Withholding Tax Procedure in Colombia for 2025
Withholding tax (retención en la fuente) is an advance tax collection mechanism used in Colombia to ensure compliance with tax obligations.
In 2025, this procedure remains essential for both employers and taxpayers subject to withholding.
This guide explains the withholding tax procedure, updated rates, and the obligations that companies and individuals must comply with.
What is withholding tax and why is it important?
Withholding tax is an advance payment of income tax, VAT, and other levies, which withholding agents must deduct when making a payment subject to withholding.
This mechanism allows DIAN (Colombian tax authority) to collect taxes more efficiently and prevent tax evasion.
For businesses and employees, understanding how withholding tax works is crucial to avoid penalties and optimize tax planning.
Entities Required to Withhold Tax
The following taxpayers are obligated to apply withholding tax:
✔ Employers who pay salaries to their employees.
✔ Companies that make payments subject to withholding, such as fees, commissions, services, leases, among others.
✔ Legal entities and large taxpayers designated by DIAN, who are self-withholding agents, meaning they apply withholding tax on their own transactions.
Withholding Tax Rates for 2025
The withholding tax rates vary depending on the type of income or transaction.
Below are the updated withholding tax rates for 2025:
a. Withholding on Salaries
✔ Applies when income exceeds 95 UVT per month ($4,730,905 COP in 2025).
✔ The rate is calculated based on the progressive withholding table established by DIAN.
b. Withholding on Professional Fees
✔ 11% for tax filers.
✔ 10% for non-filers.
✔ No minimum threshold; applied on 100% of the payment.
c. Withholding on General Services
✔ 4% for tax filers.
✔ 6% for non-filers.
✔ Applies when the payment exceeds $199,000 COP.
d. Withholding on Real Estate Rentals
✔ 3.5% for both tax filers and non-filers.
✔ Applies when the payment exceeds $1,345,000 COP.
e. Withholding on Movable Property Rentals
✔ 4% for both tax filers and non-filers.
✔ No minimum threshold; applied on 100% of the payment.
f. Withholding on Purchases
✔ 2.5% for tax filers.
✔ 3.5% for non-filers.
✔ Applies when the purchase exceeds $1,345,000 COP.
g. VAT Withholding
✔ Applies when the buyer is VAT-liable and the supplier is under the Simplified Tax Regime.
✔ Rate: 15% of the VAT charged.
✔ For foreign payments, VAT withholding applies at 19%.
h. Withholding on Payments Abroad
✔ The rate varies depending on the country where the purchase is made.
✔ Typically ranges between 10% and 20%.
Procedure for Applying Withholding Tax
The step-by-step process for applying withholding tax correctly is as follows:
✔ Identify the payment subject to withholding: Determine if the payment is subject to withholding tax and the applicable rate.
✔ Calculate the withholding tax: Apply the corresponding withholding rate on the total amount before making the payment.
✔ Deduct the amount from the beneficiary’s payment: The amount withheld must be deducted from the payment made to the beneficiary.
✔ Declare and pay the withheld amount: Businesses and withholding agents must file the withholding tax return and pay the withheld amounts within the deadlines established by DIAN.
✔ Issue withholding tax certificates: At the end of the fiscal year, withholding agents must provide certificates to individuals or companies subject to withholding.
Filing Deadlines in 2025
The DIAN tax calendar sets the deadlines for filing and paying withholding tax on a monthly basis.
✔ Deadlines vary depending on the taxpayer’s NIT (Tax Identification Number).
✔ It is crucial to check the DIAN calendar annually to avoid penalties and late payment interest.
Penalties for Non-Compliance
Failure to comply with withholding tax obligations may result in significant penalties, including:
✔ Late Filing Penalty: Ranges from 1% to 20% of the undeclared withheld tax.
✔ Omission Penalty: A fine between 100% and 200% of the unwithheld or undeclared amount.
✔ Late Payment Interest: Applied to the unpaid amount after the due date.
To avoid these penalties, it is highly recommended to maintain detailed control of tax obligations and ensure timely compliance with deadlines.
Withholding tax is a key mechanism within Colombia’s tax system, and its proper management is essential to avoid penalties and optimize tax efficiency.
It is crucial for businesses and employers to understand the applicable rates, procedures, and deadlines for 2025 to ensure full regulatory compliance.
Need Help Managing Your Withholding Tax and Fiscal Obligations?
At Nexo Legal, we provide specialized advisory services to help you properly manage withholding tax and other tax obligations.
📩 Contact us today and ensure your company’s tax compliance in 2025!
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Get started with a free case assessment
What will happen after you fill out this form?
After submitting the form, your case undergoes a comprehensive review by our team of specialist to assess its viability. Providing clear and concise information about your objectives accelerates this process.
Subsequently, a specialist will be assigned to your case, reaching out to you within a day to clear up details about your case and outline the next steps to help you achieve your goals.
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