Living in Colombia y tax liability

Ric says on May 18, 2006, 07:00:

When does the 180 days start?

Question: I spent two weeks in Colombia in September 2005 and three weeks in January 2006. Does my 180 days start as a tourist in September 2005 or January 1, 2006.
Thanks,

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Gator says on May 18, 2006, 10:46:

Answer 1. You get 180 days not calendar year but from the first entry so you will have 180 days from September 2005.

2. As a pensionado no tax due to Colombia but taxed in the USA, student no tax liability unless you work which you can not to on that visa.

"SIC FRIATUR CRUSTUM DULCE. OBESA CANTAVIT."

"Credidi pretio parvo emere et magno vendere tibi in animo fuisse!" .

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robi666 says on May 18, 2006, 11:50:

Right, and if you buy a home, if it is worth more than 80 miliones, then you will have to declare and be taxed, on an income of 6% of the value of your house. No matter if you live in your house and you don't make money on it. Sigh...

"I am a citizen of the most beautiful nation on earth. A nation whose laws are harsh yet simple, a nation that never cheats, which is immense and without borders, where life is lived in the present."

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Ric says on May 18, 2006, 13:30:

Living in Colombia y tax liability Thanks...

Good reason to rent rather than purchase.

I'm working on the Pensionado Visa with a Colombian friend at the
moment. I hope to get lucky like Patsygringo and not have to return to
the U.S. and hassle with the various documents.

Thanks,

Ken

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Brians says on May 18, 2006, 13:43:

Tax Rates I understand that you have to pay tax on 6% of the value of the home. What is the rate? Example if I own realestate worth $100,000,000 Pesos. Then 6% of that value would be $6,000,000. What would the tax rate be on that amount? How do they determine the Value? Anyone know? Thanks

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robi666 says on May 18, 2006, 13:48:

Tabla del impuesto http://www.dian.gov.co/dian/15servicios.nsf/pages/Renta-tabla-liquidacion-impuesto?opendocument

"I am a citizen of the most beautiful nation on earth. A nation whose laws are harsh yet simple, a nation that never cheats, which is immense and without borders, where life is lived in the present."

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tomtom33 says on May 19, 2006, 06:16:

Owning The assessed value of my apartment in Laguito(Cartagena) is around 150 million. I had to go to DIAN and get a tax number. Then I had to pay an accountant to file my tax return. BUT the tax liability was zero.

My guess is that, at some value, you do have to start paying.

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Brians says on May 19, 2006, 11:24:

The way I see it If you look at the DIAN table. Then the value of the property would have to be $379,033,350 to hit the first tier of the income tax table. Based on Robi666 saying they assume a 6% income on the value then $379,033,350 Pesos at 6% would get you into the first tier oweing $60,000 Pesos. I am not sure if this is correct. Anyone know for sure?

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viewpoint says on May 20, 2006, 05:09:

RIC I see from your earlier posts you have attempted to contact HUNTER and I would encorage you to continue to contact him as most of your inquiry (and the level of it) is information that he can share. He lives in the same area of Medellin that you are moving to. He knows the "basic" information you are seeking down to a minute detail.

In the last three weeks I have filed my 2004 (late) and 2005 returns with DIAN. I had to pay CP$9.000.000 for patrimony taxes for those two years but I am facing substanially more than that amount for 2006 and I am not even a resident of Colombia. These taxes arise solely from the ownership of real and personal property in Colombia and are in addition to the real estate and personal property taxes that I pay separately. These taxes function much like the "AMT" (alternative minimum tax) taxes in the USA.

Unfortuantly I don't know all the answers (just the basics) regarding this tax trap (patrimony taxes) except to know that I don't want to reside 180 days a year or invest any further in Colombia. Luckly, I had business friends in Colombia that intervened with my plans three years ago and explained the cold hard "facts of life" to me and this time I listened. They had pointed out some of the same things to me several years ago but the Colombian taxation laws had continued to change(and are contining to change) unfavorably against foreign (and domestic) investment in Colombia.

Panama (your current residence) has a much more inviting financial, business, immigration and reglatory envirnoment to invest and live. The wealthy people of Colombia have for the most part parked their wealth (and themselves) outside Colombia to the extent that they can.

The 180 days are measured on a calendar year basis (January 1 through December 31). Robi666 and Brians posts are not to different than my understanding of the tax. I have professional people handle this for me but from the signals they keep sending to me Colombia is not a welcome place for foreign people or their capital investment.

