Details are available of the double tax agreement between the UK and Colombia signed on 2 November 2016. The treaty generally conforms to the provisions of the OECD Model Tax Convention but the following should be noted:

Permanent establishment

A building site, construction, assembly or installation project or any supervisory activity connected to it constitutes a permanent establishment if it continues for more than six months.

A permanent establishment may also be created where an enterprise performs services in the other contracting state through an individual present in the other state for an aggregate of more than 183 days in any twelve month period and more than 50% of the gross revenues from the activities of the enterprise are derived from the services performed there by the individual; or if services are provided by an enterprise through employees or other personnel engaged for the purpose if the activities continue on the same or a connected project within the other contracting state for an aggregate of 183 days in any twelve month period beginning or ending in the relevant fiscal year.

Withholding tax

The withholding tax is restricted to Nil for cross-border dividends payable by a pension scheme or fund (a mandatory pension fund in Colombia). Withholding tax on dividends is limited to 5% where the beneficial owner has a 20% direct holding of capital of the paying company; and withholding tax is 15% in other cases. The withholding tax on interest is limited to 10% with some exemptions and on royalties the withholding tax is also limited to 10%.

Entry into force

The agreement will enter into force following an exchange of diplomatic notes to confirm that the necessary procedures have been completed. The agreement will take effect in relation to withholding taxes from the first day of January following the date of entry into force. For other taxes the agreement takes effect in Colombia for years of assessment beginning on or after the date of entry into force and in the UK for corporation tax for financial years beginning on or after 1 April following entry into force (or periods beginning on or after 6 April following entry into force in the case of income tax and capital gains tax).