Deduction of offshore expenses in light of Double Taxation Agreements and non-discrimination clauses

Under non-discrimination clauses payments and account deposits made ​​to a resident of the Agreement shall be recognized under the same conditions as if was a payment made to a Colombian resident


Through Revenue Ruling No. 011654 of May of 2016, DIAN referred to the 15% limitation on costs and deductions in light of the Double Taxation Agreement between Colombia and Spain.

In this sense, it determines that under the “pacta sunt servanda” principle, the non–discrimination clause shall be applied and therefore the possibility for the taxpayer resident in Colombia to deduct payments and account deposits made to a resident of Spain shall be recognized in the same conditions as if they were made to a resident in Colombia.

This considering that the causality link with the source of income, as well as the other requirements set by law, are met. Finally, DIAN established that transactions between related companies that do not fall within the transfer pricing regime may be not recognized by the Colombian Tax Authority.