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What Is the Registry of Beneficial Owners and Who Is Required to Register?  

The Colombian National Tax Authority (DIAN, by its Spanish acronym) recently regulated the modifications made to the Tax Statute[1] by Law 2155 of 2021 regarding the concept of beneficial owners and the creation of the Registry of Beneficial Owners or “RUB” (by its Spanish acronym). We explain what this Registry consists of, who is required to report this information and what information exactly must be included in said registry.

1. What is a beneficial owner?

Beneficial owners are (i) the individuals who finally own or control, directly or indirectly, a corporation or similar entity, or (ii) the individual on whose behalf a transaction is made. Likewise, this concept includes those individuals who have effective or final control over a corporation or other similar entities. In other words, the beneficial owners are the true owners or controllers or will be ultimately economically favored thanks to the operation of the corporation or other entities without legal personality[2].

2. Who are considered beneficial owners?

According to Resolution 164 of 2021, the following individuals are a corporations’ beneficial owners:

  1. The individual who holds, directly or indirectly, five per cent (5%) or more of the capital or voting rights of the corporation,
  2. The individual who benefits in five percent (5%) or more of the assets, income or profits of the corporation;
  3. The individual that exercises control over the corporation, by any other means other than those established in the previous points.
  4. When no individual is identified in the terms of the previous points, the individual who holds the position of legal representative must be identified; unless there is an individual who holds greater authority in relation to the management or direction functions of the corporation.

On the other hand, the beneficial owners of an entity without legal personality or a similar structure are individuals who hold the quality of: (i) trustees, settlors, constituents or similar or equivalent position;  (ii) fiduciaries or similar or equivalent position;  (iii) trust Committee, financial Committee or similar or equivalent position; (iv) trustees, beneficiaries or conditional beneficiaries; and (v) any other individual exercising effective and/or final control, or who is entitled to enjoy and/or dispose of the assets, benefits, results or profits.

3. What is the “RUB”?

The RUB is an integral part of the Tax Registry (RUT, by its Spanish acronym) and is the registry through which companies or similar entities that do not have legal personality, must provide information to the DIAN regarding their beneficial owners.

4. What information should be included in these reports?

The RUB reports must include, at least, the type, number and country of issuance of the document of identification, the tax identification number (NIT) or equivalent and the country of issue, the full names and surnames, the date and country of birth, the nationality, the country of residence along with the full address (department,  state, city, postal code) and email, the criteria used to determine the beneficial owner, the percentage of participation in the company, the percentage of profit in the income, results or profits of the entity, and the date from which the individual has the quality of beneficial owner.

5. When should the reports be made?

The initial report, for entities that were created before the first (1st) of January 2022, must be made no later than June 30th, 2022; for entities created as of the first (1st) of January 2022, this report must be made electronically and within the month following their registration in the RUT or the issuance of their Identification Number for Entities Without Legal Personality (“NIESPJ” by its Spanish acronym). In the event that this information is not provided, is done erroneously or incompletely or the information previously provided is not updated, the DIAN may impose penalties.

6. Who is required to report information through the RUP?

According to the DIAN, the following must report information in the RUB:

  1. National entities and corporations, with or without profit-making purposes. That is, those companies that have their effective place of administration or their main domicile in Colombian territory or that have been incorporated in Colombia in accordance with current laws, as specified by article 12-1 of the Colombian Tax Statute.
  2. Permanent establishments, understood as fixed places of business located in Colombia, through which a foreign company or individual or an individual without residence in Colombia, carry out all or part of its activity. Likewise, it will be understood that there is a permanent establishment when individuals act on behalf of a foreign company by virtue of proxy that allows them to execute acts or contracts binding on the company on a regular basis, in accordance with article 20-1 of the Tax Statute.
  3. Entities without legal personality or similar:
    • Created or managed in Colombia
    • Governed by Colombian standards
    • Whose fiduciary or similar or equivalent position are a national corporation or a tax resident in Colombia.
  4. Foreign corporations and entities without legal personality or similar whose value of assets located in Colombia represent more than 50% of their total assets, according to their financial statements.

We remind you the importance of having adequate legal counsel to ensure proper compliance with this and all the obligations of your company. Our professionals have the knowledge and expertise to help and counsel you. Contact us.

[1] DIAN. Resolution 000164 of 2021

[2] Article 631-5 of the Colombian Tax Statute.