The Definition of Tax Residence in Colombia

December 16, 2020

The concept or definition of residence for tax purposes is fundamental in any tax system, due to based on this, natural persons will tax the totality of their income in a certain jurisdiction. The latter is also called worldwide source income taxation, generally subject to income tax rates different from 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, this article explains the concept of tax residence in this country and its effects.

Who are considered tax residents in Colombia?

According to Article 10 of the Tax Statute, individuals who meet any of the following conditions are considered residents in this country:

  • Permanence in the country for more than 183 calendar days, including entry and exit days. 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 in the second year or period:

  • He/she is exempted from taxation in the country for diplomatic purposes due to the relationship with the Colombian foreign service and in virtue of the provisions of the Vienna Convention on diplomatic relations during the respective year or taxable period.
  • Those nationals meeting any of the following in the taxable period:
    • To have a spouse, partner, or children with tax residence in Colombia.
    • To have an income of fifty percent (50%) or more of the national source. Therefore, it shall be necessary to divide the total income, whether ordinary or extraordinary of Colombian source, during the taxable year for which the residence is determined, between the total income of national and foreign sources in the referred period.
    • To have administered assets in the country representing fifty percent (50%) or more of the totality of its assets. For this purpose, the term administration shall be considered as the management or conservation of these assets, either directly or indirectly.
    • 50% or more of its assets are owned in the country.
    • They do not prove their condition of foreign residents to the Tax Administration when required.
    • To be tax residents in a country qualified by the National Government as a tax haven.

How to prove the condition of residency abroad?

As indicated above, the Tax Administration may request proof of residence abroad, for which national individuals will have to file a certificate of residence abroad, issued by the country they reside in the DIAN (Dirección de Impuestos y Aduanas Nacionales – National Tax and Customs Directorate).

Who is not considered a tax resident in Colombia?

According to paragraph 2 of Article 10 of the Statute, those nationals meeting any of the conditions established in point 3 of the aforementioned Article, provided that they meet any of the following conditions:

  • To have 50% or more of its annual income as a source in the jurisdiction in which he/she is domiciled.
  • To have 50% or more of its assets in the jurisdiction in which it is domiciled.

Is there any special provision for the suspension of the 183-day count due to COVID-19?

Due to COVID-19 and the border closure, many of the foreigners who entered Colombia have remained in this country due to the situation.

Concerning this, the issue of counting the 183 days to establish tax residence in Colombia has become important, requiring the DIAN to make a pronouncement on this and the suspension measures due to the Sanitary Emergency.

The Tax Administration under 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.