|VAT Rate on Digital Services||VAT on Cross-Border Electronically Supplied Services||Digital Reporting Requirements for Foreign Sellers Providing Electronically Supplied Services|
VAT on Cross-Border Digital Services in Colombia
Colombia introduced VAT on digital services supplied by foreign companies in July 2018. Foreign digital service providers should collect and remit VAT on their B2C supplies (suppliers to non-registered customers without a valid VAT number). B2B transactions are not included in the scope and are, therefore, should be subject to the reverse charge mechanism, with the exception of businesses that are not VAT agents, for which VAT should be charged.
Foreign companies supplying digital services into Colombia are expected either to register and charge VAT on sales of digital services to end consumers or to request that VAT be withheld by credit card or financial institutions.
VAT Rate: 19% VAT is applied to the sale of affected digital services.
Digital Services in Scope
A digital service should be taxable in Colombia if it is supplied by a non-resident and used or effectively exploited within the jurisdiction. Neither the law nor the Directorate of National Tax and Customs (DIAN) has published a list of qualifying digital services. Therefore, the scope should be quite broad.
The following electronically supplied services by non-resident suppliers should be subject to VAT in Colombia:
- Provision of audiovisual services (e.g. music, videos, films, and games of all kinds, as well as the broadcasting of all kinds of events).
- Services provided via digital platforms.
- Provision of online advertising services.
- Provision of distance education or training.
- The provision of rights to use or exploit the intellectual property.
- Other electronic or digital services to users located in Colombia.
Determining the Location of the Colombian Consumer
Services supplied from abroad are considered to be supplied in Colombia and should be subject to VAT if the direct user or recipient of the service has his or her tax domicile, residence, permanent establishment, or center of economic activity in the country.
VAT Registration for Foreign Companies
Foreign companies supplying digital services in Colombia are expected to either register and charge VAT on sales of digital services to final consumers or request that VAT be withheld by credit card or financial institutions.
- VAT registration threshold for non-resident suppliers of Digital Services: No registration threshold
- Fiscal representatives: No requirement to appoint a fiscal representative
An application for VAT registration can be made here: DIAN.
VAT Returns and payment of taxes
VAT returns for non-residents
Once registered, businesses should need to collect and remit taxes to the Colombian tax authorities. Note that these are returns for non-resident companies - not to be confused with VAT returns of local companies.
|VAT Return Name||Form 325|
|Filing Deadline||Varies between the 14th and the 18th of the following reporting month. These deadlines are set in advance by the DIAN.|
|Payment Deadline||Same as the filing deadline|
|Payment Currency||Colombia Peso (COP) and US Dollar (USD)|
|Language||Spanish or English|
|Input Tax Recovery||No|
|Record Storage||five years from the year following the year the transaction occurred or the return was filed, can be stored abroad|
Digital Reporting Requirements for Cross-Border Digital Services
Foreign residents providing digital services should not be required to issue e-invoices and consequently should not report their transactions to the DIAN.
For more information about digital reporting requirements in Colombia see E-invoicing and Digital Reporting Guide.
Foreign Intermediaries Withholding VAT
If the foreign entity providing digital services opts to be subject to the VAT withholding scheme, the DIAN communicates this choice to credit card and financial institutions. Those companies will withhold the VAT, and the digital services provider should not be required to collect and remit that tax.