Clarifying Tax on U.S. Expats in Colombia

So, you expect me to give a detailed analysis on your situation (or anyone's)?

I gave general examples because, as everyone has said, everyone's situation can be different.  But I showed approximate tax bills which are as accurate as can be without doing an actual filing - no one would have any surprises, they would know what to expect.

I have posted government links and other websites that back up what I have written.  You have backed up nothing.  You have not explained how someone could pay NO taxes in the USA, but owe $30K in Colombia.  You are not credible.

Thousands of resident expats obviously disagree with your shallow and incorrect assumptions.

I would like to ask a question?  I was thinking of coming to Colombia. So, I was thinking of getting a retirement visa(or whatever you call it). I own a home in the US. And the value is going up every year. Expected to raise 50% in the next 10 years.
I am 68 and want to wait another 10 years to sell the house (the home is paid for). Will I be taxed in Colombia for that if I am retired there when i sell the house?
Will I be taxed on my savings? Equities and mutual funds?
I am also a poor gringo wanting to find a good place to retire.
I spent the last 10 years in Thailand and left there because of the rapidly changing laws on retirement for US citizens.

Hi,  Garyknrd I have no doubt that the recently posted information on here has left you totally confirm. Its clear there are disagreement galore  and some conflicts of interest in the  replies.  I would highly recommend you talk with an expert. Unfortunatly much of the information you will see here is conjecture, not backed up with any actual first hand knowledge. The information I posted came from meetings with two attorneys in practice in Medellin this year. The replies I receive here, were almost 180 degrees different. This is further confused by the fact that even the attoroneys were not 100% in sinc on every point. They both agreed that the government people take liberties with the laws which may or may not benefit you. Please contact a professional and maybe even more than one.
No one is more disappointed in what I learned, as I love the country and the people. I just spend 9 months between colombia and ecuador mostly in colombia. I have been visiting colombia years with Ericsson and Motorola. I had always intended to make Medellin my home after my retirement. I would certainly be interest in what you learn, even if it may disagee with some of my points. Regards windboater

Unfortunately the countries that I want to live in are changing their laws or have prohibited laws on the books. Seem's like they are targeting baby boomers now.
I would of already been there if not for the pandemic. I will look into it pretty seriously now. I have a feeling 180 days is my limit in Colombia. Depends on what a tax attorney in Colombia tells me I guess. Bummer..
Anyone thinking they are safe just remember they can change the laws with the stroke of a pen and do what ever they want to the expat community. I found that out the hard way.

garyknrd wrote:

...just remember they can change the laws with the stroke of a pen and do what ever they want to the expat community...

That's the bottom line.  Almost nowhere in the world that is cheap to live and attractive for expats, also has stability and rule of law to the same degree as we have in the USA.

There's not as much disagreement about taxes in Colombia as some would have you believe, perhaps because they do not really understand the laws and they also do not like what they think they understand.

When you are talking about income, it is straightforward.  Read this link about taxation in Colombia:

https://en.wikipedia.org/wiki/Taxation_in_Colombia

It clearly states the brackets for the income tax.  The personal income tax is higher percentages than in the USA, and starts at lower income levels than in the USA.  Colombia is a poor country and also has socialist tendencies, and has many government programs to fund - that's one way they try to do it, by trying to get as much tax as they can from the working public.

By and large the definition of income is the same as in the USA.  If/when you sell a house and receive money, that's considered income.

There is also no question about when you have to pay income taxes.  It's when you are a tax resident.  You are considered a tax resident of Colombia when you spend more than 183 days total in the country in any 365 day period not necessarily a calendar year.  This is similar to the USA and many states, where you are subject to tax if you spend 6 months or more there in a tax year.  Also just like the United States, Colombia asserts the right to tax your worldwide income when you are a tax resident.

You also ask, "Will I be taxed on my savings? Equities and mutual funds?"

If you are taxed on these now, in the United States, then you'd probably also be taxed on them in Colombia.  Although I'm not an investor, I don't recall being taxed on those things in the USA - not until they are sold and become income or capital gains.