The only way that you can escape the patrimony tax is through registered arm length "qualifing" registered (with DIAN) loans from outside Colombia financing your ownership of properties within Colombia thereby reducing your equity to below the taxable threshold or produce enough income from your Colombian investments to exceed the 6% imputed income. Either way you are stuck paying the taxes but if you have the actual earned income the taxes become more palatable.

The greatest downside to the tax is if you own assets that are not income producing like undeveloped land or any other assets that produce less than the imputed 6% return. Almost all of the posters here (on PBH) are not effected by this tax so they shouldn't be concerned unless they are going to begin acquiring assets "within" Colombia such as cars, homes, bank accounts, other real property or investment securities (stocks or bonds).

In the beginning I had dreams of making Colombia my home and having permanent residency and citizenship but after seven years of chasing this dream I ran away to another country that welcomes my business, my investments and offers better rewards/returns and a quick path to residency and citizenship. Now I am just a tourist visting Colombia trying to enjoy my short vacations in between trips to DIAN, the accountants and attorneys trying to comply with all this bullshit.

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tomtom33 says on May 20, 2006, 06:03:

Thanks, Viewpoint. I still hold my dream of permanent residence in Colombia after 3 years. But I have no intention of investing any money here other than modest apartments for me to live in.

I understand exactly what you mean about trips to DIAN, DAS, accountants and attorneys. Unless and until Colombia pulls her head out of her ass, she will be fortunate to be considered a third world country. You don't develop the middle class by alienating potential investment.

Conavi has still not let me know whether or not they will allow me to open an account more than two weeks after I applied for one AND submitted all the paperwork that they wanted.

All the bullshit may wear me down in time as well. I keep hoping that time will bring me a better understanding of the "system."

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Ric says on May 20, 2006, 07:51:

Viewpoint 180 days Viewpoint:


Thanks to you and others for the valuable information. I have learned from past experience of living in Nicaragua, Costa Rica and now Panama to collect as much information from people who have lived in the country and experienced first hand the rules, laws and customs of each as they relate to foreign residency. It appears like Central America the opinions vary from person to person and government agencies. I respect the opinion of both you and Gator, but as you can see the advice is in conflict. Gator states, “ You get 180 days not calendar year but from the first entry so you will have 180 days from September 2005” I was recently told by an employee of the Colombian Embassy in Panama I would be able to apply for an extension beyond the 180 and stay as long as I want. Again, another opinion and most likely in error. I would place more faith in the opinions of you and Gator based on your personal experience in Colombia.

I will be in Panama City June 27th at the Hotel Marbella before my flight to Medellin on the 29th and plan a visit to the Colombian Embassy before my departure. I spoke with you while we were both in Medellin last Feb. but we were unable to connect. I would like to communicate with you before my departure. I have a few questions about Panama City. I may also need to consign my vehicle with an agency in Panama City and would appreciate recommendations. (ricbuddy_at_gmail_punto_com) 722-8950 in Rio Sereno. I will be visiting with Douglas Martin, DWMTE and hopefully Hunter upon my arrival.

My plans include living in Medellin without opening a bank account, making investments or purchasing a home. This should limit my exposure to problems and give me the opportunity to investigate first hand the benefits of living in Colombia. I also have the option of parking my assets in Panama City and visiting Colombia for six months a year. My Panama bank, Banistmo, tells me I will be able to access my funds in Colombia in the near future. Apparently they are working on this plan with their Banistmo branch in Colombia. (how long?)

Thanks,

Ken

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viewpoint says on May 20, 2006, 09:25:

RIC Hotel Marbella my favorite hotel in Panama City. $27.50 corporate rate inlcuding 10% tax. Order the San Cocho (Sopa de Pollo) for $3.00 (small bathtub size) and 1/2 bottle of Casillero del Diablo then you will have to waddle out of that restaurant. They have changed that menu and prices in the past ten years.

I am sure I will be in Panama City or Medellin.

I always think of the 180 days measure in terms of the days counts effecting taxation and not overstaying the tourist status of 180 days per year so we may both be right. I might have a parking place for you as I have 31 parking spaces at my apartment. jajajaja

You could access most Panama bank accounts through ATMs in Colombia. I checked with BanColombia in Panama City but you can't open an account in Panama City as they are not licensed to solicit business there but you can open a Panama account from Medellin if you are a resident there.

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Gator says on May 20, 2006, 09:55:

Ric... the information you received, "I was recently told by an employee of the Colombian Embassy in Panama I would be able to apply for an extension beyond the 180 and stay as long as I want."may have been partially correct-if you are going to obtain a Pensionado Visa or Student Visa holder and you do so the "tourist" visa is immediately void and you stay on the new visa. Student stay good as long as you are a student, pensionado much longer and you can renew. If your Spanish is up to it go to the MRE site at www.minrelext.gov.co.

