VAT on foreign services rendered

Those who provide services from abroad to residents in Colombia, as a general rule, will have the legal obligation to register with the Colombian tax authority as “service providers from abroad”, in addition to passing on and collecting VAT on B2C operations (Business to Consumer).
Despite the fact that foreign services rendered from abroad are generally subject to VAT at the general rate of 19%, since the modification to Law 1819 of 2016 introduced on this tax, it was not until the issuance of resolution 051 of 2018 of the DIAN, which established the procedure to be followed to register as a service provider, in addition to the periodicity and form in which the declarations must be submitted.

It is also worth bearing in mind that Law 1943 of 2018 and later Law 2010 of 2019 introduced a modification to numeral 8 of Article 437-2 of the Colombian Tax Statute, regarding the way in which VAT should be collected. Well, the previous regulations established that the collection of the tax against electronic or digital services had to be carried out by the issuer of the credit or debit card; while recent modifications establish this system as something optional and voluntary for the provider.

Thus, some of the services against which, before, the withholding at source was automatically practiced by third parties, and with respect to those which are now non-resident providers who have to register and file a declaration with the Tax Administration Colombian are:

• Audiovisual services (music, videos, movies and games of any kind)
• Services provided through digital platforms
• Online advertising services.
• Distance education or training services
• The rights to use or exploit intangibles.
• And the other electronic or digital services destined for users located in Colombia.

The author: Giovanni Tellez, legal consultant, ECOVIS Colombia SAS, infocolombia@ecovis.co