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DIAN REVENUE RULING

Tax treatment of the benefit payment from life insurances

Only life insurance policies that lead to savings are subject to the application of section 271 of the Colombian Tax Code

 

Through Revenue Ruling No. 14738 of June of 2016, the Colombian Tax Authority- DIAN-, established that the beneficiaries of life insurance policies should declare its equity value based on the value of the payment received, equivalent to the 100% of the amount of the refund given by the insurer, according to article 271 of the Colombian Tax Code.

Additionally, DIAN concluded that the higher value of the termination shall not be subject to tax because of the equity comparison process. This, according with section 223 of the Colombian Tax Code and the legal principle that states that what is subsidiary is tied to the fate of what is principal.