Last Updated August 13, 2019

Law and Practice

Authors



Baker McKenzie S.A.S. has more than 6,000 lawyers and 77 offices worldwide. Led by Rodrigo Castillo Cottin, the firm's wealth management practice is highly renowned for its high level of expertise working with sophisticated clients in complex multi-jurisdictional reorganisation of assets and tax structures for family groups that lead the most important companies in the country. The firm develops global wealth management strategies that account for all of the applicable tax compliance requirements and commercial issues, which is a benefit given to clients that no other law firm in the country can offer. The firm is the only one with the infrastructure and international connection and co-ordination to offer an international coverage.

In Colombia there are no civil or commercial regulations regarding the establishment of irrevocable foreign trusts and private foundations. However, foreign entities have been recognised by Colombian tax authorities and may be used as structures to administer private wealth and circumvent forced heirship rules in Colombia.

Over the last decade, Colombia has implemented various anti-abuse rules forcing settlors and beneficiaries to report any irrevocable structures due to the exchange of tax information with more than 65 jurisdictions, ultimate beneficiary reporting rules, place of effective management rules, controlled foreign companies' rules and the recognition of low taxation jurisdiction.

Furthermore, regarding the use of irrevocable and discretionary trusts, the most recent tax reform (Law 1943 of 2018) provided that (i) the beneficiaries must report the trusts or the foundations, if they are not subject to conditions; and (ii) if the beneficiaries are subject to conditions then the settlor or founder must report the trust or the foundation for all tax purposes.

When implementing irrevocable trusts, foundations or similar entities, anti-abuse rules should be observed. This means that both the irrevocability and discretional character of the structure should be real and can be easily proven to the Colombian Tax Office.

Baker McKenzie S.A.S.

Ave Calle 82
No 10- 62 piso 7
Bogotá, D.C. 110221
Colombia

+57 1 634 1500

+57 1 376 2211

www.bakermckenzie.com
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Authors



Baker McKenzie S.A.S. has more than 6,000 lawyers and 77 offices worldwide. Led by Rodrigo Castillo Cottin, the firm's wealth management practice is highly renowned for its high level of expertise working with sophisticated clients in complex multi-jurisdictional reorganisation of assets and tax structures for family groups that lead the most important companies in the country. The firm develops global wealth management strategies that account for all of the applicable tax compliance requirements and commercial issues, which is a benefit given to clients that no other law firm in the country can offer. The firm is the only one with the infrastructure and international connection and co-ordination to offer an international coverage.

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