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Colombia - Other taxes and levies

Colombia - Other taxes and levies

Taxation of international executives

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Wealth tax

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 COP5,000 million. This equity is calculated by including all the value at 1 January 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 approx. USD137,000)

Finally, the tax rates is 1 percent for taxable basis.

In addition, the Colombian Government established new liabilities for individuals. 1. Informative tax return in magnetic media (For FY19 applies for taxpayers who reported gross income higher than COP500 million in FY2017) and 3. Foreign assets report (applies to taxpayers considered as residents for tax purposes who possess equity abroad).

Social security tax

Are there social security/social insurance taxes in Colombia? If so, what are the rates for employers and employees?

Employer and employee

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

Pension plan

12.0%

4.0%

16.0%

Medical plan

8.5%

4.0%

12.5%

Family welfare fund

9.0%

0.0%

9.0%

Total

29.5%

8.0%

37.5%

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 2018:

  • Pension Plan: 12 percent x monthly payroll
  • Medical Plan: 8.5 percent x monthly payroll
  • Family welfare fund: 9 percent of monthly payroll. It is important to clarify that employers who were subject to the income tax for equity CREE (for its acronym in Spanish. This tax was eliminated from FY2017), are not subject to this contribution for the employees whose monthly salary is lower than 10 monthly minimum wages (COP8,281,160, for FY19.)

It is important to consider whether an employee also makes contributions to a pension fund in their home country/jurisdiction that covers all the contingencies they could suffer during their 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.

If an employee earns a salary between four and 15 times the minimum legal monthly salaries (SMLMs), the employee must contribute an additional 1 percent to the pension solidarity fund. Likewise, employees earning 16 SMLMs or more must make additional contributions as follows:

  • 16-17 SMLMs 0.2 percent (that is 17.2 percent)
  • 17-18 SMLMs 0.2 percent (that is 17.4 percent)
  • 18-19 SMLMs 0.2 percent (that is 17.6 percent)
  • 19-20 SMLMs 0.2 percent (that is 17.8 percent)
  • Over 20 SMLMs 0.2 percent (that is, 18 percent).

Gift, wealth, estate, and/or inheritance tax

Are there any gift, wealth, estate, and/or inheritance taxes in Colombia?

The general tax rate for occasional gains is 10 percent. 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.

Real estate 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.

Sales/VAT tax

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.

Unemployment tax

Are there unemployment taxes in Colombia?

No.

Other taxes

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. 

No.

Foreign Financial Assets

Is there a requirement to declare/report offshore assets (e.g. foreign financial accounts, securities) to the country/jurisdiction’s fiscal or banking authorities?

Yes, the Foreign assets report (applies to taxpayers considered as residents for tax purposes who possess equity abroad). This tax liability do not represent a tax payment, is just informative. But if filed after deadlines, penalties will apply.

Footnote

Additional tax information is summarized by KPMG ADVISORY, TAX & LEGAL S.A.S., the Colombian member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the Colombian Finance Ministry (Republica de Colombia Ministerio de Hacienda y Crédito Público) web site.

Disclaimer

All information contained in this publication is summarized by KPMG Advisory, Tax & Legal S.A.S., the Colombian member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The information contained in this publication is based on the Colombian tax code, law 1943 of 2018, decree 1625 of 2016 and subsequent amendments, additional tax legislation and tax authority guidance.

© 2021 KPMG Impuestos y Servicios Legales Ltda, a Colombian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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