Colombia: Living There - Tax Issues

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Living There

Residents are taxed on their worldwide income. Income earned by individual residents in Colombia is taxed at progressive rates.

The tax rates vary depending on the taxable income. Income up to COP20,400,000 (US$8,681) are not taxable. The maximum tax rate is 34% on income exceeding COP96,000,000 (US$40,851).

Foreign residents are taxed only on their Colombian-sourced income for the first four years of their stay in Colombia. On their fifth year of residence, foreign residents are taxed on their worldwide income.

Capital Gains

Capital gains earned by residents are subject to tax in Colombia. The taxable gain is computed by deducting the following from the selling price: acquisition costs (as revalued by the consumer price index), costs of transferring ownership, and improvement costs.

Capital gains earned through a resident’s fixed assets are subject to special taxation. Fixed assets are houses, apartment, vehicles, chattels, and implements. If the property was sold within two years of acquisition, the capital gains earned are subject to tax at the standard progressive income tax rates. Profits generated through sale of the property held for more than two years is subject to the capital gains tax rate of 1%, withheld at source.

In transfer of the taxpayer’s homes, a reduction in the 1% withholding tax rate is applied if the property was acquired from 1978 to 1986. The reduction rates are as follows:

Colombia - more data and information

• Lawyers (attorneys) with property law practices in Colombia

Your Comments

posted by heyo my name is kandallalalal | 2008-01-14

Bus driver, Venezuela

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