The passive income obtained through foreign investment vehicles will be subject to taxation in Colombia in head of the Colombian controller.
The inclusion of an anti-deferral regime is proposed for the Controlled Foreign Corporations (“CFC”), which establishes that domestic corporations and Colombian tax residents that hold, directly or indirectly, a share percentage equal or greater to 10% of the total equity of the CFC, shall compute in their income tax return the passive income obtained by such CFC. The passive income assigned to the Colombian taxpayer will be the amount resulting from deducting out of the passive income the total costs and deductions associated with such income.
CFC are those that:
- Are controlled by one or more Colombian tax residents, according to the terms in the proposed legislation,
- Do not have their tax residency in Colombia.
CFC include investment vehicles such as corporations, trusts, collective investment funds, other fiduciary businesses and private interest foundations, incorporated with operation or domiciled abroad, regardless if they are considered to be legal entities or not, or if they are disregarded for tax purposes or not.
If the passive income of the CFC represents 80% or more of the total income, it will be legally presumed that its total income, costs and deductions will generate passive income subject to taxation for the controllers.
A list of items of income that are considered passive income is proposed, including dividends, interests, income derived from intangibles assets, income derived from the sale of assets that generate passive income, real estate lease income, amongst others.