The concept or definition of residence for tax purposes is fundamental in any tax system, since it is based on this that individuals will tax all of their income in a given jurisdiction. The latter is also referred to as taxation on world source income, which is generally subject to different income tax rates than those applicable to non-residents.
In Colombia, all tax residents will be taxed on their income obtained in the national territory as well as on their foreign source income. Therefore, the purpose of this article is to give an approximation of the concept of fiscal residence in this country and its effects.
Who is considered a resident for tax purposes in Colombia?
The concept of tax residence in Colombia is established in Article 10 of the Tax Statute, which states that individuals who meet any of the following conditions will be considered resident in this country:
- Permanence in the country, for more than 183 calendar days including days of entry and exit. The referred permanence may be continuous or discontinuous, but within any period of 365 consecutive calendar days.
When the latter includes more than one taxable period, the person is a resident for the second year or period:
- Is due to the relationship with the Colombian foreign service, and by virtue of the provisions of the Vienna Convention on Diplomatic Relations, exempt from taxation in the country where he is in a diplomatic mission, during the respective year or period.
- Those nationals who comply with any of the following, during the taxable period:
- Have a spouse or partner or children with tax residence in Colombia.
- Their income is of fifty percent (50%) or more of national source. For which, it will have to divide the totality of income, being ordinary or extraordinary of Colombian source during the taxable year of which the residence is determined, between the totality of income of national and foreign source in the referred period.
- Have assets that are administered in the country, and these represent fifty percent (50%) or more of the total of its assets. For this purpose, the term administration shall be considered as the management or conservation of these assets, either directly or indirectly.
- Fifty percent (50%) or more of its assets are held in the country.
- Do not accredit your status as a foreign resident to the Tax Administration when required.
- Be tax residents in a country qualified by the National Government as a tax haven.
How is the condition of foreign resident accredited?
As indicated above, the Tax Administration may request proof of residence abroad, for which national individuals must submit a certificate of residence abroad, issued by the country in which they have their residence, to the National Tax and Customs Administration (DIAN).
Who will not be considered tax residents in Colombia?
According to paragraph 2 of Article 10 of the Statute, those nationals who meet any of the conditions set forth in point 3 of that article, provided they meet any of the following conditions:
- 50% or more of their annual income has as its source the jurisdiction where it is domiciled.
- That the jurisdiction of domicile has 50% or more of its assets.
Is there any special provision, due to COVID-19, for the suspension of the 183-day count?
Due to COVID-19 and the closure of borders many of the foreigners who entered Colombia have remained in this country because of the situation.
In this regard, the issue of counting the 183 days in order to establish fiscal residence in Colombia has taken on an important connotation, which is why the DIAN has been asked to make a statement on this and the measures of suspension due to the Health Emergency.
The Tax Administration through Concept No. 612 of 2020, has indicated that the provisions of Articles 1 to 10 of the Tax Statute have not been suspended by the State of Emergency.