Capital Gains Taxation in Colombia
In Colombia, capital gains are subject to taxation under the Income Tax Law (Law 1819 of 2016). The law defines capital gains as the profit obtained from the sale, exchange, or other disposition of assets, including:
- Real estate properties
- Stocks and bonds
- Business assets
- Intellectual property
Calculation of Taxable Capital Gains
Taxable capital gains are calculated as the difference between the selling price of the asset and its acquisition cost. The acquisition cost includes the original purchase price, as well as any expenses incurred in acquiring the asset, such as brokerage fees or legal fees.
Adjustments or deductions may be allowed in the calculation of the gain, including:
- Expenses related to the sale, such as brokerage fees or legal fees
- Improvements made to the asset during ownership
Tax Rates
Capital gains are taxed at a flat rate of 10%. However, certain types of capital gains may be exempt from taxation, such as:
- Gains from the sale of a principal residence
- Gains from the sale of assets held for more than two years
- Gains from the sale of assets acquired before January 1, 2017
Legal Framework
The taxation of capital gains in Colombia is governed by the following articles of the Income Tax Law:
- Article 26: Definition of capital gains
- Article 33: Calculation of taxable capital gains
- Article 34: Tax rates applicable to capital gains
- Article 35: Exemptions from capital gains tax
Policy Objectives
The Colombian government's policy objectives behind the taxation of capital gains include:
- Raising revenue for the government
- Encouraging investment and economic growth
- Preventing tax avoidance and evasion
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