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Considerations around taxes in Colombia for foreigners are hardly top of mind when expats move there — and between its beautiful beaches, friendly people, and affordable cost of living, it’s not hard to see why. Of course, taxes are an inescapable part of life for everyone, but especially US citizens and permanent residents. Before moving, we highly recommend digging into the practical aspects of living abroad, and both US and Colombian taxes will form a piece of that puzzle.
In the following guide, we break down the nitty gritty details into an easy-to-digest guide on US expat taxes in Colombia. If possible, we recommend consuming it with a nice cup of Colombian coffee, or another beverage of choice.
Snapshot of Colombia taxes
- Primary tax forms: Formulario 210
- Tax deadline: Between August and October, depending on the individual1
- Reporting website: DIAN online portal
- Administrative language(s): Spanish
- Tax treaty: No
- Totalization agreement: No
How do Colombia taxes work for Americans living there?
Colombian tax residents must file a tax return (Declaración de Renta) reporting their worldwide income if they meet any of the following conditions:*
- Earned more than 59,377,000 COP (~$13,188 USD)
- Spent/charged more than 59,377,000 COP (~$13,188 USD) to credit cards
- Deposited/invested more than 59,377,000 COP (~$13,188 USD)
- Had a net worth of more than 190,854,000 COP (~$42,313 USD) by the end of the year2
Non-tax residents only have to file a tax return if a) they have Colombian-sourced income, or b) they have assets in Colombia worth more than 3,053,664,000 COP (~$675,264 USD).3
*All figures as of 2023
Who qualifies as a tax resident in Colombia?
Colombian tax laws state that anyone who spends 183 days or more in the country is a tax resident. To spend that much time in Colombia, though, Americans must first have a long-term Migrant visa,4 such as the:
Digital nomad visa
For those who work remotely for a company based outside of Colombia and earn at least 3 million COP (~$650 USD) per month.
Marriage visa
For spouses and partners of Colombian citizens or residents.
Work visa
For those who have received a job offer from a Colombian employer.
Business owner visa
For those who invest at least 116 million COP (~$35,471 USD) in Colombia.
Student visa
For those studying in Colombia.
Real estate investment visa
For those who purchase property in Colombia worth at least 406 million COP (~$90,027 USD).
Retirement visa
For retirees with a pension of at least 3.48 million COP (~$772 USD) per month who wish to live in Colombia.
What’s the tax-governing authority in Colombia?
Direccion de Impuestos y Aduanas Nacionales (DIAN)
The tax-governing authority in Colombia is called the Direccion de Impuestos y Aduanas Nacionales (DIAN), or the National Tax and Customs Authority in English. They oversee taxes, customs, exchange duties, foreign trade, and state-run lotteries.
Tax brackets in Colombia
Income tax rates in Colombia as of 2023 are as follows:
| Taxable Income Band (COP) | Taxable Income Band (USD) | Marginal Tax Rate |
|---|---|---|
| 0 – 1,090 UVT | ~$0 – $10,249 | 0% |
| 1,090 – 1,700 UVT | ~$10,250 – $15,985 | 19% |
| 1,700 – 4,100 UVT | ~$15,986 – $38,547 | 28% |
| 4,100 – 8,670 UVT | ~$38,548 – $81,512 | 33% |
| 8,670 – 18,970 UVT | ~$81,513 – $178,336 | 35% |
| 18,970 – 31,000 UVT | ~$178,337 – $291,391 | 37% |
| 31,000+ UVT | ~$291,392+ | 39% |
Note: UVT refers to Unidad de Valor Tributario, which is equal to 42,412 COP as of 20235
Property taxes in Colombia
Property owners and holders are subject to an annual municipal tax of 0.5% to 1.2% (depending on the nature/usage of the property).6
Capital gains tax in Colombia
Gains resulting from the sale of assets like stocks and property is taxed at a flat rate of 15% in Colombia.
Payroll tax in Colombia
In Colombia, employers withhold income tax from employee paychecks according to the rates mentioned above. They also withhold 4-8% of an employee’s pay (depending on salary) for the public pension fund and an additional 4% for the national health system.6
Those who are self-employed, however, do not have an employer to withhold taxes for them, so they must pay these taxes proactively.
Do I have to pay social security in Colombia?
Tax residents are subject to Colombian social security taxes on their worldwide income, while non-tax residents are only subject to Colombian social security taxes on income sourced from Colombia.
Unfortunately, Colombia does not have a totalization agreement with the US, so US expats who pay Colombian social security taxes likely must also pay US social security taxes.
VAT
The value-added tax (VAT) applied to most goods and services in Colombia is referred to locally as the impuesto de valor agregado (IVA). The standard IVA rate is 19%, but there are lower rates for certain goods and services, such as:
- 5% IVA: Agricultural equipment and products, electric or hybrid vehicles, etc.
- 0% IVA: Certain food products (meat, eggs, dairy), biofuel, internet services in some circumstances, etc.
- Exempt from IVA: Public transportation, public utilities, certain financial services, etc.