There is a wealth tax that has already been discussed before in this thread, that might be applicable if your assets are above a certain level.

Colombia in so many ways is a do-it-yourself country, and not a turn-key destination - you have to do your own research for your own situation.  You should definitely talk with several tax professionals in Colombia and make sure they can back their talk up by citing the laws and the exact wording.  It would not be unusual to receive several conflicting opinions.  If you do not have good Spanish you will be at a disadvantage, and that would violate a cardinal rule in Colombia, "no dar papaya".

Dear Gary,

You seem like a good candidate for snowbird living, spending roughly half your time in Colombia, half at your house in the States .. or somewhere else.

The Colombia wealth tax comes and goes from year to year.  It may never affect you, depending on the value of your house and other assets. 

If you hated the changing laws in Thailand, well, Colombia may be no better for tax residents, going forward.  In fact, once covid lets up, Colombia and other countries may try to recoup by making the rules worse for taxpayers and-or Expats.

Rent, don't buy if you are going to try Colombia, especially in years 1 and 2.  There are multiple reasons for this.  One reason is that La DIAN could find you and theoretically attach your abode if you were ever judged to be tax delinquent.

Abide by any information presented by Osage Archer, above.  He is our top expert on this forum's Colombia tax threads and has been for years.

cccmedia

One more thing... no one can reliably predict ten years into the future .. regarding the value of your USA house or the tax rules in Colombia.

Nobody is promised good health as they approach 80.  So factor in the flexibility and peace of mind that might be available if you sell your house sooner rather than later while you are still in your youthful 60s.

cccmedia

@OsageArcher , yes the word is out on us baby boomers from the states I am afraid. I am a poor boomer, but what I have left I would like to hold on to for as long as possible. A decision I will have to make. Thanks for the great advice and your knowledge.

@cccmedia , I may end up being a snow bird. I was flying back and forth from the US to Asia a couple of times a year,  I am getting to old for that. The jet lag is brutal for me. Not to change the subject, but I have been driving into Mexico ,and it is nice and very easy for me. But, my last time in Colombia was really nice, and I want to come back and spend some time exploring.

I bought this old house 15 years ago and it has doubled in value since then. I am fighting with the property tax people now. But, as you say you never know. The bottom may drop out tomorrow. I don't have to worry about the wealth tax in Colombia for sure.
Thanks for the info and stay safe.

I did a little research and reading on the subject.

Some guide line reading here.
reference:  https://www.taxesforexpats.com/colombia/guide

The wiki page that lists the UVT at 33,156 COP is easy enough to figure.
The problem is whoever listed it on the wiki page listed it as 33.156 using a decimal point. And it was throwing my calculations wayyyyy off. I saw it several times on that page???? So I stopped using it as a reference.

I am starting to get a general idea on what is taxed and what is not. You are legally required to file a tax return in your country if you live over 183 days in Colombia. That way the Colombian government can track exactly what you have.

But, at this point I am thinking it will not be as bad as I thought. It all depends on what percentage the assets  are taxed at.

I started drawing my SS two years ago now and that upped my income by 1800 dollars a month and still with the dividends I draw monthly it looks like I am in good shape. So I need to sit down and talk to an expert in Colombia now to fill in the gaps.

So, i know just enough to be dangerous. haha But, it looks like it will not be as bad as I first thought.

The main thing I did come away with is, MAKE sure you file a return every year in your home country.



.

Just FYI, the UVT for 2020 is 35607 COP.  It goes up each year as they make adjustments for inflation and other factors.  I don't think it's ever gone down.

Assets are not taxed unless they are over 5000 million COP.  That's somewhere around 1.35 million USD at today's exchange rate.

5 billion COP that puts me out of danger. 

When i first looked at the Wiki page it was driving me crazy ( or crazier than usual ). Finally googled it and found the error on Wiki.

I am breathing much easier now. My only problem is when I decide to sell here I need to make sure I drop my visa in Colombia if I am still there. It will be bad enough paying uncle sam.