Mine is a Resident Visa. This type of visa has the following characteristics: Multiple entrances, will expired if absence from the Colombian territory for a period more than two years, and the resident has the obligation to register with D.A.S, and obtain a “Cedula de Extranjeria”. This visa has no expiration. I think I am right on the time frame but you will find out when you go the the DAS office for the extension past you date stamp-you will have to go there anyway to apply for your cedula if you are in the country with a visa that allows a stay over 180 days. That is if you are in the country longer than six months.


"SIC FRIATUR CRUSTUM DULCE. OBESA CANTAVIT."

"Credidi pretio parvo emere et magno vendere tibi in animo fuisse!" .

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aztec says on May 20, 2006, 09:58:

Too complicated "In the beginning I had dreams of making Colombia my home and having permanent residency and citizenship..." viewpoint.

Exactly our plans and we attempted to do just that. We moved a considerable sum of money into Colombia and signed a contract to build a house in the mountains around Chia.

Immediately we were confronted with the patrimony taxes and also a potential windfall profits tax if purchased in my wife's name. These complications showed up after our disastrous problems with filing the incorrect forms (5 instead of 4) for transferring dollars into Colombia.

We did hear about "registered arm length "qualifing" registered (with DIAN) loans from outside Colombia financing your ownership of properties within Colombia thereby reducing your equity to below the taxable threshold". The Colombian who advised us on this procedure was another investor ( he purchased 3 houses) in this same project. At the time we couldn't comprehend what he was advising. We finally sought the services of a lawyer (after advice and recommendation from viewpoint). Absolutely best advice we received on moving to Colombia.

The lawyer was well versed in international and foreign investor regulations. He suggested several alternative avenues for managing our investment in Colombia including setting up an outside (offshore) corporation. It seems, as viewpoint has already mentioned, most of the wealthier Colombians have offshore corporations or accounts in Panama.

In summary, if you are planning on transferring $200,000 to $800,000 into Colombia for purchasing an apartment or house you must find a lawyer with experience in foreign investor requirements. In the end the regulations for our moving to Colombia become too burdensome. My advice for anyone contemplating such a move, try renting and stay there less than half a year.

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viewpoint says on May 20, 2006, 10:23:

AZTEC The offshore corporation or non-resident foreign ownship no longer works as a vehicle to avoid the patrimony tax because the Colombian goverment passed another law effective November of 2005 to remove that exemption. Now everyone (regardless of domicile) is taxed on their assets within Colombia that exceed the threshold. In other words there is no longer any structure than can avoid the partimony taxes.

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robi666 says on May 20, 2006, 12:07:

It is fun to see you people from USA completely mad at the idea of paying taxes. If you were used to live in Italy or Sweden, then it would have been different...
Still, it is crazy that they tax the house that you're living in or on undeveloped land!
What I can say is that you can really make 6% net profit if you rent an apartment and, after all, taxes on income are much, much lighter then the one we use to pay in Europe.
I guess the best is to put apartments in different names, father, mother, etc.
On the other way... formulario 4, 5, 11, bank accounting, yes... a big big pain in the ass. I also had a problem with formulario 5 and an apartment in my wife's name. I did my move with the help of a lawyer (my wife put in her declaration a debt and I declared an asset of the same amount), but I am still afraid of what can happen.
Again, law is even more complicated in Italy! And the Italian Dian "Guardia di finanza" is a real problem that you cannot work (tip) on.
Aztec and Viewpoint are giving the best advice. Plan ahead with the help of a qualified lawyer. Because it is not easy to decide if someone is a qualified lawyer, go to the Dian website and spend few days on it.
But... I would not change Colombia and the place where I am living with Panama... well, yes if I could get a cheap nice place in the San Blas.

"I am a citizen of the most beautiful nation on earth. A nation whose laws are harsh yet simple, a nation that never cheats, which is immense and without borders, where life is lived in the present."

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NewBoy says on May 21, 2006, 12:56:

Hi Ric Just e-mailed you on:

ricbuddy at gmail.com

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lawyerincolombia says on Jul 14, 2006, 09:24:

Lawyer in Cali Colombia I am a certified lawyer in Colombia. My name is Carlos Arturo Dorado and I can help to you about inmigration and legal problems in Colombia.
I am located in Cali Colombia.

Best regards:
Carlos Dorado
http://nicelatinladies.com/abogado.html

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