The treaty includes a number of recommendations from the Base Erosion and Profit Shifting (BEPS) project of the Organisation for Economic Co-operation and Development (OECD), such as a principal purposes test provision, rules on cooperation between the tax authorities and updated permanent establishment rules. It also includes various withholding tax rates for dividends, interest and royalties.

On December 13, 2019, Colombia and the United Kingdom exchanged notes, informing each other that they have completed the approval processes for the Treaty to Avoid Double Taxation (the Treaty).

The exchange of notes was the only step remaining for the Treaty to enter into effect. With this step completed, the Treaty will apply from January 1, 2020 for Colombia. For the UK, the Treaty generally will apply from April 1, 2020; for taxes withheld at source, however, the Treaty will apply from January 1, 2020.

The Treaty follows several recommendations of the OECD's BEPS project, such as (1) a principal purpose clause prohibiting use of the Treaty's benefits when there is no verified business purpose; (2) robust rules on cooperation between the tax authorities (e.g., the exchange of information and cooperation in tax collection); (3) updated rules on permanent establishments; and (4) a mutual agreement procedure to resolve residence conflicts for companies. The Treaty expressly provides that it should be interpreted under the OECD's commentaries.

The Treaty also includes certain thresholds for withholding tax rates as follows:

Under the Treaty, technical services, technical assistance and consultancy services are not taxed in the source state, unless there is a permanent establishment in that source state. This provision could cause the most favorable rule, contained in some treaties into which Colombia has entered, to apply. If the rule applies, the services must receive treatment that is similar to the treatment that would apply under the Colombia-UK treaty. As a result, each transaction related to these services should be reviewed on a case-by-case basis to determine whether the most favorable rule applies.