Last November 2nd 2016, the Governments of Colombia and the United Kingdom announced that both countries had successfully signed the Double Taxation Agreement (hereinafter, DTA). This DTA shall enter into force, in general terms, on January 1st 2017.

This agreement, according to the explanatory statements, is basically intended to eliminate double taxation with respect to taxes on income and on capital gains, without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance.

Jane Ellison, UK´s Financial Secretary to the Treasury, and Mauricio Cárdenas, Colombian Finance Minister, assured that this DTA will strongly enhance, as a focal point, the trade relationship between both countries. May we take into account that this Agreement shall reduce the tax barriers that businesses face daily.

This benefits are also applicable to individuals based on the two Signatory countries. With regard to individuals income and wealth tax, the profits will be remarkable. Primarily, income tax of this individuals will enjoy an organized system that will allow them to avoid the payment of taxes in both countries, such as employment income, which will be taxable only in the Country in which the activity is carried out (here we should take into account that some exceptions may be found on the DTA).

In addition to the aforementioned, other taxable income may also enjoy the advantageous regime derived from the DTA, such as withholding tax on interests or dividends. This kind of income may be taxed on both Signatory countries but, unlike the previous situation, the taxation on the country in which the income is not generated shall be limited (10 and 15 percent, respectively). With regards to the royalties arising in one of the Signatory countries, they should be taxed in the country where they were generated. Nevertheless, the other country may tax them as well, but always limited to a 10 per cent 10 per cent of the gross amount of the royalties. And similar situation would be faced by the taxable subjects that obtain a capital gain on one of this States. This gains could be also taxed on the other country with a limit will operate as well.

Finally, one of the most important highlights about DTA is the new regime of information exchange. Hereinafter, the Authorities of both countries shall exchange such information as is foreseeably relevant for carrying out the provisions developed on the instrument signed on November 2nd.

In conclusion, it is possible to identify the existence of new opportunities for international trade and transit of workers between the two countries. This agreement will benefit, foreseeably, a greater flow of investment between the Signatory countries and, also, the improvement of legal certainty for businesses.

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Tags: asesoria fiscal internacional , asesor expatriados, asesoramiento fiscal expatriados