Colombia Expat Forum

fecherklyn
Joined 2015
Posts: 1367

2 years ago

When is an income, not an income?

2 years ago

“When is an income, not an income? Well, my latest experience suggested this might be the case in Colombia.

Let me start off with recognizing this situation may not interest, or apply to most forum members. However, my attitude is that it is better to reside in Colombia with both eyes open, rather than keep one eye shut to matters that have no direct effect on you.

I invest in Colombia. Over the twenty odd years I have resided in Colombia this has had its ups, and downs. For me, investing in Colombia whilst residing here was a valid concept because I needed a supplementary income to my pensions, and because the rates of interest income were notably higher than what I could obtain in the USA, or Europe. Of course, this has its drawbacks – cost of living inflation in Colombia was higher than the host nations providing my pensions, and who in their right mind would invest in Colombia! All the same, I did it and I have nothing to complain about; Colombia’s reputation as a high risk investment location is largely exaggerated in my opinion and largely due to its association with “Latin America and all the regional loan defaults – Colombia has had no significant loan defaults to my knowledge.

So, back to my opening remark; how has my Colombian investment income become a problem?

Here we are in the beginning of the Colombian tax declaration submission period. My tax accountant requires me to submit to him my first draft (2021 tax year) no later than June 1st. For this purpose, I must already have in hand all the necessary certifications from the entities I invest with – in this case my local comisionistas (Stock Brokers) and I am responsible for verifying their input is correct. So, here we are, for the first time ever whilst I have resided in Colombia, I have a dispute with my investment agent. To my mind, he is informing DIAN and me that my investment incomes are higher than what I have received in reality.

How did this come about? Simple – A few of my Fondos de Inversion Colectivas (Mutual funds based on loan factoring) had NEGATIVE incomes (Rendimientos) in 2021 (effect of Covid), but my agent insists only the POSITIVE incomes require to be notified in my tax declaration. Thus, whist my consolidated income may be minus X, the fondos with positive incomes may be + Y.

This matter is under review at the moment and I hope my agent will come to the understanding what he has proposed is wrong – but I am not holding my breath. Of course, the Colombian government has its say in this matter. The effect of not consolidating gains AND losses in income would be very welcome to them.

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