January 10, 2022
Colombia issues resolution on ultimate beneficial owners
The resolution establishes the criteria for determining the ultimate beneficial owner that should be reported before the Colombian Tax Authority, as well as the information to be reported, the technical requirements for reporting the information and the deadlines for submitting the information.
On December 27, 2021, the Colombian Tax Authority issued Resolution No. 164, establishing the criteria for identifying the ultimate beneficial owner (UBO) of legal entities or structures without legal status (individuals that (1) are the owners of, (2) control or (3) benefit from, the relevant entity), as well as the information that will be compiled in the UBO registry (RUB, per its acronym in Spanish).
This Tax Alert highlights the most significant aspects of Resolution No. 164.
Who must provide information about UBOs?
The following legal entities or structures must submit information about UBOs:
- Colombian companies or entities (i.e., tax residents), for profit or non-profit, including public companies and public-private companies
- Permanent establishments (including branches) in Colombia of nonresident entities
- Structures without legal personality, or similar structures,1 when:
- They are created or managed in Colombia
- They are governed by Colombian rules
- The trustee (or equivalent) is a tax resident in Colombia
- Foreign entities or structures without legal personality when, according to the financial statements, the foreign entity derives more than 50% of the value of its total assets from assets located in Colombia
Who must be reported as UBO?
The following table sets out who must be reported as a UBO:
Type of entity
Person to be reported as UBO
- Individual who, individually or jointly, owns (directly or indirectly) or benefits from 5% or more of: (i) the capital, (ii) the voting rights, or (iii) the assets or profits of the legal entity
- Individual who, individually or jointly, exercises control (directly or indirectly) over a legal person by any means (other than those mentioned in paragraph 1)
- Individual who is the legal representative of the legal entity (unless another individual has greater authority, in which case the latter will be reported) when no beneficiaries are identified under the criteria mentioned previously
Structures without legal personality
Individuals who have any of the following qualifications:
- Settlor, grantor or equivalent
- Trustee or equivalent
- Trust committee, finance committee or equivalent
- Beneficiary or conditional beneficiary
- Any other individual who exercises effective / final control over a trust or has the right to enjoy or dispose of the trust's assets, benefits or profits
For conditional beneficiaries, the conditions must be indicated in the RUB; when the conditions are met, the RUB must be updated to report those beneficiaries.
When a structure without legal personality holds (directly or indirectly) shares/interests in a legal entity or has any of the roles mentioned above with respect to another structure without legal personality, the structure must report its UBOs.
Specific rules are established for entities in the ownership chain that issued bearer shares or have nominal shareholders.
Information that must be reported
Taxpayers must report the following information about UBOs:
- Document used to verify the individual's identity (e.g., passport, Colombian ID or foreign ID)
- ID number from the document used to verify the individual's identity and country of issuance
- Tax ID number or equivalent and country of issue (if the individual has a Colombian Tax ID, this should preferably be reported)
- First and last name
- Date and country of birth
- Country of nationality
- Information about country of residence, state, city, address, zip code and e-mail
- Criteria for determining the UBO
- Percentage of ownership in the capital of the legal entity
- Percentage in the legal entity or structure without legal personality's profits
- Date from which the individual is considered a UBO or the status of UBO is subject to a condition
- Date from which the individual ceases to be the UBO or the condition to be deemed the UBO ceases to exist
How should the information be provided?
Taxpayers must report the UBO information through the RUB electronic system. Resolution 164 contains a technical annex with the technical specifications of the information to be reported.
Structures without legal personality that are not required to register before the Colombian Tax Registry (RUT, per its acronym in Spanish) must register before the Identification System of Structures without Legal Personality (SIESPJ, per its acronym in Spanish).
Deadlines to report UBOs
The following deadlines apply for reporting UBOs:
Legal persons and structures without legal status created before January 15, 2022: September 30, 2022
Legal persons and structures without legal status created as of January 15, 2022: Within two months of the registration before the RUT or the SIESPJ (as applicable)
Changes in information reported to RUB as of January 1, April 1, July 1, and October 1 of each year: Update within a month of those dates
Due diligence to report UBOs
Legal persons and structures without legal status (or similar structures) must carry out all the necessary procedures to properly identify their UBOs, including identifying the corresponding chain of ownership and control. If they cannot identify one or more of the UBOs after carrying out all available procedures, they must report that to the RUB, with the reasons one or more UBOs cannot be identified.
The supporting documentation for identifying the UBOs must be kept for five years, beginning January 1 of the year following the one in which the UBOs are reported, updated or deleted from the RUB or SIESPJ (as applicable).
For additional information concerning this Alert, please contact:
1 According to Article 1 (6) of Resolution 164 of 2021, these types of entities include, among others trusts, joint venture agreements, private equity or collective investment funds, public debt funds, pension funds, and severance funds.