I was in Colombia doing some leg work in regards to birding. I cannot wait to get back.

www.flickr.com/photos/avianphotos

Great photos!  You'll have to get some of the endemic Colombian Chachalaca (among so many others!) which you can find in an area just to the south of Cali, and other central parts of Colombia.  Even the urban species you can see are a treat.

Although there is no double taxation treaty that I am aware of yet, you should be able to deduct any US taxes you pay from your Colombian tax bill.  Since the US tax is normally paid no later than April for the previous year, that makes it easier when you file in Colombia which runs from August to October.

Haha, yeah my passion. I have the Mexican Chachalaca, and I have some extremely rare birds from Asia. I spent years there getting photos. I hope to duplicate it in Colombia.. fingers crossed.

I will definitely look into the double taxation.

The main thing is now I know it is doable with out to much trouble.

Birding in Colombia is apparently really taking off the last few years, ha ha but now curtailed because of the virus.  Many Colombians who worked in the field as tour guides are now without work.

Someone you should probably get in touch with is Diego Calderón.  I do not know him personally but only by reputation which is excellent:

https://wingsbirds.com/leaders/diego-calderon/http://colombiabirding.com/

His email is       diegocolombiabirding@gmail.com

Some of his photos:

https://www.flickr.com/photos/colombia_birding_diego/

Yes the tourist industry is in dire straights.  Tour guide all over the world are suffering as well as others.
I will contact him when i arrive. And thanks for the links. All the help I can get is appreciated.
Last time in Colombia i was a little scared in some places. I need to get with a few groups that are die hard birders in Colombia.

I feel like that everyone is forgetting that Colombia has 3 "baskets" of income. In regards to the Pension Income "basket", apparently it is clear as day that the DIAN states that there is an exemption of 12,000 UVT. That in today's numbers going off of UVT of 2020=$35,607 COP. The exemption would then come out to $427,284,000 COP or $114,927 USD.  People that believe that this doesn't apply to foreign pensions/retirement accounts, then why would DIAN mention the Double-Taxation treaties that it would have to honor as well.

Sources:
UVT-https://www.dian.gov.co/normatividad/Paginas/UVT.aspx
DIAN Pension Income "basket"-https://www.dian.gov.co/impuestos/personas/Renta_Personas_Naturales_AG_2019/Paginas/rentas-cedulares.aspx

I'm sorry that this is long but I am attempting to explain this completely and correctly - and because the language is not direct and straightforward but rather convoluted, referring to things that are explained in other places, untangling it is difficult.

But the bottom line is, foreign pensions are not exempt from taxation at all in Colombia.  Only Colombian pensions are allowed the exemption.

Your last link you give says this about pensions, but it does not say what you say it does:

"Aquellos ingresos obtenidos por los conceptos mencionados anteriormente y que correspondan a rentas de fuente extranjera, se reconocerán en esta cédul y no les será aplicable la limitación establecida en el numeral 5 del artículo 206 del Estatuto Tributario conforme con lo previsto en el parágrafo 3 del artículo 206 del Estatuto tributario.

Lo anterior, sin perjuicio de lo establecido en los Convenios para evitar la doble imposición suscritos por Colombia y que se encuentren en vigor."

A rough translation:
"Those incomes obtained by the concepts aforementioned and which correspond to income from foreign sources, shall be recognized in this official document and the limitation established in number 5 of Article 206 of the Tributary Statute shall not be applicable, in conformance with that provided by law in paragraph 3 of Article 206 of the Tributary Statute.

The preceding, regardless of that which is established in the Conventions subscribed to by Colombia to avoid double imposition (of taxes) and which are in effect."

===================================================

So, while it does mention double-taxation agreements, it specifically says that income from foreign pension sources is not exempt - the limitation is not applicable.  Also, Colombia and the USA do not have any double-taxation treaty in effect - however, you are allowed to deduct any US taxes paid, from your Colombia tax bill.