What are the filing deadlines in Colombia?
Colombia’s tax deadlines are complex. The dates for the filing season are announced every December — while it’s slightly different each year, the season generally begins in August and ends in October.
Taxpayers are assigned specific deadlines according to the last two numbers of their tax identification number. The DIAN releases a calendar with these dates on their website each year.1
How do I file taxes in Colombia as a US expat?
At Bright!Tax, we specialize in filing US taxes, but our clients also get access to a network of vetted foreign filing partners in Colombia. To get a recommendation, fill out your information below.
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Do US expats living in Colombia also have to file US taxes?
Yes. The US’s tax system requires all permanent residents and citizens to file a federal tax return — provided they’ve reached the minimum income reporting requirements — regardless of where in the world they live.
Does Colombia have a tax treaty with the US?
Unfortunately, there is no agreement in place between Colombia and the US to prevent Americans living in Colombia from being taxed twice on the same income.
The good news is that there are several tax breaks that Americans abroad can take advantage of, which can often reduce or eliminate US tax bills — if not provide additional credits that can be applied to future bills.
Common tax breaks available for expats in Colombia
Foreign Tax Credit (FTC)
The Foreign Tax Credit gives US expats dollar-for-dollar credits for any income taxes that they’ve paid to foreign governments, provided that those taxes are legal, made out in their name specifically, and paid.
To leverage the FTC, you’ll have to fill out IRS Form 1116 and include it along with the rest of your tax return.
Foreign Earned Income Exclusion (FEIE)
Another popular tax break for US expats is the Foreign Earned Income Exclusion, which allows Americans abroad to exclude a certain amount of their earned income from taxation. This amount increases a bit each year due to inflation. For the 2023 tax year — aka the taxes you’ll pay in 2024 — that limit is $120,000.
If you’re eligible for the FEIE, you’re also eligible for the Foreign Housing Exclusion (or Foreign Housing Deduction, if you’re self-employed), which allows you to write off qualified foreign housing expenses like rent, utilities, parking fees, and more.
You can claim the FEIE by completing IRS Form 2555 and including it alongside your tax return.
To qualify, however, you’ll have to first meet one of the following tests:
Physical Presence Test
The Physical Presence Test requires Americans to have been physically located outside of the US for 330 days in a twelve-month period, although those days don’t need to be consecutive.
Bona Fide Residence Test
The Bona Fide Residence Test requires Americans to prove that they’re officially a resident of another country for at least one calendar year. Official documents like foreign rental contracts, residence cards, or employment contracts will help support your case.
Child Tax Credit
Expats with qualifying children or dependents can claim the Child Tax Credit just as they would in the US, for up to $1,500 in partially-refundable tax credits. To claim it, fill out the relevant information in Schedule 8812 on IRS Form 1040.
Tax implications of renting out your US residence while in Colombia
If you own property in the US, renting it while you’re living in Colombia can be a good passive income stream. Just remember to report the rental income — along with any expenses associated with the property — on Form 1040. And note that because this income is passive vs. earned, it can’t be excluded via the FEIE.
Rental income while living in Colombia – FAQ
If I own a rental property in the US or outside of Colombia, do I have to report it to Colombia?
If you’re a tax resident of Colombia, you must report all of your worldwide income, including foreign rental income. Non-tax residents, however, only have to report Colombian-sourced income, which wouldn’t include foreign rental income.
Which country do I pay taxes to on my rental property income?
Non-Colombian tax residents will only pay US taxes on income earned from the rental of a property located in the US (or any other country besides Colombia, for that matter). For tax residents of Colombia, however, this income would also be subject to taxation by the Colombian government. In this case, the FTC could help you avoid double taxation.
US Expats living in Colombia may need to file an FBAR
While Americans abroad are offered some additional tax breaks, they are also subject to some additional reporting obligations. For example, those with more than $10,000 across foreign accounts must file a Foreign Bank Account Report (FBAR) by completing FinCEN Report 114.
Furthermore, those with foreign assets worth over $200,000 on the last day of the tax year — or over $300,000 at any point in the tax year — must report them on IRS Form 8938.
I’m a US expat who’s lived in Colombia for years. Do I owe past US tax returns?
Yes. It might not seem fair, but the US requires all permanent residents and citizens to file tax returns, even if they haven’t lived in the US for years (or sometimes ever). If you realize you owe past tax returns, file them as soon as possible.
Getting caught up on your US taxes with the Streamlined Procedure
Fortunately, the IRS offers a voluntary amnesty program called the Streamlined Procedure that allows expats who are behind on their taxes to get caught up without any additional fines or penalties. To qualify, you must not currently be under IRS investigation, and your previous failure to file must have been non-intentional.
File US taxes from Colombia with Bright!Tax: Experts in US expat tax
Taxes as a US expat can be confusing, but you shouldn’t let them hold you back from fulfilling your dream of living abroad. With the right strategy, a move abroad won’t increase your US tax bills — in fact, it can often lower them.
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