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Selling a foreign holding company that owns Colombian assets: the indirect transfer tax, the 20 percent tests, the one month return and the subsidiary's liability

Last verified: 2026-10-27 · Status: Stable

Selling shares of a foreign company is taxed in Colombia as if the underlying Colombian shares or assets had been sold directly, using the Colombian holder's tax cost, holding period and commercial value. The rule does not bite if Colombian assets are under 20 percent of both book and commercial value of the foreign entity's assets, or if the shares sold are widely held listed shares. The foreign seller must register in the RUT, file and pay within one month, and if it does not, the Colombian subsidiary answers jointly for the tax, interest and penalties.

USD figures use the TRM (tasa representativa del mercado) of COP 3,157.94 per US dollar valid 27 October 2026, from the official TRM series certified by the Superintendencia Financiera and published on datos.gov.co. Conversions are for orientation only.

Key facts

Indirect transfer rule does not apply below this share of book and commercial value in Colombia	20 %ET art. 90-3 par. 2, as of 2026-10-27 · in force
Listed share exemption: maximum holding by one beneficial owner	20 %ET art. 90-3 par. 1, as of 2026-10-27 · in force
Indirect seller return deadline	1 monthsET art. 90-3 par. 5, as of 2026-10-27 · in force
Occasional gains rate, companies and non residents	15 %ET art. 313 and 316, as of 2026-10-27 · in force

The rule

1. The indirect sale of shares, rights or assets located in Colombia through the sale, by any title, of shares, interests or rights in foreign entities is taxed as if the underlying asset had been sold directly. The tax cost and tax treatment are those of the holder of the underlying asset, and the price must be commercial value. Where the first point of contact in Colombia is a Colombian company, the underlying asset is its shares. Any related or unrelated transfer, total or partial, is covered.Estatuto Tributario (art. 90-3 as modified by Ley 2010 de 2019 art. 62); Decreto 1625 de 2016 (added by Decreto 1103 de 2020), ET art. 90-3 inciso 1 to 3; Decreto 1625 art. 1.2.1.26.3, 2019-12-27 official text · verified 2026-10-27

2. The rule does not apply if the Colombian assets represent less than 20 percent of the book value and less than 20 percent of the commercial value of all assets held by the foreign entity sold; nor if the shares sold are listed on an exchange recognized by a government authority with an active secondary market and no beneficial owner holds more than 20 percent. Mergers and spin offs between foreign entities follow ET art. 319-8.Estatuto Tributario; Decreto 1625 de 2016, ET art. 90-3 parágrafos 1 and 2; Decreto 1625 art. 1.2.1.26.8, 2020-08-10 official text · verified 2026-10-27

3. Where less than the whole foreign entity or the whole underlying asset is sold, the tax cost is the percentage of the entity sold multiplied by the percentage it owns of the underlying asset, multiplied by the underlying asset's full tax cost. On a later indirect sale, the cost is the amount proportionally paid for the foreign entity's shares. The holding period that decides between ordinary income and occasional gain is that of the shareholder in the entity holding the Colombian assets.Estatuto Tributario; Decreto 1625 de 2016, ET art. 90-3 parágrafo 4; Decreto 1625 art. 1.2.1.26.4 and 1.2.1.26.5, 2020-08-10 official text · verified 2026-10-27

4. The foreign seller must file the income tax return within the month following the sale, using the change of ownership and indirect transfer return; it must first register in the RUT and obtain DIAN's electronic signature instrument, and may pay through the international account of the National Treasury. If the buyer is a Colombian resident withholding agent, it must withhold on the share of the price attributable to the Colombian assets, on each payment where the price is paid in instalments.Estatuto Tributario; Decreto 1625 de 2016, ET art. 90-3 inciso 4 and parágrafo 5; Decreto 1625 art. 1.2.1.26.12, 1.2.1.26.15, 1.2.1.26.16 and 1.6.1.13.2.19, 2022-12-16 official text · verified 2026-10-27

5. If the seller fails to comply, the Colombian subsidiary is jointly liable for the tax, interest and penalties, with a right to recover from the seller; the buyer is jointly liable when it knew the operation was tax abuse. The general penalty regime of the Estatuto Tributario applies to the indirect seller.Estatuto Tributario; Decreto 1625 de 2016, ET art. 90-3 parágrafo 3; Decreto 1625 art. 1.2.1.26.21 to 1.2.1.26.23, 2020-08-10 official text · verified 2026-10-27

6. When the indirect seller resides in a country with a tax treaty in force with Colombia, the treaty prevails in determining the tax consequences; the same applies to Andean Community Decision 578.Decreto 1625 de 2016 (added by Decreto 1103 de 2020, Diario Oficial 51.402 of 10 August 2020), Art. 1.2.1.26.6, 2020-08-10 official text · verified 2026-10-27

Test	Result if met	Source
Colombian assets under 20 percent of book value AND under 20 percent of commercial value of the entity's assets	Not taxed in Colombia	ET art. 90-3 par. 2
Shares listed on a recognized exchange with active secondary market and no beneficial owner above 20 percent	Not taxed in Colombia	ET art. 90-3 par. 1
Seller resident in a treaty country	Treaty decides	Decreto 1625 art. 1.2.1.26.6
None of the above	Taxed as a direct sale; return within one month	ET art. 90-3

Does Colombia tax the sale of the foreign holding?

Worked example

A Cayman holding sells 100 percent of a BVI company whose only asset is 100 percent of a Colombian SAS, held five years. Value attributable to the Colombian shares US$4,000,000 (COP 12,631,760,000); tax cost of the SAS shares COP 5,000,000,000; occasional gain COP 7,631,760,000; tax at 15 percent COP 1,144,764,000 (US$362,503), filed and paid within one month.
Same deal but the BVI company also owns operations elsewhere so that Colombia is 15 percent of book value and 18 percent of commercial value: not taxed in Colombia.
Selling 60 percent of a foreign entity that owns 100 percent of the Colombian company: the tax cost used is 60 percent of the Colombian shares' tax cost.

Step by step

Map the chain to the first Colombian company and value Colombian assets against the entity's total assets on both book and commercial value.
Check treaty residence of the actual seller.
Register the seller in the RUT and obtain the electronic signature instrument before closing.
Allocate the price to the Colombian assets in the sale agreement and keep the contract and supporting documents.
File and pay within one month; a Colombian resident buyer withholds on payments.
Indemnity: the Colombian subsidiary is jointly liable, so buyers usually require proof of filing and payment.

Common traps

Both 20 percent tests must be met (book and commercial value); passing only one is not enough.
The subsidiary's joint liability means the tax follows the target company into the buyer's hands.
Holding period is measured at the level of the entity holding the Colombian assets, not the seller's holding of the top company.
Gains are not passive income for Colombian CFC purposes; they are taxed under art. 90-3 instead.

Sources

← Selling listed Colombian shares as a foreign investor: the 3 percent exemption, the portfolio investor withholding regime and when a return is neededMergers, spin offs and group reorganizations before a Colombian exit: corporate steps, creditor rights, tax neutral tests and the foreign investment registration →