===================================================

But yes, there are three "baskets" for ordinary income - actually they have 4:  0%, 19%, 28% and 33%.

https://en.wikipedia.org/wiki/Taxation_in_Colombia

However, you are conflating two things that are not the same under Colombian tax law - there is income, and then there is money from a pension.

When DIAN talks about pensions, they specifically say that foreign pensions are treated as ordinary income and are taxed in their entirety with no exemptions.  Only pensions obtained through the Colombian pension system are eligible for the exemption of up to 1000 UVT per month.  If you received 2000 UVT in one month only the first 1000 UVT is exempt, up to 12,000 UVT per year.

This is specifically adressed at this link below:

https://www.gerencie.com/pensiones-exen … ombia.html

From the above link, my bolding:
"Renta exenta por las pensiones pagadas en el extranjero.

Hay residentes fiscales en Colombia que reciben pensiones casadas en el exterior, como un colombiano que se pensionó en el exterior, o un extranjero que es residente fiscal en Colombia.

Estas pensiones no gozan de exención de manera que en su totalidad son gravadas con el impuesto a la renta.

Lo anterior en aplicación del parágrafo tercero del artículo 206 del estatuto tributario que señala:

«Para tener derecho a la exención consagrada en el numeral 5 de este artículo, el contribuyente debe cumplir los requisitos necesarios para acceder a la pensión, de acuerdo con la Ley 100 de 1993.»

La pensión que toza (sic) de la exención del impuesto a la renta es aquella que se ha obtenido de acuerdo a la ley 100, lo que implica haber cotizado el sistema de seguridad colombiano, y ese ha sido el argumento de la Dian para reiterar en varias ocasiones que las pensione extranjeras no están exentas del impuesto a la renta.

===================================================

A rough thought-for-thought not necessarily word-for-word translation:
"Exempt Pension Income From Foreign Sources.

There are fiscal residents in Colombia who receive pensions obtained outside the country, as in a Colombian who receives a foreign pension, or a foreigner who is a fiscal resident in Colombia.

These pensions do not enjoy an exemption, so they are taxed in their entirety under the ordinary income tax.

The preceding is in application of the third paragraph of Article 206 of the tributary statute which signals:

'In order to have the right to the exemption established in number 5 of this Article, the contributor must comply with the necessary requisites to access the pension, in accordance with Law 100 of 1993.'

The pension that enjoys the exemption from ordinary income tax is that which has been obtained in accordance with Law 100, which means having contributed to the Colombian social security system, and this has been DIAN's argument to reiterate on various occasions that foreign pensions are not exempt from ordinary income tax.

OsageArcher

You are correct. I read about foreigners that elect to put their foreign pensions on line 41. They are risking penalties, which are severe.

Thank you for your insights OsageArcher.
For many websites, not this one!, the idea is not to inform expats but to misinform them into making the jumping permaturely.  Many, so called experts point to a couple of isolated, and confusing facts and offer their analysis of their meaning. Dont fall for that, I do my own research, with true experts and therefore are seldom mislead by omission.
Taxes in Colombia are complicated subject even for people who have worked in the field for decades. One or two carefully choosen tibits of information can prove anything you like, ie taxes in Colombia are cheap  for retired US expats, (they aren't! Unless you own nothing, and make nothing) anywhere in the world. In that case anywhere will due.
All the information I supplied I received directly from lawyers I met with during my recent 6 months in country. They provided a comprehensive picture of my personnal tax liabilities if I stayed on Colombia more than 6 months. Their consensus was I couldn't afford Colombian taxes dispite being of modest means (by US standards). Now a few tidbits of Colombian tax law don't substitute for that kind of substantive analysis, But keep the tibits coming, as they helps me understand how some parts of the picture hang together.

Regards

Windboater

Windboater and Osage,

This thread intrigues me for several reasons the main one being that I may retire to Colombia with my wife. That being said, I truly feel Windboaters angst and I do believe that he has some misconceptions as I certainly did. Just a few comments.

