Colombia: Each participant in joint contract entitled to claim proportional share of withholding taxes

Rule providing managing partner solely entitled to claim withholding tax annulled

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December 16, 2024

The Council of State, through Judgment No. 26085 of August 30, 2024, held that each participant in a joint contract is entitled to claim its share of withholding taxes in accordance with their participation in the contract.

In so holding, the court partially annulled several sections of General Concept 008537 of 2018 of the Legal Management Directorate of the DIAN, which provided that the managing partner of a joint contract was the sole owner of income from the contract subject to withholding at source and thus entitled to claim all withheld tax. The court determined that the contested sections violated Article 18 of the Tax Code amended by Law 1819 of 2016, under which each of the parties to a joint contract, whether as managers or as hidden participants, must independently declare the assets, liabilities, income, costs, and deductions according to their participation.

Read a December 2024 report (Spanish) prepared by the KPMG member firm in Colombia

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