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The Netherlands to conclude tax treaty with Colombia

On 16 February, Prime Minister Rutte and President Duque of Colombia signed the tax treaty between the Netherlands and Colombia in The Hague. This tax treaty prevents double taxation and contributes to the economic interests of both countries.

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Tax Treaty Colombia

Tax treaty

Colombia is an important partner for the Netherlands in Latin America. This tax treaty removes potential barriers that could otherwise hinder economic activities in Colombia and the Netherlands. A treaty also ensures legal certainty for taxpayers in both treaty countries. The treaty between the Netherlands and Colombia follows the OECD and UN model treaty in the main.

The treaty includes agreements to prevent tax avoidance. With these and other agreements in the treaty, this tax treaty meets the minimum standards of the so-called Base erosion and profit shifting project of the OECD/G20 against tax avoidance.

A reduced withholding tax rate of five percent for interest on loans for infrastructure projects has also been agreed with Colombia. This was at the request of the Colombian government, in order to attract foreign funding for these projects. In addition, the Netherlands is the first country with which Colombia has made agreements on arbitration. This ensures that if taxpayers from Colombia or the Netherlands have a dispute about double taxation, and the competent authorities of the two countries do not resolve it, they can submit this to a fixed group of experts from the industry who will give a binding ruling.

Before the treaty enters into force, both countries must still go through the mandatory approval procedure. In the Netherlands, the treaty is therefore first submitted to the Council of State for its opinion and is then submitted to parliament for approval.

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mr. Erwin Morriën
International tax lawyer

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