Title: Taxation of real estate investments in Spain and Colombia

Author: Leandro Zambrano Cañón

Within the effects of globalization that increasingly stimulate the integration of world markets to build a comprehensive economy, is the increase in the levels of "foreign direct investment" as an effective means of increasing the flow of resources in the economies of the world of each country.

In this sense, one of the sectors that traditionally provides attractiveness to people is the investment in the real estate sector, not only because it can allow a return on the capital invested by the value that the property may present, but because it can provide other benefits such as obtaining leases for lease and in general for the usufruct on the real estate.

The study compares the internal tax legislation of the countries of Spain and Colombia in terms of national and local taxes on real estate assets.

Now, one of the variables that have more importance, and that determines the final profit of the investor is the fiscal component, since an excessive tax burden makes the investment more expensive and discourages investment. For that reason, the Master’s Degree Final Project aims to identify the tax obligations that a Colombian individual and legal entity must assume when making an investment in real estate assets in Spain and, equivalently, the tax burden that a Spanish investor must assume in Colombia, and its effects on these economic operations.

To this end, a comparative study was carried out between Spanish and Colombian internal tax legislation, in all that pertains to national and local taxes that must be borne by an investor in real estate assets being Colombian in Spain and vice versa. For that purpose, the principles and rules of law used in the international distribution have been applied, legal institutions such as permanent establishment and fiscal residence have been examined and the agreement between Spain and Colombia has been taken as reference for avoid double taxation and prevent tax evasion in taxes on income and equity, signed by both states.

Finally, various investment vehicles are studied on real estate assets created in the Spanish and Colombian regulations, which would have to be assumed if a property were acquired directly.

Therefore, the work provides a perspective and a fairly accurate representation on the taxation of real estate investments in these countries. Moreover, it provides tools and elements that allow to planning and deciding this investment on the nature, applying the national and international tax regulations in an appropriate manner, maximizing benefits and minimizing risks.