Colombia

Colombia has 13 Double Taxation Agreements - download the complete guide to see the full listing -, which are indicated in Appendix 3, following the OECD Model (Spain, Chile, Switzerland, Canada, Mexico, South Korea, Portugal, India, Czech Republic, United Kingdom, France, Italy and Japan) and (Arab Emirates, which is not yet in force), and since it is part of the Andean Community, Decision 578/2004 is applicable to it. 

Colombia signed the MLI (Multilateral Convention to Implement Tax Treaty Related Measure to Prevent BEPS), but to the date the legal procedures required for it to enter into force in Colombia (approval as a law before the Congress, analysis of constitutionality by the Constitutional Court, ratification, etc.) have not been completed.

Prevalence of DTAs

In Colombia, it has been established that in case of conflict between an international agreement to avoid double taxation and a domestic tax legislation, the international agreement to avoid double taxation prevails in accordance with the principles of specialty and pacta sunt servanda. 

Tax Ruling No. 100202208-96 – Of the Colombian Tax Authority (“DIAN” per its acronym in Spanish)
Ruling C-460 of 2010 – Council of State

Constitutional Court

• The Colombian Constitutional Court has recognized that although the OECD comments are not binding, they are an important interpretative tool in such a complex and changing subject as the international agreements to avoid double taxation. Tax Ruling C-460 of 2010- Constitutional Court
• The Colombian Constitutional Court has recognized that income tax and similar/analogous taxes are autonomous taxes under the Colombian tax regime, but for the purposes of the international double taxation agreements, they are assimilable. Tax Ruling C-00049 of 2015, Tax Ruling C-00289 of 2014, Concept 0023323 of 2015, Concept 067157 of 2014 and Concept 073092 of 2013

Colombian Tax Authority (DIAN) Ruling Opinions

Among others:

• The Colombian Tax Authority (“DIAN” per its acronym in Spanish) has issued an interpretation regarding the exempted income referred to in CAN Decision 578, which must be recorded as exempt income, while the non-taxable income provided for in the international agreements to avoid double taxation are INCRGO (income not constituting income or profit). Concept 34760 of 2015- DIAN
• It has also ruled on the constitutional principle of Pacta Sunt Servanda, which establishes that the international agreements to avoid double taxation are a special law of preferential application, and it is not possible to modify international agreements by Decree- Office 96 of 2021- DIAN.

Interpretation of the Most Favored Nation clause (MFN) (Concept 20003283 of 2020)

• Regarding to the Colombia-Spain DTA, with the entry into force of the Colombia-United Kingdom DTA, the treatment provided for in Section 12 of the Colombia-Spain agreement on royalties is not altered or modified. 
• Regarding to the Colombia-Mexico DTA, the concepts of technical services and technical assistance will no longer be treated as royalties. The consideration for consulting services is not covered by the most favored nation clause, and therefore, it will continue to be treated as a royalty under this agreement. 
• Regarding to the Colombia-Chile DTA, the exclusion of the concepts of technical service, technical assistance and consultancy from the definition of Section 12 of the Colombia-United Kingdom DTA does not constitute an exemption or a stipulation of a lower rate in the terms of this treaty. Thus, the Colombian Tax Authority (“DIAN” per its acronym in Spanish) concluded that the MFN clause of the Colombia-Chile DTA. 
• Regarding to the Colombia-Czech Republic DTA, the concepts of technical services, technical assistance and consultancy will no longer be treated as royalties.
• Regarding to the Colombia-Portugal DTA  with the treatment in force of the Colombia-United Kingdom DTA, under the mentioned international agreement to avoid double taxation it is indicated that the concepts of technical services, technical assistance and consultancy will no longer be treated as royalties. 
• Regarding to the Colombia-Switzerland DTA, the agreement foreseen in Section 12 of the Colombia-Switzerland DTA does not generate any type of alteration or modification. 
• Regarding to the Colombia-Canada DTA, the MFN clause is only applicable for royalties and not for interests. In this case, it is limited only to events in which more favorable conditions are agreed with a third country regarding technical services, technical assistance and consulting.
• In relation to South Korea, India, France, Italy and Japan, no most favored nation clause was not agreed with respect to this issue.