A trust does not leave DIAN's radar because it sits abroad. If you are a Colombian tax resident, as settlor, as beneficiary or as the person who controls it, the trust can trigger the controlled foreign entities (ECE) regime, the foreign assets declaration, beneficial owner reporting and, if something is omitted, the risk under Article 434A of the Criminal Code. Ligal reviews the trust, organizes the route from start to finish from Colombia and tells you, with the clauses and the numbers in hand, what makes sense and what must be declared, with lawyers, accountants and ex-DIAN experience.
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A trust is an Anglo-American legal arrangement: one person (the settlor or grantor) transfers assets to a trustee, who manages them under the founding document for one or more beneficiaries. It can be revocable or irrevocable, discretionary or with fixed rights for the beneficiaries, and it can have a protector or a committee overseeing the trustee. Colombia has no general equivalent; the closest is the fiducia mercantil of the Commercial Code (Arts. 1226 ff.), but they are not the same. In a fiducia mercantil the settlor (fiduciante) transfers specified assets to a trustee company (fiduciario) to manage or sell them for a purpose he sets, for his own benefit or that of another beneficiary (Art. 1226); only credit institutions and duly authorized trust companies may act as fiduciario (Art. 1226); the assets form a separate autonomous estate (Art. 1233) that is not part of the general security of the fiduciario's creditors (Art. 1227); and the Code prohibits secret fiduciary arrangements, those where the benefit passes to several persons in succession and those lasting more than twenty years, with exceptions (Art. 1230). The assets also cannot be pursued by the settlor's creditors, except those whose claims predate the arrangement, and an arrangement made in fraud can be challenged (Art. 1238). A foreign trust may not have those limits; so what works in a Colombian fiducia cannot always be carried over to a trust, or the other way around.
For DIAN, being abroad is not enough. Paragraph 1 of Article 882 of the Tax Code expressly lists trusts, autonomous estates, other fiduciary arrangements and private-interest foundations among the vehicles that can be controlled foreign entities (ECE), whether or not they have legal personality and whether or not they are transparent for tax purposes. For an ECE to exist, all the requirements of Article 882 must be met: it must be controlled by one or more Colombian tax residents and have no tax residence in Colombia. Residents with a direct or indirect interest of 10% or more in the capital or in the results are covered (Art. 883). Passive income (Art. 884) is deemed earned in the year the ECE obtains it, in proportion to the interest (Art. 886), is included in the income tax return (Art. 890), carries the Article 254 credit for taxes paid abroad (Art. 892), and its later distribution, already taxed, is not taxed again (Art. 893). Whether a given trust meets those requirements depends on its type and clauses. In Official Letter 3287 of 2018, DIAN analyzed an irrevocable foreign trust, with a US trustee and discretionary distributions, and concluded that the duties fall on the resident who obtains the economic benefit of the assets (possession, Tax Code Art. 263), which is determined case by case among the settlor, the contributor and the beneficiary, and that a resident beneficiary who receives a distribution, income or benefit must declare it in the income tax return. For net wealth tax, paragraph 3 of Article 295-3 of the Tax Code treats interests in foreign trusts as fiduciary rights (Arts. 271-1 and 288) and names the founder as the declarant when the beneficiaries are conditional or have no control or disposal over the assets, whether or not the trust is revocable or discretionary; if the founder dies, the unliquidated estate declares, and if the founder cannot be identified, the beneficiaries do. That rule operates only for net wealth tax.
Keys to a trust under Colombian rules
Ligal organizes the analysis from start to finish from Colombia: it reads the trust, defines what each person must declare and tells you frankly whether the structure makes sense or whether there is a better alternative located in Colombia, without promising results.
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We review the founding document (or the proposal you were given), its amendments, the type of trust, the powers of the trustee, the protector and the beneficiaries, the list of contributed assets and the account statements. That shows who controls, who can receive and who benefits, in economic terms, from the assets.
02
We analyze whether the trust can be an ECE, who has possession of the assets, how contributions and distributions are treated in income tax, and whether there are effects on net wealth tax. Where the answer depends on the clauses, we say so, without inventing rules.
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Jeysson Pulido and LIGAL Auditores quantify the assets and flows; we review the foreign assets declaration, beneficial owner reporting and the consistency between what the trust says, the income tax return and what has already been declared.
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We compare the trust with a family holding company or a fiducia mercantil in Colombia, with a will and succession planning, and if assets or income have gone undeclared we assess how to regularize before an audit does it for you.
A trust combines the law of the structure, Colombian tax, foreign asset reporting and criminal tax risk. At Ligal the same team handles it.
