Taxes in Colombia

How much and how to pay?

Taxes in Colombia

Personal income tax (impuesto de renta) rates in Colombia range from 10%-33% depending on your income. The tax year (año fiscal) in Colombia runs from January to December  Using a financial advisor to help you pay your tax at the amount that is required is a good way to keep on top of your taxes.

The institution in charge of taxes is the National Tax and Customs Directorate (Dirección de Impuestos y Aduanas Nacionales ).

Income tax (Impuesto a la Renta y Complementarios)

Residents of Colombia are taxed on worldwide income, while non-residents are only taxed on their income from Colombia. The first COP$1,090 that you earn is considered tax free. A non-resident is someone who spends less than 183 days in the country during a tax year (1st January - 31st December).

For financial matters a person is considered a resident of Colombia if they spend longer than 183 days in the country during the tax year. Residents are taxed on their worldwide income, no matter where it is generated.

Double taxation

Expats should check with the tax office in their native country whether they are required to pay taxes there, in addition to Colombian taxes.

There are some treaties in place with Colombia to avoid double taxation, but these are mostly with other South American countries. This means expats could have to pay tax in two countries. A financial advisor will be able to help you potentially avoid this problem.

If you are a non-resident of Colombia, i.e. you spend less than six months a year in the country, you will only have to pay tax on the money that you have earned in Colombia. Tax on residents who have stayed for six months or more pay taxes on all income earned. This also includes commissions, bonuses, holiday pay, and other work related benefits.

A list of taxes for different incomes and earnings can be seen here .

VAT and capital gains tax

The standard rate of VAT (Impuesto al Valor Agregado - IVA) is at 16%, however this depends on the item being bought; luxury items tend to be at a higher VAT rate. Residents do have to pay local municipal taxes and property taxes (impuesto sobre la propriedad), which covers all types of properties under sixteen different banding levels which depend on property value.

Capital gains tax (impuesto a las ganancias) must also be paid on inheritance and sales of assets, which is usually at the standard tax rate. Life insurance policies and royalties to copyright are exempt from tax.

Tax deductions

Some types of income, usually low income workers are exempt from some income taxes including redundancy payments, social security benefits, death benefits, health insurance costs and school fees. These deductions are not subject to nationals only, as you can be a foreigner and still receive these deductions. There are no extra allowances for those who have children.

Paying your taxes

It is important that you make sure that you file your tax documents early to avoid penalties, the deadline is usually April/May time. The penalty for late filings is around 5% per month of delay up to 100% of the tax or withholding tax due date. It can then increase from 10% to 200%. There is an added interest rate of 10% of the fine which you must pay, so it is worth getting your taxes in order before the due date.

Further reading

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