Capital gains from the sale of shares in a private resident company by non-residents are taxed at the rate of 15% (increased from 10% effective from 1 January 2023).

The standard withholding tax rate on dividends is 20% (increased from 10% effective from 1 January 2023), including on dividends received by permanent establishments in Colombia of foreign companies. The withholding tax applies on dividends paid out of profits generated in 2017 and subsequent years that are declared after 31 December 2018. If dividends are distributed from profits not taxed at the corporate level, the standard corporate tax rate applies, and after deducting such amount, an additional 20% (increased from 10% effective from 1 January 2023) is withheld.

10%: The term "royalties" includes payments of any kind received as a consideration for the use of, or the right to use, any copyright in literary, artistic or scientific work, including cinematographic films or tapes or other recordings media for the reproduction of those images or sound; for the use of or the right to use any patent, trademark, draws, models, plans or formulas or process or other intangible property; for the use of, or the right to use any industrial commercial or scientific equipment, or for information related to industrial, commercial or scientific experience. Fees for technical services, technical assistance and consulting services are also classified as royalties under the treaty and, therefore, attract the withholding tax for royalties as prescribed by the treaty.

10%: The term "royalties" includes payments of any kind received as a consideration for the use of, or the right to use, any copyright in literary, artistic or scientific work, including cinematographic films or tapes or other recordings media for the reproduction of those images or sound; for the use of or the right to use any patent, trademark, draws, models, plans or formulas or process or other intangible property; for the use of, or the right to use any industrial commercial or scientific equipment, or for information related to industrial, commercial or scientific experience. Fees for technical services, technical assistance and consulting services are also classified as royalties under the treaty and, therefore, attract the withholding tax for royalties as prescribed by the treaty.

10%: The term "royalties" includes payments of any kind received as a consideration for the use of, or the right to use, any copyright in literary, artistic or scientific work, including cinematographic films or tapes or other recordings media for the reproduction of those images or sound; for the use of or the right to use any patent, trademark, draws, models, plans or formulas or process or other intangible property; for the use of, or the right to use any industrial commercial or scientific equipment, or for information related to industrial, commercial or scientific experience. Fees for technical services, technical assistance and consulting services are also classified as royalties under the treaty and, therefore, attract the withholding tax for royalties as prescribed by the treaty.

The treaty does not specifically deal with management and similar service fees. In line with the OECD Model, this means that said services do not fall under the royalty article and do not attract the royalty withholding tax provided for under the treaty unless the services represent a minor part of a commingled transaction imparting in essence know-how. In that case, the services would follow the qualification of the principal component of the transaction, and may then attract the royalty withholding tax under the treaty. Otherwise, said services may be taxed in the source country only if the recipient has therein a (services) PE and the fees are attributable to that PE. Note, however, that not all countries would adhere to the OECD standpoint. ORBITAX has by default opted for the OECD position and the withholding tax rate is by default set to zero where the treaty does not specifically deal with management and similar service fees. Where the relevant country has a developed policy regarding the treatment of management and similar service fees and the correlation between those and royalties, ORBITAX has sought to cover this in Sec. 5.6. of the country chapters (Qualification of Specific Income Categories for Tax Purposes).

Fees for technical services, technical assistance and consulting services are classified as royalties under the treaty and, therefore, attract the withholding tax for royalties as prescribed by the treaty. The conclusion of the Colombia-United Kingdom tax treaty was thought to impact the treatment of the same fees under the Colombia-Spain tax treaty as a consequence of the MFN clause included in the treaty. However, the Colombian tax agency took the position in this notification that the conclusion of the Colombia-United Kingdom treaty did not result in triggering the MFN clause in the Colombia-Spain tax treaty due to the peculiar drafting of the latter. Such fees remain, therefore, classified as royalties and continue to attract the withholding tax for royalties under the treaty.