Tax: Colombia

In Colombia it is not usual to find cases of sale/purchase of aircraft because what is used most is the figure of the lease. However, the sale and transfer of aircraft is mainly taxed by consumption tax and sales tax. 

Consumption tax is caused by the sale of some movable bodily property such as aerodyne, as provided in article 512-1 of the Tax Statute. This tax is caused at the time of the sale of the good. Article 512-4 of that Statute determines that the tariff at which aircraft is taxed shall be 16% on the taxable basis made up of the difference between the total value of the transaction and the purchase price. Under Article 512-5, teaching aircrafts do not cause excise duty. 

Sales tax is also caused in accordance with Article 420 of the Tax Statute as the sale of a movable property is one of the facts that generates this tax. Within the Colombian tax law there is no specification on the tax rate for the sale of an aircraft; which is why, it must be understood that the one that applies is the general rate of 19%. 

However, it is worth mentioning that, as always in tax matters, each issue must be analyzed individually. 

Colombia is not a member of the European Union, neither shares the EU´s customs nor the taxation.  Therefore, under Colombian law there would be no tax effect on the sale or purchase of an aircraft, as well as on the transfer of its title or interest when such operation is carried out within the European Union. Thus,  there would be no tax caused by such operations in Colombia.  

In Colombia it is possible to conclude sale contracts with foreign parties providing that, as a rule, Colombian law shall apply. In this way, taxes and their treatment will be equivalent to those caused in the celebration of a sale when, both, the buyer and the seller, are Colombian persons.  

When the contract is concluded abroad but is related to a property that is located or registered (like aircraft) within the Colombian national territory, the Colombian law must be applied. It will be the Colombian law that regulates the entire legal relationship of a sale when the situation and location of the good commercialized is located within Colombia at the time of the sale. 

In this way, the sale of an aircraft, either through a contract concluded with a foreign party, or abroad will generate sales tax. It is not relevant to Colombian law, if the aircraft sold will enter the country through a long-term import, because this is not part of the grounds exempted from the tax. 

On the contrary, when one of the sales contract’s parties is foreign and the good that is the subject of the contract is not within Colombia, the time of sale of the movable property shall govern the contractual relationship with the rules of the other State. 

On the other hand, when a sale of an aircraft is held and then exported, it is necessary to consider that they are two different and independent chargeable events between them. That is, in the sale, taxes are generated by the mere action of the transfer of the domain, regardless of what will be done next with the good sold. Thus, whether export sales tax is generated or not, it does not affect the tax treatment of the purchase and sale of the aircraft at all. 

However, as will be mentioned below, the export of goods under the Colombian legal system is exempt from sales tax and customs levies. 

As always, each issue must be analyzed individually. 

In Colombia, exports are not taxed by sales tax or tariff levies.

Under Colombian law, the importation of an aircraft can be carried out in two ways: either temporarily or permanently. 

In the case of a temporary importation, Decree 1165 of 2019 in Article 142 provides that the aircraft shall be imported for the time in which the activity is carried out (download, cargo, maintenance, etc.) and must be re-exported. When the re-export is not carried out, in accordance with Article 220 of the same Decree, a financial penalty shall be faced for each month of delay and the aircraft shall be immobilized. 

Article 142, in turn, provides that in cases where there is an aircraft exchange contract authorized and registered by the competent authority, there will be no need for customs procedures nor duties. 

In the case of a permanent importation, it shall be made in cases where it is intended to nationalize an aircraft by means of the registration of that aircraft as Colombian. 

In addition, the importation of aircraft causes sales tax, in accordance to Article 420 of the Colombian Tax Statute, which establishes importation as a chargeable event for this tax. Therefore, under Article 184 of Decree 1819 of 2016, the general rate of 19% shall apply to all aircrafts’ imports. It is a tax borne by the importer and will be collected in full by the Colombian Civil Aeronautics. 

Article 459 of the Tax Statute determines the taxable basis for sales tax for import cases, the same being on which customs duties would be settled. 

According to Decree 2153 of 2016, aircraft imports are taxed at a tariff rate of 0%. This means that they are subject to tariffs, but their rate is equal to zero. 

Article 519 of the Tax Statute establishes the national stamp duty in Colombia. It states that it will be caused on public instruments and private documents, as well as in securities, if they are granted in Colombian territory or abroad and if they are executed or generated within Colombia.  

In addition, stamp duty will be caused on documents raised to public deed, except for documents related to the disposal of vessels. Article 25 of Decree 2076 provides that the concept of vessels encompasses larger vessels and aircraft. Therefore, the documents involved in the alienation of an aircraft shall not be subject to stamp duty.  

For leasing contracts on vessels, Article 26 of Decree 2076 states that it will only be caused once the term of the contract has expired and the purchase option has not been used. When this happens, the value of the royalties paid until the expiration of the term of the contract will be settled for the tax basis.  

Stamp duty in Colombia has a rate of 1.5% and Article 522 of Tax Statute determines the rules for establishing the amount on which that percentage will apply. The values must be canceled within Colombia and settled to the official change. 

