Do I Need to File Taxes in Colombia as a Foreigner?

If you’re a foreigner with any connection to Colombia whether you live here part of the year, own property, or generate income you’ve probably asked yourself this question:

Am I obligated to file taxes in Colombia?

The answer isn’t always straightforward. Colombian tax regulations can be a maze, but here we break down the general rules, important exceptions, and when you should pay special attention to your tax situation in the country. Get ready to clear up your doubts!

1. What is Tax Residency in Colombia and why is it Crucial?

Tax residency isn’t defined by your visa type or nationality alone. It’s a tax concept that, according to Colombian regulations (Law 1607 of 2012 and the Tax Statute), determines whether you must declare your global income or only that generated in Colombia.

An individual is considered a tax resident if they meet any of the following criteria:

• Presence of 183 days or more in Colombian territory. These days can be continuous or discontinuous, within a 365-calendar day period. Think of it like a counter that resets each time you leave the country but totals all your days of stay.
• Being of Colombian nationality and not being able to prove tax residency in another country, or having more than 50% of your income, assets, or wealth located in Colombia.

2. I’m not a tax resident, do I still need to file taxes in Colombia?

Yes, in some cases, you do! Even if you don’t meet the criteria to be a tax resident, you might have **tax obligations** in Colombia. This happens when you have what is known as “Colombian source” income or certain assets in the country.

Here are the most common situations:

a) Colombian source income: If you generate income that originates in Colombia, the DIAN will expect you to declare and pay taxes on it, regardless of where you reside the rest of the year. Some examples include:
• Rentals of real estate located in Colombia.
• Fees or payments for services physically rendered within Colombian territory.
• Dividends or returns from investments in Colombian companies.
• Salaries for employment or economic activity carried out in the country.
b) Properties or assets in Colombia: Having assets such as real estate, financial investments (stocks, funds), or bank accounts with significant balances in Colombia could make you responsible for filing an income tax return, even if you are not a resident. This applies especially if:
• Your gross wealth in Colombia exceeds certain thresholds established annually by the DIAN.
• Your bank transactions (deposits, investments) exceed certain annual amounts.

3. What are the thresholds for filing income tax in Colombia?

Each year, the DIAN updates the thresholds that determine who is obliged to file an income tax return, expressed in UVT (Tax Value Unit). It’s crucial that you check these values for the specific tax year you’re interested in.

To give you an idea, for the 2023 tax year, you had to file an income tax return if you met any of the following conditions:

• Total gross income greater than COP $59,377,000.
• Gross wealth (all your goods and rights) exceeding COP $190,854,000.
• Credit card purchases exceeding COP $59,377,000.
• Bank deposits, investments, or financial transactions totaling more than COP $59,377,000.

(Remember: These amounts change every year and must be verified for the corresponding tax period. It’s essential to consult the UVT for the year in question for precise calculations.)

4. What happens if I don’t file my tax return when I’m obliged to?

Ignoring your obligation to file taxes in Colombia can result in significant financial and legal consequences. The DIAN does not take non-compliance lightly. If you don’t file when you should have, you could face:

• Penalties for late filing.
• Penalty for not filing.
• Default interest.
• Restrictions: Possible limitations on carrying out immigration procedures, opening bank accounts, or making investments in Colombia.
• Audits and tax inspection processes: The DIAN could initiate a process to verify your tax situation, which may lead to even higher penalties if irregularities are found.