Windboater you state that you owe no income taxes in the US due to getting two deductions. From that I deduced that you are married and filing jointly. To have zero taxes in the US or at least not need to file you would have to have income of around $27,000 (according to professor Google anyway). So I am lost as to how you owe $ 30,000 in taxes on $27,000 in income...so obviously I am missing something.

Also, I don't see it mentioned anywhere in the thread and I may have overlooked it; but, you are aware that you and your wife will be filing separately as there is no joint filing in Colombia.

As to the world wide tax; it is my understanding that it is one or the other. If you owe more based on patrimoney you pay that. Probably completely wrong.

Finally, Colombia is not that much cheaper if at all if you have middle income and wish to maintain the same lifestyle that you would in the USA. In my case I would have to have a stand alone home 3600 square feet three car garage and live in a Poblado/Envigado or such. Not that I would; but, comparing a home in Doce de Octubre to where I am currently living in TX is not an apples to apples comparison.

Additionally, you are aware that you are paying I believe 19% tax on every thing that you purchase aren't you? Unless of course you buy everything from street vendors and such.

I found someone on a different forum that paid into the Colombian tax system that shared their tax information with me and it was nowhere near as bad as you are portraying it here (not saying you are wrong either).

The problem is that you can consult ten "experts" and get ten different answers. Also, you won't find a good old "H & R Block" that will promise that if your return is audited and you are fined that you will pay only the additional tax and not any of the penalties. You will be blamed for what ever error is there and liable 100% for it.

Good luck and I welcome further comments to educate myself.

LPD

I looked at this issue sometime ago as I was also thinking of retiring to Colombia.  First you are right about the 19 percent IVA or value added tax that you pay on everything you buy except some basic food items.  This is a tax that started almost like a U.S. sales tax and has been steadily climbing over the years, you should look at its history and you will see where it might be in five or ten years.  As regard to income tax, if you earn a U.S. style income that puts you in the upper brackets in Colombia immediately and the percentage you would be paying in Colombia is much higher than similar U.S. income, that is the main reason I have decided not to move there.  If you want to live in Latin America with a U.S. income I think better choices would be Mexico, Costa Rica, and possibly Panama or Belize although I have not really looked into the specifics of those countries.

Laker4115 wrote:

If you want to live in Latin America with a U.S. income I think better choices would be Mexico, Costa Rica, and possibly Panama or Belize although I have not really looked into the specifics of those countries.

Don't forget Ecuador -  one reason many choose Ecuador, is that Ecuador does not tax foreign pensions.  Another is that Ecuador is dollarized, their currency is the US Dollar.

There are downsides to Ecuador, of course, just like any other place - but not paying taxes on any foreign-sourced income outweighs them for many expats.

https://budgeting.thenest.com/expats-pa … 30055.html

This all depends on who you use for your taxes I know many expats receiving pensions here in Colombia who do not pay  any taxes on their pensions, I for myself am not receiving pension yet, but I only pay about a $ 1000 USD on top of what I already pay in the US because my accountant deducts what I already pay in the US,  my only income is from IRA's and that only becomes income when you take a distribution, ofcourse I also do not own anything in the US and so that situation is a bit different, but I also know a few expats that own property in the US and do not pay any taxes here so it all depends on who you use to do your taxes.

Lpdiver if you dont mind ill kust ansaer you a little at a time as i can. Your first question i sinlple. Without laying out my tax situation for the whole world to see it, its the items the US doesn't tax that Colombia does tax that gives me the big tax bill in Colombia.
1. Colombia taxes your world wide income. This includes things like foreign social security payment.  Foreign income from Iras, Roth's,  health saving accounts, medical saving accounts, non taxible stocks and bonds.
Income for orher tax exemp assets like the sale of homesteaded property.  You dont have to have lots of these to make a huge difference in you colombian tax liabilities
Ive explined this more in detail back in the post.

