The wealth tax is a significant tax burden for individuals and legal entities with substantial assets in Colombia. With the enactment of Law 2277 of 2022, which permanently established the wealth tax, it is essential to understand the key aspects to comply correctly with this obligation and avoid penalties.
What is wealth tax?
This tax is levied on net worth, defined as the difference between the taxpayer’s assets and liabilities, as of January 1st of each year. The taxable event is precisely this net worth exceeding a minimum value.
Taxable event and tax base
For the year 2024, the tax is generated if the net worth as of January 1st is equal to or greater than 72,000 UVT (approximately $3,388,680,000). Net worth is calculated by taking the total gross assets less outstanding debts as of that date.
It is important to take into account the cadastral valuations of real estate, which are updated every yera and may affect the subjection to the tax [Article 295-3 of the Tax Code].
Additionally, individuals have a special exclusion: the first 12,000 UVT (approximately $564,780,000 in 2024) corresponding to the asset value of their primary residence are excluded from the tax, provided that they actually live there most of the time.
Taxpayers
Those responsible for payment will be those who possess such assets according to the following categories:
- Natural persons and undivided estates that declare income or belong to special regimes.
- Natural persons, whether Colombian or foreign, without residence in Colombia, with respect to their assets in the country.
- Unliquidated estates of deceased persons not residing in the country.
- Foreign companies or entities with assets in Colombia other than portfolio investments[Decree 1068 of 2015, Article 2.17.2.2.1.2].
Applicable rates
The tax is calculated by applying the following rates according to the value of the net worth:
- 0.5% for assets between 72,000 and 122,000 UVT
- 1.0% for assets between 122,000 and 239,000 UVT
- 1.5% for assets exceeding 239,000 UVT (temporary rate in effect for 2023-2026)[Law 2277 of 2022].
Sanctions and obligations
Failure to file or pay taxes may result in penalties under Article 647 of the Tax Code. Furthermore, Law 2277 includes specific penalties for illegal practices such as:
- Making accounting or tax adjustments that do not correspond to real operations and unduly reduce equity.
- Omission or underestimation of assets.
- Inclusion of non-existent liabilities or unauthorized provisions, in order to pay less tax.
These fraudulent activities may result in administrative and criminal penalties.
Recommendations for compliance
- Prepare a clear and up-to-date inventory of your assets and debts to calculate your net worth.
- Check the updated appraisal and property values.
- Submit your tax return on time according to the deadlines established by the DIAN.
- Consult expert advice to avoid errors or improper tax adjustments that may be penalized.
Understanding the wealth tax and its legal implications is essential to complying with this tax obligation in Colombia and avoiding penalties that could affect your assets. Law 2277 of 2022, the Tax Code, and related regulations establish the legal framework that ensures the proper application of this tax.
To ensure proper compliance and avoid risks, it is recommended to consult with tax and fiscal experts who can guide you through this process.
