How to Calculate Withholding Tax in Colombia: Complete Guide 2026

Withholding tax (retencion en la fuente) is an advance tax collection mechanism in Colombia, primarily regulated by the Tax Code (Decreto 624 of 1989). It is not a tax in itself, but rather a method of gradually collecting taxes such as income tax, VAT, and ICA at the moment the economic transaction occurs.

The mechanism is straightforward: when a person or company (the withholding agent) makes a payment to another person or company, they deduct a percentage of the payment and transfer it directly to DIAN (National Tax and Customs Authority). That withheld percentage becomes an advance on the payee's income tax.

In practice, if you are a salaried employee, your employer acts as the withholding agent and deducts the withholding from your payroll each month. If you are an independent contractor, the hiring company withholds a percentage at the time of payment. At the end of the tax year, when you file your income tax return, the total amount withheld is deducted from the tax owed.

Withholding tax serves two main purposes: ensuring a constant revenue flow for the government and facilitating tax collection by distributing the tax burden throughout the year. You can calculate your withholding automatically with our withholding tax calculator.

The UVT (Tax Value Unit / Unidad de Valor Tributario) is the reference measure used in Colombia to express tax values in terms that automatically adjust for inflation. Instead of fixing amounts in pesos, the law defines thresholds and rates in UVT, and each year DIAN updates its value.

UVT value for 2025: COP 49,799

This value was set by DIAN Resolution 000187 of 2024 and applies for the entire 2025 tax year. This means that when a regulation states "from 27 UVT," the threshold in pesos is:

27 UVT x COP 49,799 = COP 1,344,573

How UVT is applied in withholdings:

• Minimum withholding base: Each concept (salaries, services, purchases, etc.) has a minimum base expressed in UVT. If the payment does not reach that base, no withholding is applied
• Rate ranges: For salaries, the table in Article 383 of the Tax Code defines UVT ranges to determine the marginal rate
• Deductions: Many deductions (prepaid health, dependents, mortgage interest) are also expressed in UVT

UVT history:

Year	UVT value	Change
2023	COP 42,412	+11.59%
2024	COP 47,065	+10.98%
2025	COP 49,799	+5.81%

Knowing the current UVT value is essential for any tax calculation in Colombia. All thresholds and rates mentioned in this guide use the 2025 value of COP 49,799.

Withholding tax has different rates depending on the payment concept. Below are the main current tables for 2025:

Withholding on general services:

Concept	Minimum base (UVT)	Minimum base (COP)	Rate
General services - legal entity	4 UVT	COP 199,196	4%
General services - individual (tax filer)	4 UVT	COP 199,196	4%
General services - individual (non-filer)	4 UVT	COP 199,196	6%

Withholding on fees and commissions:

Concept	Minimum base (UVT)	Minimum base (COP)	Rate
Fees - legal entity	0 UVT	COP 0	11%
Fees - individual (tax filer)	0 UVT	COP 0	11%
Fees - individual (non-filer)	0 UVT	COP 0	10%
Commissions	0 UVT	COP 0	11%

Withholding on purchases:

Concept	Minimum base (UVT)	Minimum base (COP)	Rate
General purchases - legal entity	27 UVT	COP 1,344,573	2.5%
General purchases - individual (tax filer)	27 UVT	COP 1,344,573	2.5%
General purchases - individual (non-filer)	27 UVT	COP 1,344,573	3.5%

Withholding on rent:

Concept	Minimum base (UVT)	Minimum base (COP)	Rate
Movable property rent	0 UVT	COP 0	4%
Real estate rent - legal entity	27 UVT	COP 1,344,573	3.5%
Real estate rent - individual (tax filer)	27 UVT	COP 1,344,573	3.5%
Real estate rent - individual (non-filer)	27 UVT	COP 1,344,573	4%

These rates apply on the value before VAT. It is important to always verify whether the payee is an income tax filer or not, as rates vary accordingly. For a quick calculation, use our withholding tax calculator.

Withholding tax on salaries receives special and more complex treatment than other concepts. It is calculated using Procedure 1 or Procedure 2 from the Tax Code, and applies the progressive table from Article 383.

Procedure 1 (Article 385 TC):

Applied month by month. The employer calculates the withholding by taking the worker's monthly income, subtracting allowed deductions, and applying the Article 383 table. This is the most common method.

Procedure 2 (Article 386 TC):

Based on a fixed percentage calculated in June and December each year from the previous 12 months' income. This percentage is applied for the following 6 months. It produces more stable withholdings but can result in under- or over-withholding.

