COLOMBIA Law and Practice Contributed by: Rodrigo Castillo Cottin, Ana María López and Alejandra Becerra, Rimon, P.C.
on gross income, excluding revenues for exports, pro - ceeds from the sale of fixed assets, refunds, subsidies and withholdings. Financial transactions tax Financial transactions tax is imposed on any trans - action whereby funds held by a Colombian entity in Colombian bank accounts are disposed of (eg, debits on bank accounts). The taxable base is the amount of funds withdrawn. The applicable rate is 0.4% and it is withheld and collected by the financial entities through which the transactions are conducted. This tax is gen - erally levied on all financial transactions. “SIMPLE” tax regime As of 2020 (Law 2010 of 2019), a simplified tax regime was established for resident individuals and local enti - ties whose prior year’s gross income does not exceed 100,000 Tax Units (approximately USD1.19 million) and who carry out certain economic or commercial activities (eg, owning a small shop, micro-market or hair salon), or who offer mechanical/technical servic - es and consulting services, etc. A lower threshold of 12,000 Tax Units (approximately USD143,088) applies to individuals whose primary income derives from pro - fessional, consulting, or scientific services. The SIMPLE tax regime unifies income tax, industry and commerce tax, VAT and excise tax for taxpay - ers registered under this regime. These taxpayers are obliged to file a unified annual tax return (although there are advance payments every two months) and make a unique tax payment at a rate between 1.2% and 8.3% on their gross income earned, depending on their economic activity code. 1.2 Exemptions Inheritance and Gifts Inheritance and gifts are deemed extraordinary income subject to the capital gains tax regime. As mentioned in 1.1 Tax Regimes , the following extraordinary income is considered as exempted for capital gains purposes: • the deceased’s primary residence – 13,000 Tax Units (approximately USD155,012 for 2025);
• the deceased’s real estate property other than their primary residence – 6,500 Tax Units (approximately USD77,506 for 2025); • value inherited by the deceased’s surviving spouse and heirs – 3,250 Tax Units (approximately USD38,753 for 2025); • assets or rights received by individuals not consid - ered as heirs or a surviving spouse – 20% of the assets’ or rights’ value; • assets or rights gifted or transferred by the deceased during their lifetime that were received gratuitously by a beneficiary – 20% of the assets or rights value without exceeding 1,625 Tax Units (approximately USD19,377 for 2025); and • any books, clothing, personal belongings and furniture belonging to the deceased – 100% of the assets’ value. Transfer of Assets Tax exemptions applicable on transfer of assets should be analysed on a case-by-case basis. As an example, in the case of real estate, Article 44 of the CTC estab - lishes non-taxable income proportions, from 10% to 100% of the profits on the sale of a property used as the taxpayer’s residence, as long as the property was acquired between the years 1978 and 1986. 1.3 Income Tax Planning Income tax planning alternatives should be analysed on a case-by-case basis. As an example, anticipating real estate property disposal/transfer, taxpayers could apply for a step-up in the tax basis (costs) by applying the rule established in Article 72 of the CTC, which allows them to take the cadastral official appraisal as the asset’s fiscal cost which can be adjusted/ increased at the taxpayer’s request. 1.4 Taxation of Real Estate Owned by Non- Residents There are no specific tax rules or planning mecha - nisms relating to real estate owned by individuals who are non-residents or non-citizens. As a general rule, real estate located in Colombia is subject to taxation in the country regardless of whether the owner is a Colombian tax resident/citizen or not.
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