COLOMBIA Law and Practice Contributed by: Rodrigo Castillo Cottin, Ana María López and Alejandra Becerra, Rimon, P.C.
Anti-Abuse Rules Article 869 of the CTC established a tax anti-abuse rule. This rule allows the CTO to re-characterise or reconfigure any operations or series of operations that may constitute abuse for tax purposes and disregard their effect. Conduct is considered abusive if: • the transaction is not reasonable from a commer - cial and economic perspective; • a high tax benefit is achieved but is inconsistent with the risks undertaken by the taxpayer; and • the execution of a structurally correct legal act or business is apparent, but its content hides the true will of the parties. The process of re-characterisation or reconfiguration of a potentially abusive operation would have to be initiated by the CTO within the term of expiration of the statute of limitation of the corresponding tax return. Relevant definitions and procedures applicable to the CTO in order to apply tax anti-abuse rules are estab - lished in Resolution 4 of 2020. Transparency and Privacy Colombia balances transparency with privacy through statutory tax secrecy rules and data protection law. Tax returns data is confidential under Article 583 of the CTC and may be used by the CTO only for tax control, assessment and administration. Beneficial ownership data filed in the RUB is not public; access is granted only to competent authorities under Law 2195 of 2022. In parallel, the habeas data framework (regulated by Law 1581 of 2012 and Law 1266 of 2008) imposes purpose limitation, confidentiality and security obligations on data processing, including for tax authorities and financial institutions reporting under the CRS, FATCA or the RUB. 2. Succession 2.1 Cultural Considerations in Succession Planning Most Colombian companies are family-owned. These companies are usually founded and managed by a matriarch or patriarch. Other family members carry
out other high management roles in the company. In most cases, the matriarch/patriarch is unwilling to turn over wealth and grant control to younger generations until their passing, or until they are no longer capable of handling the company’s affairs. As Colombia has forced heirship rules forcing the testator to assign certain compulsory portions, appli - cable to half of their estate, even against their will, Colombian families are constantly concerned about implementing estate and succession planning solu - tions to ensure a successful turnover of wealth, allow - ing the family estate to increase in value over time. 2.2 International Planning Colombian families have become increasingly global. This situation has created various challenges when transferring wealth to family members, as Colombian rules on forced heirship are mandatory and apply to the estate of the individuals (both national and foreign) whose last residence was Colombia. This transfer of wealth may provide various challenges from a tax and estate planning perspective when sev - eral jurisdictions are involved. Colombian courts usu - ally apply local law in respect of real personal property Colombian rules on forced heirship are mandatory and apply to the estates of all individuals (national and foreign) whose last place of domicile was Colombia. Colombian and foreign heirs have the same rights and are entitled to equal treatment in Colombian probate proceedings. The Colombian Civil Code forces the testator to assign certain compulsory portions, appli - cable to half of their estate, even against their will. located in Colombian territory. 2.3 Forced Heirship Laws
The compulsory portions are: • maintenance provided by law; • the marital portion; and • the legitimate portion. Maintenance Provided by Law
A compulsory portion is assigned for the subsistence of the beneficiary in a way that corresponds to their
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