Lpdiver if you dont mind illjust answer you a little at a time as i can. Your first question
Is simple . Without laying out all my tax situation for the whole world to see it, its the items the US doesn't tax,that Colombia does tax, that gives me the big tax bill in Colombia.
1. Colombia taxes your world wide income. This includes things like foreign social security payment.  Foreign income from Iras, Roth's,  health saving accounts, medical saving accounts, non taxible stocks and bonds.
Income for orher tax exempt assets like the sale of homesteaded property.  You dont need to have a lot of these to make a huge difference in your colombian tax liabilities
Ive explined this more in detail back in the post.
Colombia also looks at your assets and assumes   tax liabilties you failed to pay and uses your assets as a reason to add more income tax. Im not even referring to the wealth tax luckly I dont have assets to qualify for that..  hope this helps explain why the lawyers waved me off from moving permenently to medellin.
Regards john

Windboater,

I don't mind bit by bit information or a whole bunch all at once and I do understand your wish to keep financial matters private. The reason I am so interested in your case is that I find myself in a similar situation. This latest post of yours leads me to believe that the biggest problem from you is the sale of a home. I would find myself in a similar situation.

Also, the world wide wealth tax is of concern to me as I own a nice home in TX and will very shortly inherit a POS hundred year old home in CA ( but valuable).

You speak of the wealth tax and income tax as both being applicable; have you been told that as a fact? I was under the impression that it was one or the other; whichever was the highest.

I also felt that since you can deduct your US taxes directly from your tax obligation in Colombia along with the lower cost of living for most folks it is still a good deal to live in Colombia. So if I have a $20,000 dollar tax liability in Colombia and paid $13,000 in US taxes I would owe $7,000 in Colombia. This likely offset by the lower cost of living.

About that lower cost of living; I have stated in another forum that if comparing apples to apples Colombia isn't cheaper than the U.S. and get raked over the coals for that statement. But consider this: I live in a nice modern 3,000 square foot house in a very nice subdivision. To buy the same level of home in Colombia is likely to not be cheaper. I have two nice late model cars as well; that will be more expensive as well. Now it is true that I would not be living in that situation in Colombia; I would likely live in Doce de Octubre and have one car and one motorcycle. Most expats would not be comfortable there after dark.

Taxes are a very dynamic situation and constantly changing. Personal example is Proposition 19 that just passed in California a few days ago. I drastically changes my financial situation and actually makes relocating to Colombia more economically bearable.

Personally my path forward is likely to be that we will be sharing a home with my wife's best friend of over 50 years. She will share her home in Colombia and we will share our home in the U.S. Not everyone can do that.

Good luck with your path forward.

Noting your screen name; it was my intention to live aboard a sailboat for the next ten years or so; but, as we were driving to the marina to view some my wife finally informed that no way in hell was she going to live on a boat....

Regards,

lpd

Actually selling the house wasn't even on the radar when I talked to the Colombian attorneys.   That only came up recently but any income from the sale would be fair game for the colombian tax authority, were it would be tax exempt on my US taxes.

You mentioned no joint filing. My wife doesn't work, she is a dependent on my US tax return.

Dont understand this!
As to the world wide tax; it is my understanding that it is one or the other. If you owe more based on patrimoney you pay that. Probably completely wrong.
Resident pay tax on world wide income - period! I havent mentioned  inheritance, no one in my family is left alive didnt even talk to the attorneys about it. Im sure from what they did say, its taxible in Colombia even for sumes gifted in the US.
Yes im aware of the VAT, most countries around the world have that. Most things you buy are so cheap there, you hardly notice it.

Taking tax information from some unnamed person on a forum is like getting your news from Facebook. At least FB isnt intensionally trying to promote Colombia as many forums are.
I always suggest talking to a local Colombian lawyers as i did. No they dont always agree on everything but you will get the gist of it.

Regards
Windboater

I specifcally left out the wealth tax from my discussion and said so. You are confusing wealth tax with income tax accessed because you own assets.
They arent the same. The Weath tax is not an income tax. I totally understand your confusion . I see people on here saying things like,"it's just like in the US." trust me you arent in Kansas anymore and its nothing like the US. In the US the wealth is already there. In colombia they need to get the wealth from the expats because Colombians won't pay. They are notorious for that!

