Stamp duty on the alienation of real property

By: CMA 

Article 77 of Act 2277 of 2022 (hereinafter the “Tax Reform”), in practice, revived the obligation to pay the stamp duty for documents that have been formalized as public deed, specifically in cases of alienation, under any title, of real estate whose value is equal to or greater than twenty thousand (20,000) UVT (Taxable Value Unit).

For the purpose of applying the stamp duty, “alienation under any title” is understood as the transfer of the real right of ownership, whether free of charge or for valuable consideration.

The execution of a promise of sale by private document does not generate the obligation to pay the stamp duty because it is not an alienation.

The properties that will be subject to this tax are those that exceed 20,000 UVT, that is, according to Resolution 0001264 of November 18, 2022, which fixed the UVT at $42,412 for the year 2023, properties with a value equal to or greater than $848,240,000.

The stamp duty rate varies for real estate between 20,000 and 50,000 UVT, that is, real estate with values from $848,240,000 and over $2,120,600,000, in application of the table contained in Article 77 of the Tax Reform, as follows:

The general opinion on the national stamp duty dated February 24, 2022, and virtual filing 000I2023002211 issued by the DIAN (National Tax and Custos Authority) (the “Opinion”), clarifies fundamental aspects on the levy, application and collection of the tax.

The Opinion specifies that the stamp duty is levied even in cases in which an alienation of real estate with a value of less than 20,000 UVT is executed; however, the DIAN indicates that for real estate of this value the applicable rate is 0%, thus, it is a differential application of the rate and not a matter of the levy of the tax.

In addition, the DIAN states in the Opinion that the following remain exempt from the application of the stamp duty: i) contributions of real estate to a Colombian company, ii) transfers of real estate under a spin-off or merger, as long as the provisions of Articles 319-3 to 319-6 of the Tax Code are met, as well as iii) transfers of real estate resulting from the dissolution of the community property.

The constitution or cancellation of mortgages shall also be exempt from the application of the stamp duty, this, according to the DIAN by virtue of paragraph 3 of article 519 of the Tax Code (article 77 of the Tax Reform) where it interprets that the tax is not levied when the constitution or cancellation of a mortgage on a real estate property has been formalized as a public deed.

The Opinion specifies that contributions of real estate to foreign companies are understood as a transfer in tax terms, which implies that stamp duty is applicable in these cases.

On the other hand, the Opinion emphasizes that the transfer of ownership of real estate to a trust constitutes a transfer for tax purposes, since there is no tax regulation to the contrary for tax purposes, i.e., the alienation or transfer of ownership of real estate to a trust and between trusts will be subject to stamp duty.

Regarding the concurrence with the registration tax, it is important to mention that although the paragraph of article 226 of Act 223 of 1995 states that “when the document is subject to the registration tax referred to in this law, no national stamp duty shall be levied,” the provisions of paragraph 3 of article 519 of the Tax Code (article 77 of the Tax Reform) prevails over such provision, which enables the concurrence between the registration tax and the stamp duty.

The tax may be economically borne by all the parties involved in the act (for example, by the buyer and seller in the sale and purchase of real estate) or by only one of them. Additionally, the law has not established a form of distribution of the percentage of the payment of the tax and, therefore, the payment of the tax may be freely agreed between the parties to the transaction.

Finally, the DIAN states in the Opinion that, under Article 518 of the Tax Code, it is the Notaries who must act as withholding agents of the stamp duty and will therefore be responsible for collecting the tax and issuing the withholding certificate.

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