The Colombian Tax and Customs Directorship (DIAN) has reiterated that it is mandatory to present an income tax return in the same tax year as a transfer of foreign investment ownership occurs. The representative or attorney of a foreign investor with no residence or domicile in Colombia is charged with this obligation, regardless of whether or not the investment is registered with the central bank, Banco de la República.
In accordance with DIAN's Opinion No. 48836 of May 4 2000: "regardless of the aspects related to the foreign investment registration in Colombia, foreign investors without residence or domicile in the country are obligated to file income tax returns in the taxable year or years in which they obtain income for concepts different to those set forth in articles 407 to 411 and 414-1 of the Tax Code."
Interpreting article 592 of the Tax Code, the DIAN indicates that two requirements must be met simultaneously in order to exclude investors from the obligation to file income tax returns:
- that the income corresponds to the concepts set out in the articles 407 to 411, inclusive, and 414-1 of the Tax Code; and
- that all the income has been subject to income and remittance tax withholdings, and such withholdings have been made, when applicable.
Moreover, the DIAN points out that "the change of foreign investment ... involves the transfer of ownership of the fixed assets in which such investment is represented, be they shares or contributions to local companies, or other assets owned in Colombia by foreigners without residence or domicile in the country, the transfer of which gives rise to the profit or loss resulting from subtracting the fiscal cost of the transferred asset or assets from the transfer price thereof. Income which, given its nature, does not meet the requirements needed for the exoneration of the obligation to file the corresponding income tax return", considering that "income arising from the transfer of fixed assets does not correspond to the income set forth in articles 407 to 411 and 414-1, referred to in article 592 cited before. Furthermore, if the payment for the acquisition of the assets representing the foreign investment is likewise made by a foreigner without residence or domicile in Colombia - when the transaction is made between foreigners - the income is not subject to withholding because the foreign purchaser is not qualified as a withholding agent and therefore such withholding is not made in the absence of this subjective requisite".
In DIAN's opinion, the obligation to file an income tax return must be understood without prejudice to the preparation and filing of the private tax liquidation referred to in Resolution 1521 of 1998, which is a previous requirement for the registration of the transfer of foreign investment ownership before the central bank. It must instead follow articles 326 and 327 of the Tax Code, since the private liquidation has a provisional character to proof the payment, or the guaranty of payment, of taxes arising from the change of title-holder before the special investigations division of the DIAN.