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¡According to US Department of State, the United States is Colombia’s largest trade and investment partner worldwide. Conversely, Colombia is the United States third-largest trade partner in Latin America, with two-way trade in goods and services totalling $29.9 billion in 2020!
Why United States?
According to SelectUSA , the United States (US) has the largest consumer market on earth with a GDP (Gross Domestic Product) of $20 trillion and 325 million people. In addition, free trade agreements with 20 other countries provide enhanced access to hundreds of millions of additional consumers.
Investment opportunities range from real estate, portfolio investments, direct business investment and relocating or moving part of the business to the US. For these purposes investors shall be aware about the legal and tax domestic rules as they vary in each state and are different from Colombian regulations.
Lack of a DTT!
U.S. and Colombia does not have a DTT (Double Tax Treaty) currently in force, the negotiation for an agreement that prevents double taxation is on a preliminary stage of discussion. Therefore, Colombian companies and investors who are planning to invest or start a new business in the U.S. shall consider their income and capital gains will be taxable in both countries.
Tax Basis.
Individuals are subject to personal income tax at a top rate of 39% in the US and in Colombia, on the same income.Corporations are subject to a corporate income tax (CIT) of an average of 33% or a 20% withholding tax (varies considering the federal income tax and the state income tax) and 31% in Colombia on the same income (35% on 2022 according to the proposed tax reform). In Florida, CIT rate is one of the lowest in the US, starting in 21% with the federal income tax rate, to the highest rate of 26.5% along with the federal income tax rate.
In both cases, it is possible to take a tax credit on the taxes paid in the US, which must be calculated in due form in accordance with Colombian regulations.
- Tax Residence.
An individual is resident for tax purposes if he/she is present in the United States for more than 6 months in the tax year (continuous or discontinuously). Resident individuals are taxed on worldwide income, while nonresidents are taxed only on their effectively connected income to a trade or busines in the US.
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How to avoid double taxation?
For Colombian investors is recommended to be incorporated in the Unites States through a company (LLC, Corporation, S-Corporation or other), as companies located within its jurisdiction are not Colombian residents for tax purposes. Legal entities in the US are deemed to tax on the corporate or shareholder level depending on the election made by the taxpayer in the US (generally). For complex investments, it is recommended to use tax planning schemes.
Legalnova* can assist you investing in the US either if you are an individual or a company starting business in North America. We have a team of advisors both in United States and Colombia.
Don´t miss your chance! Take your investment to the US