Director · Tax lawyer, ex-DIAN
Leads the legal strategy from start to finish: reading the trust, the tax effect in Colombia, regularization before DIAN if needed and the defense if there is criminal risk.
Accountant · Quantification and traceability
Reconstructs the origin of the contributed assets and the trust's flows, quantifies what must be declared and prepares the support for the income tax return and foreign assets.
Certified public accountants
Accounting and technical support to reconcile what the trust reports with what is declared in Colombia.
Whoever offers a trust as a way for “nothing to be declared in Colombia” is selling a risk, not a solution. Tax Code Art. 882 covers trusts, and the foreign assets declaration and beneficial owner reporting follow their own path.
DIAN has said that the duty falls on whoever obtains the economic benefit of the assets (Tax Code Art. 263), and that a resident beneficiary who receives a distribution declares it in the income tax return. Who is bound in your case depends on the type of trust and its clauses.
Before contributing assets or receiving a distribution, you should know the treatment, the support and the timing. Correcting an omission later costs more and can open an audit.
A trust is not a shield against obligations already incurred. Transfers made to harm creditors can be challenged, and combining that purpose with a structure abroad increases the risk.
With the document in hand, the first step is to know what kind of trust it is, who controls it, what assets it holds and what you have done so far in Colombia: income tax, net wealth, foreign assets and beneficial owner registration. With that map you can decide whether the structure has a real asset-protection or succession purpose, whether the cost and the risk are justified, and whether a family holding company, a fiducia mercantil or succession planning in Colombia meet the goal better. Ligal organizes the full route. Juan Santiago Rodríguez Prieto, a tax lawyer and former DIAN official, directs the strategy together with accountant Jeysson Pulido and LIGAL Auditores (certified public accountants). The team, with lawyers, accountants and direct experience inside DIAN, handles real cases of audit, enforced collection and tax litigation.
Keep in mind: the treatment of a trust depends on its type and its clauses. Ligal assesses each case separately and defines the route without promising results.
Director
Juan Santiago Rodríguez Prieto
Tax lawyer · Ex-DIAN
Before signing the trust, contributing assets or receiving a distribution, you should know how it is taxed. We assess your case within one business day. Use the form or open Diagnosis.
01
TodayWe review the trust document or the proposal you were given, the amendments, the account statements, the list of assets and what has been declared in Colombia.
02
one business dayWe pin down the type of trust, who controls and who benefits from the assets, which obligations arise in Colombia and where omissions may exist.
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ImmediateWe define whether the structure is kept, adjusted or replaced, what is declared and how anything pending is regularized.
Frequently asked questions
Holding a trust abroad is not in itself prohibited; what matters is declaring what is due. Article 882 of the Tax Code lists trusts among the vehicles that can be controlled foreign entities (ECE), and the foreign assets declaration, beneficial owner reporting and income tax may be triggered depending on the case. How it is taxed depends on the type of trust (revocable or irrevocable, discretionary or with fixed rights), on who controls it and on who benefits, in economic terms, from the assets; that requires a case-by-case review, not a single rule.
In a fiducia mercantil (Commercial Code, Arts. 1226 ff.) the fiduciario must be a credit institution or a duly authorized trust company; the assets form a separate autonomous estate (Art. 1233) that is not part of the general security of the fiduciario's creditors (Art. 1227); secret arrangements, those with successive benefit to several persons and those lasting more than twenty years are prohibited, with exceptions (Art. 1230); and the assets cannot be pursued by the settlor's creditors except those whose claims predate the arrangement (Art. 1238). A foreign trust is governed by the law that regulates it and may have trustees that are not regulated as Colombian trust companies, protectors and beneficiary structures that the Colombian fiducia does not allow. So they look alike but are not the same.
It is the controlled foreign entities regime (Tax Code Arts. 882 to 893, added by Law 1819 of 2016). Paragraph 1 of Article 882 expressly mentions trusts, autonomous estates, other fiduciary arrangements and private-interest foundations, with or without legal personality and transparent or not. For an ECE to exist all the requirements must be met: it must be controlled by one or more Colombian tax residents and have no tax residence in Colombia. Those covered are residents with a direct or indirect interest of 10% or more in capital or results (Art. 883); their passive income (Art. 884) is attributed in the year the entity obtains it (Art. 886). Whether a given trust meets the requirements calls for a review of its type, its clauses and who has control and rights.
There is no single answer. In Official Letter 3287 of 2018, DIAN analyzed an irrevocable foreign trust with a US trustee, discretionary distributions and beneficiaries without control, and said that the duty over the contributed assets falls on the resident who obtains their economic benefit (possession, Tax Code Art. 263), to be determined case by case among the settlor, the contributor and the beneficiary. It clarified that a resident beneficiary who receives a distribution, income or benefit must declare it in the income tax return, whether or not he has possession. If you only hold an expectation and have received nothing, the document has to be examined to know whether you are a possessor, and doctrine issued after 2018 has to be reviewed.
