Taxation of international executives
Additional tax information is summarized by KPMG, the Colombian member firm of KPMG International, based on the Colombian Finance Ministry (Republica de Colombia Ministerio de Hacienda y Crédito Público) web site.
The wealth tax applies for individuals who are considered as income taxpayers. It is important to bear in mind that the wealth tax will apply to residents and non-residents for tax purposes. The difference between residents and non- tax residents will be the information to be included, since tax residents will have to include the equity owned in Colombia and abroad and non-tax residents will only have to include the equity owned in Colombia.
The wealth tax will apply for individuals whose net equity is higher than COP 1.000 MM. This equity is calculated by including all the value at January 1st of the assets owned (real state, investments, vehicles, financial products, accounts, etc.) and subtracting the liabilities and debts.
On this regard, it should be noted that the net equity is not the taxable base. The taxable base is calculated taking the net equity and subtracting the value of the home of dwelling (up to USD 145.000 approx.) and the “effective equity value” (value of the asset multiplied by the percentage obtained after dividing the net equity by the gross equity) of stocks of Colombian entities.
Now, foreign individuals who are considered as tax residents and have reside in Colombia for less than 5 years are able to subtract the net amount of the assets owned abroad of the taxable base.
Finally, the progressive tax rates are as follows: 0.125% for taxable base between COP 0 and COP 2.000 MM; 0.35%, between COP 2.000 MM and COP 3.000 MM; 0.75, between COP 3.000 MM and COP 5.000 MM; and 1.5%, for net equity higher than COP 5.000 MM.
In addition, the Colombian Government established new liabilities for individuals. 1. Informative tax return in magnetic media (For FY17 applies for taxpayers who reported gross income higher than Cop 500 MM in FY2015) and 3. Foreign assets report (applies to taxpayers considered as residents for tax purposes who possess equity abroad).
Are there social security/social insurance taxes in Colombia? If so, what are the rates for employers and employees?
All persons employed in Colombia must make contributions to the social security system, consisting of general and special contributions. Contributions are calculated based on an employee’s earnings.
A voluntary regime is available to self-employed and unemployed individuals. Participants in this regime are subject to a special quota.
|Type of insurance||Paid by employer||Paid by employee||Total|
|Family welfare fund||9.0%||0.0%||9.0%|
The social security system provides benefits to the participants, or their dependents, in the event of occupational accidents, sickness, retirement, and death, and so on.
Employers must pay the following social contributions for 2016:
It is important to consider whether an employee also makes contributions to a pension fund in his/her home country that covers all the contingencies he/she could suffer during his/her permanence in Colombia. If so, joining a pension scheme in Colombia is voluntary. However, when an employee has a labor agreement with a Colombian company, the health plan schemes are obligatory.
Are there any gift, wealth, estate, and/or inheritance taxes in Colombia?
The general tax rate for occasional gains is 10%.
Specific rules apply in order to determine the taxable base of inheritance.
However, no specific inheritance tax; that is state tax or gift tax is levied at either the federal or local tax level. However, certain gifts may be treated as income and subject to tax in the hands of recipient.
Gifts and inheritances of immovable property may also be subject to local real estate transfer tax.
Are there real estate taxes in Colombia?
Yes, however, any property taxes paid are deductible from rental income when calculating an individual’s tax base. If no rental income is received, property taxes would not be deductible.
Are there sales and/or value-added taxes in Colombia?
Yes, in Colombian there is a specific regime for value-added tax but it is not applicable for labor payments.
Are there unemployment taxes in Colombia?
Are there additional taxes in Colombia that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.
Is there a requirement to declare/report offshore assets (e.g., foreign financial accounts, securities) to the country’s fiscal or banking authorities?
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