The great idea that you can deduct your us tax liabilties on your Colombian tax return is a non-starter. Most expats retiring to Colombia dont make enough to pay any taxes in the US to deduct in Colombia. If you are unlucky enough to make enough in the US to pay tax you are probably in a world of hurt if you retire in Colombia. A miniscule tax deduction isnt going to help you.

windboater wrote:

In colombia they need to get the wealth from the expats because Colombians won't pay. They are notorious for that!

The great idea that you can deduct your us tax liabilties on your Colombian tax return is a non-starter. Most expats retiring to Colombia dont make enough to pay any taxes in the US to deduct in Colombia.

Some of the bluster on this thread cries out for sourcing .. or else prospective Expats are probably misled.

I'm turning on the Bat Signal for Osage Archer.  If only he could pull some arrows out of his quiver and puncture the blather.

cccmedia

I still cannot connect the dots...

So what I did was look up the maximum a couple can earn in the US and not have to file and used that number.

I then looked up the UVT and brackets for 2019 in Colombia and arrive at about $3,415 owed in Colombia (NOT $30,000) if there are no deduction etc. For someone on a tight budget that may be a deal breaker; but, it ones budget is that tight I would be more concerned with the dollar/peso rate dropping.

As to having gotten opinions from two attorneys in Colombia, there is a wide range of possibilities as to their accuracy. Personally, when I have had legal issues to deal with I have armed myself with the written law and a person fluent in English, Spanish, and what actually happens in Colombia and I have fared well so far.

So someone is does not have a grip on the facts (could be me). But, I won't worry for a few more years as I won't be relocating full time for three more years and a lot can change. However, I will continue to investigate and discuss.

I am guessing that windboater either has a very unique situation, misunderstands something, or is just yanking our chains. It doesn't matter to me as I can learn something from all three situations.

As to his assumption that "most of the expats living there don't pay U.S. taxes" I doubt that is true and painting with such a broad brush is misleading.

LPD

LP

Like you said 3 or 4 years is a long time.

And if you do decide to stay more than 183 days in 3 or 4years, just dont buy any property or have any big bank accounts in Colombia

You seem to be wasting a lo of time and energy for something way down the line:

Who knows, Colombia could turn into another Venezuela by then, and you wouldnt even want to come here on vacation, let alone permanently

Just relax

cccmedia wrote:

I'm turning on the Bat Signal for Osage Archer.  If only he could pull some arrows out of his quiver and puncture the blather.

cccmedia

Sorry, I've stopped beating this dead horse!  I don't think there's anything useful to be added unless sources are quoted and linked to, which I have tried to do on everything I have already posted.

LPdiver's approximate figures are much more representative I think of what most expats might pay - I notice it has never been explained as to how a tax of $30,000 USD would be owed, it's just been a declaration without anything to back it up.

nico,

Time and energy are the one thing I have plenty of (shift worker). I am not as worried for my personal situation; but, I don't like people posting a viewpoint that flat out would not be true for most folks and I am simply trying to understand someone else's situation.

lpd

I havent seen anyone claim foriegn pension are tax exempt in Colombia so what you are describing is threfore tax evasion. Im not going that route in a foreign country, regardless of what others might do.

On the contrary my situation isnt unique in the least. Thats why I found it necessary to report my findings.  At the risk of repeating myself (maybe 5 times now) your can't look solely at earned income (world wide) as the problem for Americans wishing to retire in Colombia is deeper in the tax code as you might expect! If it was straight forward, no Americans would even concider Colombia as a retirement destination.  Colombia doesn't recognize the tax free status of any assets and sources of income from the US. Its as simple as that ie got a US ira, thats a taxible asset, is the ira invested? That income  and also taxible on your Colombian return.  The list of these types of tax free items in the US tax code is huge, but its all taxable in Colombia. You can find a list of these tax free or tax defered items further back in this thread. Even If you only have one or two of these, the impact can still be significant.
Your last point.  Im speaking as a retiree. Certainly not all americans who wish to retire in Colombia have a low enough income to be tax free in the US, but if they arent they will certainly be paying more Colombian taxes than me. I would give them the same advice, look twice before you leap

