What replaced the old 10% flat dividend tax for resident individuals in Colombia?

Law 2277 of 2022 eliminated the 10% flat rate effective 1 January 2023. Dividends from previously-taxed profits are now added to the cedula general and taxed at progressive Article 241 rates of 0-39%, with a 15% withholding at source on amounts above 1,090 UVT and a partially-offsetting 19% tax credit under Article 254-1.

What is the 1,090 UVT dividend threshold and what does it mean in pesos?

1,090 UVT is the withholding breakpoint for resident individual dividend recipients: dividends up to that amount face 0% withholding; the excess is withheld at 15%. At the 2026 UVT value of COP 52,374 (set by DIAN Resolution 000238 of December 2025), 1,090 UVT equals approximately COP 57.1 million per distribution.

How are dividends paid to non-resident individuals or foreign companies taxed in Colombia?

Non-residents pay a final 20% withholding tax on dividends from previously-taxed profits, up from 10% before the 2022 reform. If the profits were never taxed at the company level, an effective combined rate of approximately 48% applies (35% corporate-level plus 20% on the net). Applicable tax treaties may reduce these rates.

How is interest income taxed for resident individuals in Colombia?

Interest on bank deposits, CDTs, and bonds is capital income in the cedula general and taxed at the same progressive 0-39% Article 241 scale as labor and other income. Financial institutions withhold at source; the withholding is creditable. Residents not required to keep full accounting books may exclude the inflationary component of regulated-bank interest from taxable income.

Does Colombia's 19% IVA apply to dividends or interest received by investors?

No. Dividends and interest or financial yields from credit operations are excluded from the IVA base under the Estatuto Tributario. Colombia's 19% sales tax applies to goods and most services, but financial intermediation returns -- including interest received by depositors and dividend distributions -- fall outside the IVA net entirely.

Dividend and Investment Tax in Colombia — Rates, Rules & Filing

Colombia's dividend and investment-income framework was fundamentally restructured by Law 2277 of 2022 (Ley 2277 de 2022), effective 1 January 2023. The reform abolished the preferential flat-rate treatment that had applied to dividends received by resident individuals and brought them fully into the progressive income-tax schedule administered by DIAN (Direccion de Impuestos y Aduanas Nacionales). Understanding the interplay between the new withholding rules, the 19% tax credit, and the distinction between previously-taxed and previously-untaxed corporate profits is essential for anyone receiving dividend or investment income from Colombian sources. Consult a qualified tax professional for advice on your specific situation.

How are dividends taxed for resident individuals after the 2022 reform?

Before Law 2277 of 2022, resident individuals paid a modest flat rate of 10% on dividends from profits that had already been subject to corporate income tax. From 1 January 2023 onward, those dividends are added to the resident's cedula general (general income basket) and taxed under the progressive scale in Article 241 of the Estatuto Tributario, which runs from 0% to 39%. A withholding-at-source mechanism (retencion en la fuente) applies at the point of distribution: amounts up to 1,090 UVT (approximately COP 57.1 million in 2026 at the COP 52,374 per-UVT rate set by DIAN Resolution 000238 of December 2025) are withheld at 0%, while the portion above 1,090 UVT is withheld at 15%. [1][2] This withholding is not a final tax; it is credited against the shareholder's annual income-tax liability filed on Form 210.

What is the 19% dividend tax credit and how does it work?

To cushion the increase in tax burden caused by folding dividends into the 0-39% progressive scale, Law 2277 of 2022 simultaneously introduced a new tax credit (descuento tributario) under Article 254-1 of the Estatuto Tributario. For resident natural persons and illiquid estates, the credit equals 19% of the amount of dividend income (in UVT) that exceeds 1,090 UVT. [3] The calculation formula is: (cedular dividend income in UVT minus 1,090 UVT) x 19%. The credit is applied on Line 124 of Form 210 and reduces the final income-tax liability dollar-for-dollar (peso-for-peso). Because the 15% withholding is also creditable, the effective marginal rate on dividends above 1,090 UVT is the progressive Article 241 rate (up to 39%) minus the 19% credit, yielding a maximum effective marginal rate on dividends of approximately 20% for the highest-income recipients. [1][2]

What happens when dividends come from previously-untaxed corporate profits?

Colombian corporate law requires that distributing companies certify, on each withholding certificate (Form 1099 equivalent), whether profits distributed were previously subject to corporate income tax. When dividends originate from profits that were not previously taxed at the company level (non-constitutive income under Article 49(3) of the Estatuto Tributario), the distribution faces the general corporate rate of 35% on the gross amount at the company level first. Only after that corporate-level tax is the residual amount treated as a dividend subject to the 0%/15% withholding table for resident individuals. [1][4] For non-residents, the combined effective burden on untaxed-profit dividends reaches approximately 48% (35% corporate + 20% WHT on the net). Distributing companies bear responsibility for accurate profit-source certification; errors can trigger penalties under DIAN's administrative penalty framework.

Dividend type	Recipient	WHT rate applied	Final treatment
From previously-taxed profits, up to 1,090 UVT	Resident individual	0%	Added to cedula general; 0-39% progressive rate; 19% credit above threshold
From previously-taxed profits, above 1,090 UVT	Resident individual	15% (creditable)	Same progressive treatment; credit offsets WHT
From previously-taxed profits	Non-resident individual or foreign company	20% (final)	Final; no return filing required
From previously-untaxed profits	Any recipient	35% at company level + applicable rate on residual	Resident: progressive 0-39%; Non-resident: 20% on net (approx. 48% combined)
Between Colombian companies	Domestic company	10% (creditable)	Credited in payee company's return

How is interest and other financial-yield income taxed?

Interest earned on bank deposits, term deposits (CDTs -- certificados de deposito a termino), corporate bonds, and other financial instruments constitutes capital income (rentas de capital) within the cedula general under Article 26 of the Estatuto Tributario, as confirmed by DIAN's interpretation of the cedula structure. [5] This means interest is taxed at the same progressive Article 241 rates (0-39%) that apply to the shareholder's total net cedular income. Financial institutions apply withholding at source (retencion en la fuente) on interest payments; that withholding is creditable against the annual return. One partial relief remains: resident individuals not required to maintain full accounting records may treat the inflationary component of interest received from regulated financial entities as non-taxable income, with the Ministry of Finance annually certifying the applicable inflation percentage via decree. The non-inflationary yield is fully taxable. [5] Investment fund (Fondo de Inversion Colectiva -- FIC) distributions follow a pass-through structure and carry the underlying income character to the unitholder.

Does IVA (Colombia's 19% sales tax) apply to dividends or financial yields?

No. Colombia's IVA (Impuesto sobre las Ventas) does not apply to dividends or to interest and financial yields from credit operations. Interest and financial returns from credit transactions are excluded from the IVA base under the Estatuto Tributario, provided those returns do not form part of a separately-taxable supply under Article 447. [6] This exclusion reflects a broader policy choice: financial intermediation services are outside the VAT net, even though the standard IVA rate is 19%. Investors should note that while returns themselves escape IVA, advisory fees or asset-management fees charged by financial service providers may be subject to IVA at 19%.

For further country-level context, see the Colombia country overview. Tax rules change; verify current rates and thresholds with a qualified tax professional before filing or making investment decisions.

Dividend and Investment Tax in Colombia

Key points