The Netherlands signs tax treaty with Colombia
On 16 February 2022, the Netherlands and Colombia signed a tax treaty (Tax Treaty) aimed to prevent tax evasion and contribute to the economic interests of both countries.
The Tax Treaty will provide for the opportunity for Dutch and Colombian resident taxpayers to invest in the other country on a more tax efficient manner. The Dutch Ministry of Finance published not yet the text of the Tax Treaty but instead the following highlights:
- The Tax Treaty is generally in line with the OECD and UN model tax convention and meets the minimum standards of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (Multilateral Instrument or MLI).
- At the request of the Colombian government, a reduced withholding tax of 5% on interest on loans for infrastructure projects was agreed upon in order to attract foreign funding for such projects.
- The Netherlands is the first country with which Colombia has made an agreement on arbitration. This means that in case of a dispute about double taxation, and the competent authorities of the two countries do not resolve it, taxpayers from Colombia or the Netherlands can submit it to a permanent group of experts from the industry who will provide a binding decision.
- The date of entry into force is yet unknown. Before entry into force, the mandatory legislative approval procedures must still be completed in both states.
Please contact us if you would have any questions on the Tax Treaty.