Article 383 TC table (marginal, in UVT):

UVT range (taxable employment income)	Marginal rate	Instruction
Up to 95 UVT (COP 4,730,905)	0%	COP 0
95 to 150 UVT (COP 4,730,905 to 7,469,850)	19%	(Taxable base in UVT - 95) x 19%
150 to 360 UVT (COP 7,469,850 to 17,927,640)	28%	(Taxable base in UVT - 150) x 28% + 10.45 UVT
360 to 640 UVT (COP 17,927,640 to 31,871,360)	33%	(Taxable base in UVT - 360) x 33% + 69.25 UVT
640 to 945 UVT (COP 31,871,360 to 47,060,055)	35%	(Taxable base in UVT - 640) x 35% + 161.65 UVT
945 to 2300 UVT (COP 47,060,055 to 114,537,700)	37%	(Taxable base in UVT - 945) x 37% + 268.40 UVT
Over 2300 UVT (over COP 114,537,700)	39%	(Taxable base in UVT - 2300) x 39% + 769.75 UVT

Allowed deductions before applying the table:

• Mandatory health contributions: 4% of salary
• Mandatory pension contributions: 4% of salary
• Pension solidarity fund: 1% if salary exceeds 4 minimum wages
• Dependents: Up to 10% of gross income (maximum 32 UVT monthly)
• Prepaid health: Up to 16 UVT monthly
• Mortgage interest: Up to 100 UVT monthly
• 25% tax exemption: On taxable income (Article 206, numeral 10 TC)

The calculation is complex, so we recommend using our withholding tax calculator which automatically applies the table and deductions.

Let us walk through a complete example of withholding tax calculation for a salaried employee using Procedure 1:

Case details:

• Monthly salary: COP 8,000,000
• Mandatory health contributions (4%): COP 320,000
• Mandatory pension contributions (4%): COP 320,000
• Pension solidarity fund (1%): COP 80,000
• Prepaid health: COP 350,000 monthly
• Dependents: 1 child (10% of income, maximum 32 UVT)

Step 1: Calculate net income

• Gross income: COP 8,000,000
• (-) Health contributions: COP 320,000
• (-) Pension contributions: COP 320,000
• (-) Solidarity fund: COP 80,000
• = Net income: COP 7,280,000

Step 2: Subtract deductions

• (-) Dependents: COP 800,000 (10% of COP 8,000,000, limited to 32 UVT = COP 1,593,568, the lesser applies)
• (-) Prepaid health: COP 350,000 (limited to 16 UVT = COP 796,784, the lesser applies)
• = Subtotal: COP 6,130,000

Step 3: Apply 25% tax exemption

• Tax exemption: COP 6,130,000 x 25% = COP 1,532,500 (limited to 240 UVT = COP 11,951,760 monthly)
• = Taxable base: COP 6,130,000 - COP 1,532,500 = COP 4,597,500

Step 4: Convert to UVT and apply table

• Taxable base in UVT: COP 4,597,500 / COP 49,799 = 92.32 UVT
• Since 92.32 UVT is less than 95 UVT, the rate is 0%
• Withholding tax: COP 0

In this example, the worker has no withholding tax thanks to the deductions. If the salary were COP 12,000,000, the taxable base would exceed 95 UVT and withholding would apply. To quickly verify your case, use our Colombia payroll calculator.

The withholding tax applied to you during the year becomes an advance on your income tax. When filing your annual income tax return, you can offset the total withholdings applied against you.

If you are a withholding agent (company or person that withholds):

• You must file and pay the withholdings monthly using the withholding tax return (Form 350)
• The filing deadline depends on the last digit of your NIT (generally between the 8th and 21st of the following month)
• Late filing generates penalties and late payment interest
• You must issue withholding certificates to payees before March 31 of the following year

If you are the withholding subject (person withheld from):

• Keep the withholding certificates issued by your payers
• If you are a salaried employee, your income and withholding certificate is issued by your employer
• When filing your tax return, add up all withholdings and deduct them from the tax owed
• If total withholdings exceed the tax owed, you have a tax credit balance that you can request as a refund or offset against future taxes

Income tax filing in Colombia - 2025 deadlines (tax year 2024):

• Individuals: between August and October 2025 (based on last digits of NIT)
• Legal entities: between April and May 2025

To determine your obligation to file income tax, check whether your gross income exceeded 1,400 UVT (COP 69,718,600 in 2025) or your gross assets exceeded 4,500 UVT (COP 224,095,500). Use our Colombia severance calculator to estimate your social benefits.

Knowing the most frequent errors will help you avoid problems with DIAN:

Error 1: Not verifying whether the payee files income tax

Withholding rates vary significantly between tax filers and non-filers. For example, in general services the rate is 4% for filers and 6% for non-filers. Applying the incorrect rate can generate penalties for both the withholding agent and the payee.

Error 2: Withholding on the VAT-inclusive amount

Income withholding tax is applied on the value before VAT. It is a common error to calculate it on the total invoice amount including tax. However, VAT withholding (reteIVA) is indeed calculated on the VAT amount itself.

Error 3: Not withholding when required

Every withholding agent is required to withhold when the payment exceeds the minimum base. Failure to do so generates a penalty equal to 100% of the amount not withheld, plus late payment interest.

Error 4: Confusing withholding tax with self-withholding

Self-withholding is a different mechanism where the taxpayer applies the withholding to themselves. It primarily applies to large taxpayers and the special income self-withholding (formerly CREE) replaced by the self-withholding under Article 1.2.6.6 of Regulatory Decree 1625 of 2016.

Error 5: Not considering all salary deductions

Many employers calculate salary withholding without considering all allowed deductions (dependents, prepaid health, mortgage interest, voluntary pension and AFC contributions). This generates over-withholding that the worker can only recover in their annual tax return.

If you have doubts about your withholding, compare your employer's calculation with our withholding tax calculator to verify that all deductions are being correctly applied.