Colombia: New tax treaty with France

Colombia: New tax treaty with France

The governments of Colombia and France on 25 June 2015 agreed to a new income tax treaty for the avoidance of double taxation and the prevention of tax evasion and tax avoidance with respect to taxes on income and on capital. The treaty provisions will enter into force once the treaty is ratified by both Colombia and France. Current estimates are that the treaty provisions will not be effective before 2017.

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Among the provisions under the Colombia-France income tax treaty are:

  • Measures to eliminate double taxation with respect to the taxes on income and capital, to disallow “treaty shopping” arrangements (i.e., arrangements by which there is an attempt to obtain treaty benefits for residents of third countries) and a limitation of benefits clause 
  • Rules concerning the taxation of income from technical services, technical assistance, and consulting services, with such income to be taxed exclusively by the country of residence, by eliminating considerations received for these services from the definition of "royalties" (similar to the treatment of such income in other treaties in Colombia’s income tax treaty network) 
  • Provisions concerning a “most favored nation” status in other treaties, and concerning the tax exemption for income from technical services, technical assistance, and consultancy services in other treaties 
  • Measures concerning the taxation of income derived from the development of specialized business in connection with the exploration or exploitation of natural resources located in either Colombia or France, when these activities are conducted for a period of at 60 days, and included for these purposes in the definition of permanent establishment 
  • Rules to include branch profits in the definition of dividends

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