Resident Tax Information
Any person who spends more than 180 days in Colombia during a year will be considered a fiscal resident of the country. The following are some of the criteria that will make an individual a fiscal resident in Colombia:
Spouses or dependents of the individual stayed in the country for 183 days
(continuously or not) within a period of 365 consecutive days.
50% or more of one's income is sourced directly or indirectly from Colombia.
50% or more of one's property/assets are managed in Colombia.
50% or more of one's assets are 'physically' located in Colombia.
The tax authority (DIAN) requests proof of fiscal residency in another country and says the proof is not provided to the DIAN.
The person has a fiscal residence in a place considered a tax haven by the Colombian government.
Fiscal resident will be entitled to observe the income tax levy below -
Social Security
olombia’s social security scheme covers a lot of benefits for its employees”
- Old age pension
- Worker’s Medical benefit
- Funeral grant
- Family allowance benefit
- Disability pension and settlement
- Unemployment benefit
- Cash Sickness benefit
- Invalidity benefit
- Survivors benefits, and settlement
- Severance benefit
- Cash Maternity benefit
The contribution for Colombia’s social security system is as follows -
Statutory Benefits
Statutory Benefits in Colombia must be equally provided by employers to their employees.
Below are the mandatory employee benefits —
Social security contributions
Colombia's social security system is very comprehensive and requires employers to effectively manage payrolls in order for employees to receive their benefits.
Statutory leaves
Employers in Colombia are required to make sure that social security contributions are deducted each payroll period. When an employee avails himself or herself of these benefits, employers must be on top of processing and making certain they receive their entitled amounts too!
Bonuses
The Colombian government has a policy of giving employees one month’s salary as service bonuses twice per year. It is given in June and December, which means that there are more opportunities for contractors to receive this reward!
Fringe Benefits
On top of the benefits mandated by the labor laws, additional compensation called Fringe benefit, may be offered by employers to their employees. The following are some of the fringe benefits offered in Colombia –
- Company cars
- Personal
- Loans
- Private Life
- Insurance
- Medical Insurance
Exempt Benefits
All monetary benefits are taxable and subject to withholding of taxes. However, the
exempt benefits include –
- Pension, health, and social security contributions
- Special savings account for housing
Long-term Incentives
The best way for an employer to show their appreciation of hard work and dedication is through long-term benefits. Employees will often be rewarded with company specific goals, such as stock options or other forms of equity ownership that provide incentives over time horizons greater than one year when they achieve certain performance milestones within the business unit/organization where employed.
The following are some of the long-term incentives offered in Colombia
- Pay for Performance
- Employee Stock Purchase Plan
- Pension and Retirement Savings
- These incentives must be explained and specified in the employment contract.