It depends on the tax and on the case. For net wealth tax, paragraph 3 of Article 295-3 of the Tax Code treats interests in foreign trusts as fiduciary rights (Arts. 271-1 and 288) and provides that, if the beneficiaries are conditional or have no control or disposal over the assets, the declarant is the founder, settlor or originator, whether or not the trust is revocable or discretionary; if the founder dies, the unliquidated estate declares until the beneficiaries receive the assets; and if the founder cannot be identified or the estate has already been liquidated, the direct or indirect beneficiaries declare. The same article states that this rule has effects only for net wealth tax. For income tax and for the foreign assets declaration, the key question is who has economic possession of the assets.
Article 607 of the Tax Code requires the annual foreign assets declaration from income tax payers who hold assets abroad, and only when their asset value on January 1 exceeds 2,000 UVT. Who must include a trust's assets (the founder, the beneficiary or both) depends on who has economic possession of them and on the terms of the trust; it is not an automatic answer. The declaration is informational, but filing it late or with errors has consequences under the Tax Code, and omitting assets can escalate. It should be reviewed before the filing date set by the decree in force for each year.
Article 631-5 of the Tax Code, as amended by Law 2155 of 2021, defines the beneficial owner and, for structures without legal personality such as fiduciary arrangements, includes the natural persons who are settlor, trustee, members of the fiduciary or financial committee, beneficiaries or conditional beneficiaries, and any other natural person who exercises effective or final control. Article 631-6 creates the Single Registry of Beneficial Owners (RUB) within the RUT and refers to the penalty of Article 658-3 for failing to provide, providing incorrectly or failing to update the information. Who reports, when and how is regulated by DIAN through a resolution; whether you have a reporting duty in your case must be confirmed against the resolution in force.
In serious cases it can. Article 434A of the Criminal Code (as amended by Article 69 of Law 2277 of 2022) punishes with 48 to 108 months of prison whoever omits assets, declares a lower value of assets or declares nonexistent liabilities with the purpose of fraud or evasion in tax returns, for an amount equal to or greater than 1,000 monthly legal minimum wages defined by official assessment of the tax authority. Not every omission is a crime: it requires that purpose, that amount and that official determination. Even so, the prudent course is to prevent: declare properly or regularize in time. Ligal also leads the criminal tax defense from start to finish if the risk already exists.
It can make sense when there is a real and lawful purpose (organizing assets located in several countries, managing assets for minors or incapacitated persons, planning a transfer) and it is done with tax transparency. It makes no sense, or is risky, when the aim is to hide assets from DIAN, move them away from debts that already exist or sidestep the rules on forced heirship and succession, or when the cost and the reporting risk outweigh the benefit. Acts made to harm creditors can be challenged, and Colombian succession rules remain relevant for a Colombian resident. It should be compared with a family holding company or a fiducia mercantil in Colombia and with succession planning.
The family holding (commonly an SAS under Law 1258 of 2008) brings the assets under a single corporate governance, and a contribution to a Colombian company can receive the treatment of Article 319 of the Tax Code if its conditions are met. The fiducia mercantil, under Article 102 of the same Code, keeps the tax cost of the contributed assets and works with transparency: beneficiaries include in their return the income, costs and expenses of the autonomous estate. Neither protects against debts that already exist. We explain both in family holding and fiducia, and transfers with assets abroad in succession with foreign assets.
First it is measured: type of trust, assets, years, income and distributions, and who had possession. With that, we assess what should have been declared, which correction and regularization mechanisms the tax rules in force provide, and whether there is criminal risk to address. Acting before an audit is often better than waiting for DIAN's request. Ligal assesses the case, quantifies the risk and defines the route without promising results.
Ligal is a firm specialized in tax law and international estate planning. Under the direction of Juan Santiago Rodríguez Prieto, a tax lawyer and former DIAN official, together with Jeysson Pulido, accountant, and LIGAL Auditores (certified public accountants), we combine legal analysis with accounting reconciliation and organize the matter from start to finish from Colombia: reading the trust, the tax effect, the foreign assets declaration and the beneficial owner. Our work is backed by 5.0 / 5 on Google with 36 reviews: https://share.google/VVzMvULrOj8Mj52Au. The team handles real cases of audit, enforced collection and tax litigation. No outcome is guaranteed.
Free. Attach the trust document or the proposal you were given, the list of assets and what you have declared in Colombia. We assess the tax treatment and the route.