1. Legal nature of business collaboration agreements

It is relevant to introduce a general definition of collaboration agreements, which have the following characteristics:

They establish participation and integration relationships in specific businesses or companies, in the common interest of the parties involved.

They allow a connection without full integration, maintaining autonomy in unrelated operations.

They enable independent cooperation to achieve a shared purpose.

Among these forms, consortia, temporary unions, and joint accounts are highlighted, among others.

Benefits of these agreements:

• Access to technology: reduced investment costs and increased competitiveness.
• Complementation: leveraging comparative advantages without committing permanence.
• Risk distribution: sharing resources, responsibilities, and financial matters.
• Mediation: independence in litigation, with some exceptions.

When two or more companies agree to distribute responsibilities, resources, and profits, a business collaboration is established. Below are two modalities:

1.1. Association agreements

Definitions:

“An association between two (2) or more companies with the purpose of jointly carrying out a specific activity through a new entity created and controlled by the participants.” — OECD

“An agreement between two (2) or more persons to conduct a business as co-owners and obtain profits.” — UNIFORM PARTNERSHIP ACT

This agreement is not regulated by Colombian law, but it can exist through social practice. Each partner records income, costs, and expenses directly according to what was agreed.

1.2. Simple business collaboration

According to Article 1602 of the Civil Code:

“Every contract legally executed is a law for the parties…”

And Article 4 of the Commercial Code states:

“The stipulations of validly executed contracts shall prevail over supplementary legal norms…”

2. Tax effects of collaboration agreements

2.1. Income tax

“Business collaboration agreements… are not income tax taxpayers…” — Tax Code, art. 18

The parties must file taxes independently and keep records of the activities performed.

2.2. Withholding tax

If there is a manager or entity, it will be the holder of the income subject to withholding. In joint-account agreements, the manager operates under their own name. If no manager exists, income is distributed proportionally.

2.3. Sales tax (VAT)

The profit received by the silent partner is not subject to VAT.

2.4. Electronic reporting

The information must be submitted by the contract administrator. The following are reported: Joint Venture, joint accounts, consortium, and temporary union.

2.5. Industry and commerce tax

If treated as a joint account, the manager reports all income. If not, each party reports its corresponding share.

2.6. Required elements of the agreement for tax purposes

• Duration over time
• Generation of economic benefits
• Shared participation and joint control

3. Accounting effects of collaboration agreements

IFRS do not explicitly mention these agreements. If there is no joint control, they are treated as a “principal and agent” or “customer-supplier” relationship.

Accounting entries

Sales invoice to the customer:

Purchase invoice from the transportation agent:

Payment of sales invoice:

Payment of purchase invoice: