando sangre", the same as our IRS...

Landofvanilla
  1/1/2021 02:00 EST

So your understanding below was not correct?

"My understanding is that you would in no case be a tax resident for both 2020 and 2021 - unless you stick around in 2021 long enough to pass the "more than 183 days in any 365 day period" rule, and had more than 183 days in 2020 as well as in 2021."

Ive read that the DIAN may allow force majeure so I will claim that I was not able to leave the country in July, August, and most of September which would have reset my 6 month clock... And I will leave asap in January.

guestuser
  1/1/2021 08:39 EST

Force majeure after already being a tax resident for three years? Can’t see that happening. How does not being able to travel in those months (and there were repatriation flights) in those three months ‘reset’ the calculation? Its not a continuous period of 183 days, its 183 days in 365 and you’ve just added another 100 days or so by staying the rest of September, October, November and December.
DIAN may give some relief to say people visiting who couldn’t then get back but selectively trying to reduce the count for someone who is already a tax resident seems unlikely. If nothing else why didn’t you leave when you could if that was your intention in the Summer?

Landofvanilla
  1/1/2021 12:02 EST

Looks like I need a tax lawyer. Does anybody have any references?

guestuser
  1/1/2021 12:10 EST

A good tax lawyer who understands local taxes and offshore circumstances? You could try one of the big legal companies here but the advice may run into thousands of dollars.

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WhoaNellie
  1/1/2021 15:48 EST

"So your understanding below was not correct?"

Nothing at all was incorrect in my understanding. It's a simple matter of counting. When the more-than-183-day limit is reached, you become a tax resident for the year in which it is reached. You just have to keep track of the rolling number of days. YOU have to keep track of it, not someone commenting on it. Oh, I guess DIAN will also keep track of it for you, you don't have to, if you like surprises.

fecherklyn
  1/2/2021 08:45 EST

By chance, I have just received an email from Colombia Legal & Accounting SAS who provide bilingual legal services to expatriates residing in Colombia. Here is what they have to say about the tax residency rules:

“If you have exceeded 183 days in any 12 month period overlapping 2019 to 2020 or in 2020 then you will need to declare taxes in Colombia for 2019. The time period is not fixed between January 1 and December 31. Let us know if you need us to explain this.”

Our mailing address is:
Colombia Legal & Accounting SAS, Cra 39 # 5A-95,Oficina 709, Medellín, Antioquia, Colombia
www.medellinlawyer.com (James Lindzey)


Please note I do not use these services myself and this information does not constitute my recommendation.

ponymalta2
  1/2/2021 09:20 EST

Fecherklyn

Do you know offhand if James actually registered as a lawyer in Colombia ? (I know Christophe Mueller is ). James' firm certainly seems to offer a wide range of services.

SeñorCajero
  1/2/2021 09:22 EST

Why even worry about it until DIAN contacts you (if they even do-which I have my doubts, since I have never heard of this happening to anyone who didnt-"poke a stick int the sleeping dog") first..

SeñorCajero
  1/2/2021 09:23 EST

Why even worry about it until DIAN contacts you (if they even do-which I have my doubts, since I have never heard of this happening to anyone who didnt-"poke a stick int the sleeping dog") first..

guestuser
  1/2/2021 09:33 EST

The sleeping dog theory doesn’t work if you’ve filed taxes in Colombia in the past as the OP says they have. Anyone who files taxes will attest to the reminders DIAN send reminding you of the need to file. You also get a nice thank you when you do.

saiid20
  1/2/2021 10:46 EST

Si Señor C...Dian does send me a very polite what they call an invitation to file every year a couple of weeks prior to the due date...

ponymalta2
  1/2/2021 16:48 EST

Cajero, I tend to agree with you- but fairly consistently past 2 years I have heard Dian is starting to realize they already have the tools to get ta filings by foreigners outside the country, and then a bit more effort to get bank records

Best advice remains stay off the damn radar screen. applies anywhere but in particular in Colombia)

..

SeñorCajero
  1/3/2021 09:31 EST

Doing a declaration de renta-Thats what I call poking the dog

I know guys that have pohked the dog- but theier accountants send in bogus tax returns and thet¡y still pay zero

Keeps themhappy for some reason

SeñorCajero
  1/3/2021 09:40 EST

Saiid

I got one of those letters for a house I bought and sold in Colombia almost 10 years ago.

