Colombia's tax authority, the Dirección de Impuestos y Aduanas Nacionales (DIAN – Colombia's national tax and customs authority), has introduced expanded reporting obligations for foreign entities with economic activity in the country. The changes take effect for the 2025 tax year, with initial filings due in 2026. Foreign companies that previously operated below established disclosure thresholds may now find themselves within scope for the first time.
Colombia's revised tax legislation now requires foreign entities earning Colombian-source income. including through structures that trigger a permanent establishment determination. to file enhanced informational returns with DIAN. Disclosing beneficial ownership data, cross-border payment flows, and intercompany pricing arrangements. The compliance deadline for the first affected reporting cycle falls in the first half of 2026. Entities that fail to file face substantial administrative penalties under Colombia's tax legislation.
This alert explains what changed, which entities are affected, and the immediate steps that international companies should take now.
What changed and when it takes effect
Colombia's tax legislation has been progressively aligned with OECD transparency standards over recent years. The latest reform expands the scope of mandatory disclosures in three significant ways.
First, the definition of establecimiento permanente (permanent establishment) has been broadened. Foreign companies providing digital services, acting through dependent agents, or maintaining a sustained commercial presence in Colombia may now meet the threshold – even without a registered legal entity in the country. This brings Colombia's permanent establishment rules closer to international norms, but extends obligations to entities that previously considered themselves outside the Colombian tax net.
Second, enhanced transfer pricing documentation is now required for a wider category of related-party transactions. Cross-border payments – including management fees, royalties, and intercompany loans – must be supported by contemporaneous documentation showing arm's-length pricing. The withholding tax rules applicable to these payments have also been updated, with stricter enforcement signalled by DIAN.
Third, beneficial ownership disclosure obligations now apply to foreign entities deriving Colombian-source income above defined thresholds. This means that intermediate holding structures, even those established in jurisdictions with which Colombia has a tax treaty, must disclose the ultimate beneficial owners to DIAN if income flows through them into Colombia.
The reforms apply to the fiscal year beginning January 1, 2025. Reporting obligations under the new rules fall due during the first half of 2026, on a schedule published by DIAN that varies by taxpayer category.
Which foreign entities are affected
Not every foreign business with a Colombian connection is immediately affected. The new obligations apply where one or more of the following conditions are met.
- The foreign entity earns Colombian-source income above the prescribed annual threshold, whether through direct sales, digital service delivery, licensing, or financial instruments.
- The entity is determined to have a permanent establishment in Colombia under the revised criteria – including through a dependent agent, a fixed place of business, or a digital services threshold.
- The entity is a party to related-party transactions with a Colombian-resident counterpart, including intragroup services, debt financing, or intellectual property licensing arrangements.
- The entity is an intermediate holding company receiving Colombian-source dividends or capital gains, regardless of the jurisdiction of incorporation.
- The entity's ultimate beneficial owner has not been previously disclosed under older reporting regimes.
Entities that fall within these categories but are resident in a jurisdiction covered by a tax treaty with Colombia are not automatically exempt. Treaty benefits remain available for corporate income tax and withholding tax purposes – but the new informational reporting obligations apply independently of treaty status. A foreign entity may still owe no net Colombian tax under a treaty, yet remain fully subject to the disclosure requirements.
Tax residency of the foreign entity is also a relevant factor. Entities that have established tax residency in Colombia. through management and control criteria, or through a Colombian-sited permanent establishment. face the full scope of corporate income tax obligations in addition to the new reporting duties.
For a detailed analysis of how Colombia's tax obligations interact with your corporate structure, our team at tax law services in Colombia provides entity-specific assessments.
Immediate actions for international companies
The compliance window is shorter than it may appear. Entities that begin their review now will have adequate time to gather documentation and file correctly. Those that delay risk penalties and, in more serious cases, the denial of treaty benefits or withholding tax credits.
The following five actions should be addressed without delay.
- Assess permanent establishment exposure. Review all commercial arrangements – agency agreements, digital service contracts, and sustained in-country activity – against the revised permanent establishment criteria. Even arrangements structured before the reform may now trigger classification.
- Review withholding tax obligations on cross-border payments. Identify all payments from Colombian counterparts to the foreign entity during fiscal year 2025. Confirm that the applicable withholding tax rate has been correctly applied and that treaty relief, where available, has been properly claimed and documented.
- Prepare or update transfer pricing documentation. For any related-party transaction with a Colombian affiliate or counterpart, ensure that contemporaneous transfer pricing documentation is in place. DIAN has indicated increased scrutiny of intercompany pricing, particularly for management service fees and financial transactions.
- Register or update beneficial ownership disclosures. Confirm that the entity's beneficial ownership chain has been disclosed to DIAN in the format now required. Intermediate holding structures should verify that no gaps exist in the ownership trail that could trigger a reporting deficiency.
- Confirm the applicable filing deadline. DIAN publishes a tiered filing calendar. The deadline varies depending on the entity's tax identification number and taxpayer category. Missing the applicable date carries automatic penalties under Colombia's tax legislation.
Entities with more complex structures – particularly those combining a permanent establishment in Colombia with treaty-resident intermediate entities and related-party flows – should also review their corporate law arrangements. Coordination between tax and corporate considerations is often essential. Our corporate law practice in Colombia works alongside the tax team to address structural issues that affect reporting positions.
International companies with reporting obligations in multiple jurisdictions may also find it useful to review the parallel developments covered in our alert on tax reporting changes in the United States. There. Comparable transparency measures are being introduced.
For a tailored strategy on Colombia tax reporting compliance for your entity, reach out to info@ferrazwhitmore.com.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our Americas practice – led by Marco Reyes, International Counsel for Latin American and Iberian markets – provides specialist support on Colombian tax legislation. Corporate income tax structuring, withholding tax compliance. Additionally, cross-border reporting obligations for foreign entities operating in Colombia. We advise international entrepreneurs, institutional investors, and in-house legal teams who require results-oriented counsel across civil law systems. The firm's tax practice covers 15 practice areas and benefits from a dual tradition: Portuguese civil law expertise combined with English common law capability, enabling cross-border structuring across both legal systems. As a law firm with deep Colombia experience, Ferraz & Whitmore assists clients from the initial exposure assessment through to full DIAN compliance. To discuss your situation, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.