Figures verified 7 October 2026 · Applies to: 2026 rules
Foreign-owned Colombian companies regularly pay money abroad: management fees to the parent, software licences, interest on shareholder loans, consulting from the head office. Each of these payments can trigger Colombian withholding tax, deducted by the Colombian company at the time of payment. Getting it wrong means the company pays the tax itself, and the expense may not be deductible.
Who withholds
The Colombian company making the payment is the withholding agent. It deducts the tax from the payment, files it on its monthly withholding return and pays it to the DIAN. The foreign recipient receives the net amount.
The main rates (Art. 408 ET)
| Type of payment to a non-resident | Withholding rate |
|---|---|
| Interest, commissions, fees, royalties, rents, compensation for personal services | 20% |
| Consultancy, technical services and technical assistance (whether rendered in Colombia or from abroad) | 20% |
| Interest on foreign loans with a term of one year or more | 15% on the interest |
| Administration or management fees (gastos de administración o dirección) under Art. 124 | 33% |
| Goods or services sold by non-residents with a significant economic presence in Colombia, where not covered above | 10% of the total payment |
Article 408 contains further special rates for specific cases, such as aircraft leasing and reinsurance. A tax treaty can reduce some of these rates (see below).
VAT on services from abroad
Services provided from abroad and used in Colombia are generally subject to Colombian VAT. When the provider is a non-resident, the Colombian company applies VAT withholding (reteIVA) at 100% of the VAT. In practice it self-assesses the VAT, a reverse charge, rather than the foreign provider charging it. That VAT can usually be credited if the company is VAT-registered and uses the service for taxed activities.
Treaties
Colombia has a network of tax treaties (around 15 to 18, depending on the source) that can reduce withholding on interest, royalties and services. The status of several (Brazil, the Netherlands, Uruguay, Luxembourg and the UAE) is reported differently by different sources, so confirm a treaty is in force before applying a reduced rate. Comunidad Andina Decisión 578 covers Bolivia, Ecuador and Peru.
There is no US–Colombia income tax treaty. Payments to a US parent bear the full domestic rates.
Management fees: the 33% trap
Payments for administration or management to a parent company abroad are a common way to move money from a subsidiary to head office. They carry the highest rate on the list, 33%, and are subject to deductibility limits and transfer-pricing scrutiny. Before you set up an intercompany fee arrangement, model the withholding, the deductibility and the alternative of paying dividends (20% withholding, 48% all-in).
Related-party payments and transfer pricing
Payments to a foreign parent or affiliate are related-party transactions. Companies with gross assets above 100,000 UVT or income above 61,000 UVT that have such transactions must file transfer-pricing returns, and prices must be at arm’s length. Even below the thresholds, keep documentation that supports the price.
Practical checklist
- Classify each type of payment correctly (service, technical assistance, royalty, interest, management fee). The rate depends on it.
- Check for a treaty in force with the recipient’s country, and keep the residency certificate the treaty requires.
- Apply income tax withholding and reteIVA on the payment date, and file both on the monthly return.
- Keep the contract, invoice and proof of payment together.
- Review intercompany arrangements against transfer-pricing rules once a year.
Withholding on payments abroad is part of the monthly compliance a foreign-owned company carries. See what a foreign-owned company needs from its Colombian accountant. Withholding rates are also in a state of flux following litigation over Decreto 572 of 2025; see Colombia’s 2026 tax changes.
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This article is general information, not tax or legal advice. Colombian tax law changed materially between December 2025 and September 2026, and some rules described here are subject to pending legislation or litigation. Confirm your situation with a professional before acting.