Colombia VAT Guide for Digital Services 2025

VAT rates in Colombia 

How much is VAT in Colombia? 

The Colombia VAT  regime is modernized when it comes to the applicability of tax provisions for non-resident service providers. Domestic economic operators, in most cases, are obliged to register for VAT from the commencement of their business activities. 

There are some exceptions to the general rule when the person is making exclusively tax-exempt supplies. Natural persons acting as economic operators could benefit from different thresholds, mainly reserved for individuals who make hobby sales or low-level sales. 

VAT threshold in Colombia 

Considering the latest VAT Colombia provisions, no registration threshold for domestic businesses pursuing economic activity with profit. The economic persons that make taxable supplies of goods or services, or import goods, are obliged to register for VAT from the first taxable supply. 

Foreign taxable persons with a permanent establishment in the country are required to register for IVA Colombia from the first sale made in the country. 

There is no VAT threshold in Colombia for non-resident providers of digital services or digital platform operators. 

VAT Taxable Activities in Colombia

Types of taxable activities that trigger mandatory VAT registration:

• Supply of goods and services for consideration;
• Services performed abroad are enjoyed in the country
• Imports of goods and services; 
• Overseas sales of low-value goods to customers in Colombia
• Provision of digital services to customers in Colombia

Tax Representative in Colombia 

Non-resident taxable persons who wish to register Colombia IVA should engage the services of a local tax representative, concerning the collection of VAT, submission of returns, and remittance that a non-local tax agent could handle. 

Tax registration

In July 2018, Colombia introduced a VAT framework for non-resident providers of digital services. These providers, in most cases, have two options: to register, collect, and remit VAT; or to instruct local payment service providers to withhold VAT and remit it to tax authorities. 

To reduce the levels of tax avoidance, local tax authorities have the discretion to require specific non-resident digital providers to register for VAT and develop best practices in VAT compliance. 

This is the case with large digital platforms and highly profitable overseas vendors of digital services. 

VAT on Electronically Supplied Services in Colombia 

Digital Services

In alignment with the current tax provisions, non-resident providers of digital services could adhere to the VAT system, or could request that the obligation for collection of VAT be transferred to local financial institutions. However, tax authorities have the right to require the overseas vendor of digital services to register, collect, and remit VAT for its local sales. 

When it comes to B2C transactions, the obligation to collect VAT lies with the provider or withholding VAT agent; for B2B sales, where the buyer is a locally registered VAT business, the recipient should collect and remit VAT under a reverse charge mechanism. 

The local VAT framework hasn’t specifically indicated what type of services are exclusively “treated” as a taxable digital service, and this practically means that most of the digital services supplied by non-resident providers are within the scope of local VAT, when the service is enjoyed, used, or exploited by local recipients. 

How much is VAT in Colombia for Electronically Supplied Services?

 The VAT rate Colombia for most digital goods and services is 19%. However, this shouldn’t be followed blindly. There are different kinds of taxable supplies for which the IVA rate Colombia differs. 

Taxable Digital Services in Colombia

The following types of digital services trigger mandatory VAT registration of non-resident providers:

• Audio and video streaming services 
• SaaS services
• E-books and publications 
• Travel arranging services

Marketplace and Digital Platform Operators Rules

There isn’t a specifically developed VAT system for non-resident digital platform operators. The non-resident digital service providers(direct and indirect)have, in general, two options to register for VAT and be directly responsible for the full life-cycle of transactions: either register for VAT and be directly accountable for the full life-cycle of transactions,  or request from local payment service providers to withhold and remit VAT to local tax authorities. 

Tax authorities have discretionary authority to demand that non–resident digital providers register and collect VAT. One of the main decision-making factors is the economic presence of the non-resident provider. 

Invoicing Rules

The minimum requirements of the invoice are the following: 

General information 

• Indication of the type of the invoice(sales invoice) 
• Date of invoice issuance 
• Consecutive invoice numbering
• Invoice type specification
• Date and time of supply
• E-Invoice Code
• QR code 
• Digital signature(stamped by software provider)

Seller information

• Company name
• Full address(head office)
• Billing address if different from company address
•  VAT number

Customer information

• Name 
• Full address
• VAT number(if applicable)

Fiscal Information

• Tax amount for each type of goods or services supplied
• Net value per tax rate
• Distinct line of gross value per tax rate or tax-exempt supply
• Type of the transaction by reference to the categories indicated in the VAT Act 
• Total tax  amount 
• Invoice Total tax exclusive
• The rate of any discount
• Total invoice amount
• Indication of the VAT withholding agent 

Additional information for e-invoices 

• Name and business name of the software provider 

Foreign Currency Invoice in Colombia  

In most cases, issuing an invoice in a foreign currency is permitted. However, VAT declarations should be submitted exclusively in the local currency.  

VAT Return in Colombia 

Standard Return 

Domestic taxable persons and foreign taxable persons with permanent establishment in the country should submit a standard return, using the template “Form 300”. 

Simplified Return

Non-resident digital service providers should use the simplified return form, known as the declaration called “Form 325”. 

Simplified VAT Return

Penalties for late reporting and omitted declarations 

Late VAT return filing, late VAT payment, and late registration are situations in which taxable persons are most likely to incur an obligation to pay a penalty and/or interest for not complying within the prescribed timeframe. 

Penalty for late filing

• A penalty is issued for each month or each day of late filing. The penalty accrues monthly(an additional penalty of 5% for each month or each part of the month is added up to 100% of the tax amount owed) 

Penalty for erroneous return

• The tax provisions state that submission of an erroneous return attracts a penalty equal to 100% of the difference between the correct tax due, as determined by the Revenue authority, and the amount paid by the taxpayer.
  

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