Colombian legislation provides some exceptions to stamp duty, in accordance with Article 530 of the Tax Statute. 

In Colombia, the most commonly used modality is leasing and not ownership. Therefore, there are few cases of aircraft property registration. However, the registration procedure is regulated as follows: 

There is no tax as such corresponding to the registration of an aircraft; what really exits are procedural rights to be able to proceed with the registration. Hence, the Colombian government established three mechanisms through which an aircraft can be registered. 

The first refers to the registration in the National Aeronautical Register of the aircraft’s ownership. As a result, the property register is obtained along with an operating permit. The second modality consists of registering the aircraft’s sale contract within the same Aeronautical Register. This time, what you get from the procedure is the registration of that contract for the first time. Finally, there is the aircraft’s register of the operating contract in the case of aircraft leases. 

The payments to be made are determined by the same government on its website and will depend on the weight of the aircraft being registered.1 

Regarding sales tax, as the registration of an aircraft is not found within the facts generating the tax, it is understood that it is not caused. In other words, by the fact of registering an aircraft, one of the events generating sales tax established under the Tax Statute in Article 420 is not being materialized. 

Aircraft within the legal system are not considered as luxury goods. Therefore, all tax treatment given to aircraft will not be special, as they are not considered luxury good inside the Colombian tax regulation.  

Within the Colombian legal order, the figure of aircraft leasing is given through financial or operational lease contracts depending on the lease modality: wet lessee or dry lessee. 

According to the National Tax Statute, income tax and sales tax are generated. 

Income tax: Article 127-1 of the Statute sets out how income tax is applicable for both financial and operating leasing, as well as establishing tax treatment for the owner and the tenant.  

Consequently, in the case of a financial lease, the lessor shall, at contract’s conclusion, recognize as a lease asset the value of the lease fees, the purchase option and the residual value. In addition, the lessor must include in the income statements all the income generated by that lease agreement. 

Similarly, the lessee must recognize such contract as an asset and record the sum of the royalties as a liability; which must match the value recorded by the lessor as an asset. In addition, the value that the lessee registers as an asset may be amortized or deducted; and sales tax may be deducted or discounted according to the type of good subject of contract. 

When it comes to an operational leasing, in the case of the owner, the same asset treatment must be given to the lease fees, as it is done in the financial leasing. On the contrary, for the tenant, there will be a difference in which it will be a deductible expense.  

In the other way, payments made on international leasing contracts of aircraft, and their parts, made with companies without domicile in Colombia, will be subject to a 1% withholding tax. 

Sales tax: The Colombian Tax Statute under Articles 127-1, 420, 421 and 429 provides the tax treatment for sales tax in the case of aircraft leasing. 

The law states that sales tax can be levied since this case is considered as a financed acquisition of an asset by the lessee. Thus, tax-speaking, a leasing contract involves the sale of the good object of the contract, which on this occasion concerns to an aircraft. 

In addition, the Tax Statute determines that this tax is generated when there is a sale; and, in turn, states that the payment of the portion of the royalties in the lease could be recognized as a sale. Hence, the cause of sales tax in aircraft leases. 

However, Colombian tax law does not set a differential rate for aircraft leasing. Therefore, it must be applied the 19% general tax rate.  

By the way, every transaction must be analyzed individually. 

See answer to Question 11.

Aviation in Colombia is considered private even if it is an aircraft for corporate, private or commercial use. Aviation of the Colombian Armed Forces (FAC) shall be understood as public. Therefore, for questions 10 and 11 the answer will be the same.  

Currently there is no tax implication for the use or operation of private aircraft in Colombia. There are no taxes, fees or contributions that charge such activity. What there are, are operating permits that must be processed with the Civil Aeronautics, but as such it is not a tax to be paid to the Colombian State for these concepts. 

Interests generated on bank loans are deductible from income tax, as provided by Article 117 of the Tax Statute. When a natural person purchases a bank loan from a bank, the interest expense can be taken as deductible. It is necessary that the loan was acquired to obtain an asset that will generate income to the person.  

Decree 3027 of 2013 established a maximum for the deduction of such interest from income tax: it is that the value of the debt cannot exceed three times the taxpayer’s liquid assets determined by December 31 of the immediately preceding taxable year. 

Colombia has within its regulation, due to Law 1816 of 2016, the National Carbon Tax that was implemented with the purpose of incentivizing the reduction of greenhouse gas emissions. In this way, the sale in Colombian territory, the withdrawal for own consumption or for the marketing and the import of ACPM, Kerosene, Jet Fuel and Fuel Oil are levied with carbon tax. When these fossil fuels are exported, the carbon tax will not be caused. 

Currently, it is normally paid on January 1st and is COP$16,422 for each ton of CO2 generated. The tax rate will depend on the carbon emission factor and the value established by law for each type of fuel mentioned above. This fee is expressed in unit volume (kg) per energy unit (J).  

The taxpayers of the National Carbon Tax are those who purchase fuels from their producer or importer. Producers and importers shall also be taxpayers when making withdrawals for their own consumption. 

