As a result of the State of Internal Commotion ordered by the Colombian government due to the pressing situation in the Catatumbo region (Decree 62 of January 24, 2025), the National Government issued Decree 175 of February 14, 2025, whereby it included a transitory modification to paragraph 2 of article 519 of the Tax Statute (TS), increasing the rate from 0% to 1%.
According to article 519 of the ET, Stamp Tax is payable when the following requirements are met:
- There must be a public instrument or private document, including securities, that is granted or accepted in the country, or that is granted outside the country but that is executed in the national territory or generates obligations in Colombia.
- Such documents must record the creation, existence, modification or extinction of obligations. If the document extends or assigns an obligation, it is also covered by the tax.
- The amount must be greater than 6,000 UVT (COP 298,794,000). If the document incorporates a lower value, the tax is not payable.
- In such documents, a public entity, a legal or similar person, or a natural person who is a merchant must act as grantor, acceptor or subscriber. In the case of a natural person, they must have assets or gross income in excess of 30,000 UVT (COP 1,493,970,000).
In short, as a general rule, every event in which a company signs a private contract of any kind, grants a loan or acquires a financial product, provided that it is above the minimum amounts, could be subject to this tax.
There is no need for a notary to be involved, for a public deed to be drawn up or for a public entity to be involved. If a company signs a service contract with a local supplier for 6,000 UVT, this contract could be subject to Stamp Tax at 1%.
Even though the tax existed since 2010, the applicable rate was 0% and now the applicable rate is 1%.
Does the new 1% rate apply only to documents executed after the entry into force of Legislative Decree 0175 of 2025, or does it also cover those executed prior to the entry into force of the aforementioned Decree?
The tax authority -DIAN- has indicated that the 1% rate, shall be applied from February 22, 2025. Articles 8 and 9 of Legislative Decree 0175 of 2025 established that, with the purpose of obtaining resources destined to the attention of the internal commotion decreed in the region of Catatumbo, the metropolitan area of Cúcuta and the municipalities of Río de Oro and González in the department of Cesar, the stamp tax rate provided in paragraph 2 of Article 519 of the Tax Statute (ET) has been temporarily modified, setting it at 1%.
This means that, as a general rule, public instruments and private documents granted or accepted as of such date, including those executed abroad but executed in Colombia or generating obligations in the country, will be taxed.
What about contracts of undetermined value that entered into force before Decree 0175?
In contracts of undetermined amount, the stamp tax is generated with the subscription, granting or acceptance of the document, while its accrual and taxable base are determined with each payment or credit on account depending on the type of contract.
Therefore, if a contract of undetermined amount was subscribed before the entry into force of Decree 0175 of 2025, the payments made before February 22, 2025 were subject to the 0% rate, while those made after that date must be settled at the 1% rate until December 31 of the same year, provided that they exceed 6,000 UVT and the requirements established in articles 51912 and 52213 of the Tax Statute are met (DIAN opinion No. 003245 of 2025).
The national stamp tax shall be levied at the rate of one point five percent (1.5%) on public instruments and private documents, including securities, which are granted or accepted in the country, or which are granted outside the country but which are executed in the national territory or generate obligations therein, in which the constitution, existence, modification or extinction of obligations is recorded, as well as their extension or assignment, the amount of which is greater than six thousand (6,000) Tax Value Units (UVT), in which a public entity, a legal entity or similar, or a natural person who is a merchant and who in the immediately preceding year had a gross income or gross equity of more than thirty thousand (30,000) Tax Value Units (UVT), intervenes as grantor, acceptor or subscriber.
Stamp tax shall also be payable in the case of accepted commercial offers, even if the acceptance is made in a separate document.
How to determine the stamp tax amount?
For the determination of the amounts in the stamp tax, the following rules shall be observed:
1. In contracts of successive performance, the amount shall be that of the total value of the periodic payments to be made during the term of the agreement.
In contracts of indefinite duration, the amount shall be taken as the amount corresponding to the payments during one year.
Article 519 of the Tax Statute establishes that the generating event of the national stamp tax is configured at the moment in which a document subject to the tax is granted, accepted or subscribed. However, in contracts of undetermined amount, paragraph 5 of this provision establishes the following special rule: "(...) When such documents are of undetermined amount, the tax shall be levied on each payment or credit on account derived from the contract or document, during the time it remains in force.
2. The amount of contracts in foreign currency shall be determined according to the official exchange rate at the time the tax becomes effective.
Sanctions for not paying the stamp tax
If the Tax Administration determines that the value to be paid initially was quantifiable, it may, by resolution, fix such value by additionally imposing a penalty for inaccuracy equivalent to 160% of the higher value determined.
Conclusion
In conclusion, according to the doctrine discussed in this article, in contracts of undetermined amount, the generating event of the stamp tax is configured with the subscription, granting or acceptance of the document, while the accrual and the taxable base are determined with each payment or payment on account made, in accordance with the special rule provided in paragraph 5 of Article 519 of the E.T. 21. Therefore, if a contract of undetermined amount was subscribed before February 22, 2025, the taxable event was configured at the time of subscription, granting or acceptance. However, since the taxable base is defined with each payment, the generating event and its accrual do not necessarily occur at the same time.
DIAN’s position regarding the applicability of the stamp tax on payments made after its entry into force but regarding old contracts, is certainly against the rationale of any new regulation which cannot be applied retroactively. Even though DIAN’s opinions bind their officers, all voices have been raised against this position and litigation is expected to make sure it does not apply. In the meantime, a conservative position would be to make sure the stamp tax is paid when such event occurs.
About the Author
Gabriela Mancero is a Partner at PM Abogados. She is ranked in Chambers & Partners as one of the leading attorneys in the Corporate/M&A practice.
For inquiries, she can be reached at [email protected].