Thanks to all who have posted here, in particular OsageArcher.  I am a retired American.  I have spent the better part of 6 months in Colombia each of the past 3 years.  I am currently staying in Manizales with my girlfriend.  I am at the point of wanting to learn for sure if I can afford a cedula and visa in Colombia and pay the requisite taxes on my US retirement.
Can anyone recommend a tax lawyer in Manizales, Pereira, or Medellin?
My Spanish is pretty poor, basic conversational, and that is part of the problem for me, being unable to read and comprehend any laws or regulations in Spanish.
Anyway, any recommendations would be greatly appreciated.  I would much prefer have a recommendation for a tax/immigration lawyer, than just trying to find one on the internet.

I don't know the specifics as far as tax income brackets as they currently exist in Colombia, but you should not be surprised if your U.S. income puts you in the fifty percent tax bracket.  Maybe someone else in this forum can provide tax bracket specifics, this is why initially seems to be a relatively cheap place to live when in reality it is not.

Laker4115 wrote:

...you should not be surprised if your U.S. income puts you in the fifty percent tax bracket.

To my knowledge the income tax brackets in Colombia do not reach 50%.  A tax on assets, popularly known as a wealth tax or impuesto a la riqueza, does not apply until your assets exceed 5000 million COP, just under 1.5 million USD at today's exchange rate.  That tax is set at a 1% rate.

Colombia, just like the United States, asserts the right to tax the worldwide income of its fiscal residents.  A fiscal resident, a tax resident in Colombia is anyone who spends more than 183 days total in-country in any 365-day period not necessarily a calendar year.

It is true that tax-free money, say from a Roth IRA in the United States, is viewed as income in Colombia if/when a withdrawal is made - that money is income from Colombia's point of view.  Similarly, the United States does not recognize any special treatments that income gets according to the laws of other countries - if it's income, it's income and is taxed as such, in both countries.

Any income taxes you pay in the United States may be deducted from your Colombian tax bill.

This is a good overview of taxation in Colombia:

https://en.wikipedia.org/wiki/Taxation_in_Colombia

The income tax brackets are as follows.  The table below shows the tax rate in units of UVT (Unidad de Valor Tributario), in which 1 UVT = $35,607 COP for 2020.

Income Range in UVT    Tax Rate
0 to 1,400                          0%       (up to 49.8498 million COP, about 14,400 USD)
>1,400 to 1,700                19%     (about 14,400 USD to 17,500 USD)
>1,700 to 4,100                28%     (about 17,500 USD to 42,300 USD)
>4,100                                33%     (over about 42,300 USD)

Just a for instance using the above table at today's approximate exchange rate:  If your US income was $1500/month, $18,000/year, you would pay no tax on the first $14,400.  Then you would pay 19% tax on your income from $14,400 to $17,500, which is .19 times $3100 which is $589 USD;  then you'd pay 28% tax on your income from $17,500 to $18,000 which is .28 times $500 which is $140 USD, for a total tax bill of $729 USD or about 2.5 million COP.  But this is without any deductions, so you wouldn't end up paying that much.

In any case consult with a good tax attorney or accountant in Colombia.  Consult several.  Most are not necessarily knowledgeable about the special situations of foreigners, they do most of their business with native Colombians.

WELL..its lucky  I didnt tell them about  the countries that have "Tax Treaties" with Colombia..Like Canada..


https://www.youtube.com/watch?v=oCLtaK7 … l=SketchiT

Hey fellow expat... we just retired to Manizales, expats trying to learn language and culture.  We have an excellent lawyer based in Pereria but who comes here when we need her.  We also found an excellent espanol teacher here.  Would love to meet other expats but hard to find in Manizales.  Send me a note if you'd like the contact info for our lawyer.  Kind Regards.  J