In accordance with Article 1 of Decree 2442 of 2018, tax controllers must declare and pay this tax on a monthly account. There are no rules that allow exemption for the report of this tax, which is why the return must be filed, even if it is in zeros. 

All resources collected through this National Carbon Tax are allocated to the Fund for Environmental Sustainability and Sustainable Rural Development in Conflict-Affected Zones. In this way, this money is used to issues such as management of coastal erosion, the conservation of water sources, the protection of ecosystems and other environmental objectives set by the Fund. 

In the first instance it is important to clarify that, in Colombia, the departure tax and the airport tax are two different levies. In this way, their tax treatment is done as follows and corresponds to the taxes that passengers must pay within their plane tickets: 

National stamp tax by departure: is the value that must be paid by both Colombians and foreigners residing in Colombia when leaving the country by air, as defined by Resolution 1545 of 2015. The second Article of that Resolution provides that the charge of that tax shall be made by means of the price of all tickets and air contracts. In this way, the airlines will collect this tax. 

The value of this tax corresponds to 2.6 UVT whose values are set annually by the National Taxes and Customs Office in Colombia. (DIAN) 

However, Colombian nationals and foreigners entering the country for visit or transit shall not pay the tax. Resolution 1545 of 2015 states that visit should be understood as the entry to the country that does not exceed 60 calendar days; and as transit, one must understand the stopover or transfer made by the foreigner within the Colombian territory, as part of his flight itinerary, which continues to another city other than the one of origin outside Colombia. 

Airport fee: is a contribution established by law due to the use given by passengers to public airport facilities, value that must be included within the price of the ticket. 

This fee may be national or international. It is national when the flight has as its final destination a point in Colombia; and, when in the flight schedule of a private aircraft has as last destination a point within Colombia and its passengers make use of public terminals. Currently, this national airport fee costs COL $15,900.  

The airport fee is international when, unlike the national one, the end points of the flight plans are abroad, and passengers use the public terminals in Colombia during their transit. Its value today is USD$39, at the value of the representative market rate for the 14th and 28th of each month, as established by Resolution 5496 of 2005. 

Administrative fee: Resolution 3596 of 2006 defines the administrative fee as the mandatory non-refundable charge for the issuance of air passenger transport tickets, national and international. 

Pursuant to Resolution 3596 of 2006, the Civil Aeronautics is responsible for establishing the value of the administrative fee annually based on the Consumer Price Index (CPI) of the immediately preceding year.  These values will be for both the national and international administrative fees. 

This fee is charged by travel agencies, intermediaries and airlines in their direct sales. However, when ticket sales are carried entirely via Internet, airlines and travel agencies may charge a different administrative fee than the one Civil Aeronautics indicates. 

When the administrative fee is international, there will be a charge of sales tax with a 19% fee. 

Sales tax: in accordance with the Tax Statute, the air transport of passengers is subject to sales tax, with the general fare of 19%.  However, Article 476 of the same Statute excludes from this tax some national routes to certain destinations such as: the department of the Archipelago of San Andrés, Providencia and Santa Catalina, la Pedrera, Leticia and Tarapacá in the department of Amazonas, in the Choco the destinations of Acandí, Capurganá, Nuquí, Bahía Solano, Bajo Baudó, Juradó, among others. These territories and sites excluded from sales tax are established by the Decree 1625 of 2016, in article 1.3.1.13.16. 

In addition, Article 461 of the Tax Statute provides that, in the case of international passenger air transport, sales tax shall be settled on 50% of the value of the ticket when round-trip is issued; and will be 100% of the ticket value when it’s a one-way ticket. 

When it is a return ticket purchased abroad and the one-way trip begins abroad and the return trip in Colombia, or sales tax will be caused, according to the state council’s ruling of November 13, 2014. 

Fuel charge: The airline is free to determine the cost for the aircraft’s fuel. Tourism tax: it is caused by the entry of foreign persons to Colombia in means of air transport of international traffic. Currently its rate is US$15 or its equivalent in Colombian pesos. This tax must be included by the airlines in the heat of the air tickets and they will be responsible for their collection.  

They are exempt from payment of this tax, diplomatic and consular agents, crew of international transit aircraft, students, fellows and teachers, passengers in transit and those who enter Colombia in cases of arrival forced or emergency medical caused on board. 

There are excise duties and fees for certain areas of Colombia that are also included within the value of the  air ticket which are: 

Tourist card tax and use of public tourist infrastructure (San Andrés, Providencia and Santa Catalina): It consists in the payment for the entrance to the Archipelago either as a tourist or temporary resident. Its value is determined by the CPI.   Contribution to tourism (Leticia): it is a levy to be paid by any domestic or foreign tourist entering Leticia for a time not less than 24 hours and not more than 90 days for the purpose of resting or recreational.  Table Border Pro-development (Cucuta): the use of the stamp will be mandatory when air transport tickets have routes that leave the Department of Norte de Santander. 

Under Colombian legislation, type 100/130 gasoline intended for aviation is exempt from the General Tax on Gasoline and ACPM, under Decree 568 of 2013. 

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