I was naive and an accountant at the time told me to fillout a RUT and NIt.

I wasted a buncjh of time in a line and paid him ovre 200,000 COP for his services.

Turns out if I did nothing I would have been better off.

Anyway I never heard nothing for years, but I got a form letter from them to my email last year.

I talked to an accountant, a friend of another Bucaramanga resident on this forum.

Eventually the accountant just told me just ignore the letter., "just a form letter

guestuser
  1/3/2021 10:17 EST

Ten years ago. Try buying and selling property in Colombia now without a tax id.

Landofvanilla
  1/5/2021 14:50 EST

I just had a paid session with a tax lawyer here in Bogota. He stated that the interpretation of DIAN and of his law firm of the rolling 365 days that cover 2 tax years, in which 183 days total in that period would make you a tax resident as of the 2nd year, is for visitors for whom the added days in the 2nd year are needed to qualify them for tax residency.

He said that in my case, having been here 350 days in 2020, those days would stay in 2020. None of them would cross over and automatically make me a tax resident as of Jan 1, for just being here on Jan 1. I can still leave and not be here 183 days in 2021 and not be a tax resident.

This echoes what PWC has interpreted here: https://taxsummaries.pwc.com/colombia/individual/residence

"In cases where that requirement is met by considering the days spent in Colombia over two successive fiscal years, the individual qualifies as tax resident as of the second fiscal year."

@WhoaNellie, I apologize if this is what your original understanding was, as well.

guestuser
  1/5/2021 16:46 EST

So, the tax days from 2020 mean that you need to file taxes in 2021 for the Colombian tax year of 2020, but that you won’t need to pay taxes in 2022 for 2021 based in your current days in Colombia.

Landofvanilla
  1/5/2021 18:02 EST

Right.

elpdiver
  1/5/2021 23:32 EST

More than 183 days in a rolling 365 day span seems crystal clear to me.

LPD

Landofvanilla
  1/6/2021 01:20 EST

I think I'll defer to the lawyers and tax consultancies that work with the Dian on its interpretation of the law..

SkyMan
  1/6/2021 10:29 EST

DIAN will probably become much more aggressive in going after gringo's tax $ as Colombia is in a world of trouble financially -via- COVID expenses. But the gringo's tax $ is a mere droplet in the seas of Colombia's finances. Stay Well. Buena Suerte !

Landofvanilla
  1/6/2021 15:37 EST

100%. All governments. Expect an expansion of the wealth tax here during the tax reform bill that's coming this year that will go into effect for tax years 2020 and beyond.

I just spoke with a second tax lawyer at a different firm here in Bogota. He confirmed the interpretation of Dian. Stays over 2 tax years are meant to apply to visitors / people who did not become tax residents during the 1st tax year of the 2 in question.

Landofvanilla
  1/6/2021 15:39 EST

*2022 and beyond.

Bogota
  1/11/2021 20:16 EST

LandoVanilla,

If you feel comfortable doing so, can you provide the tax attorneys you went to. I may want to consult before I re-enter Colombia.

Bogota

Landofvanilla
  1/16/2021 23:03 EST

abogadosenimpuestos.com and agtabogados.com

Landofvanilla
  1/16/2021 23:03 EST

abogadosenimpuestos.com and agtabogados.com

Landofvanilla
  1/16/2021 23:03 EST

abogadosenimpuestos.com and agtabogados.com

guestuser
  1/17/2021 07:05 EST

On tax lawyers here in Colombia getting advice on whether you are a tax resident is fairly straight forward. The issue arises when you want them to opine on foreign investments. Even questions over taxation of deferred income plans like 401k plans will get you different answers. Many of the investment vehicles that expats take for granted don’t exist in Colombia and therefore are subject to interpretation here. It’s an important question to ask Tax attorneys here about their knowledge of overseas investments and you may also need to be able to explain the construction of any unusual structures you have. The basis of Colombian tax law is cash flow which can be a very expensive concept for the taxation of some overseas investments.

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