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Tax losses in Colombia: 12 year carryforward, merger and spin off limits and the five year review period

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Last verified: 2026-10-26 · Status: Stable

Colombian companies can carry tax losses forward for 12 years, without an annual cap, but cannot carry them back. After a merger or spin off losses move only in proportion to equity and only if the companies carried on the same activity. Returns that create or use losses stay open to DIAN review for five years instead of three.

USD figures use the TRM of COP 3,158.43 per US dollar, valid 24 to 26 October 2026, from the official TRM series certified by the Superintendencia Financiera and published on datos.gov.co. UVT amounts use the 2026 UVT of COP 52,374 (DIAN Resolución 000238 de 2025). Conversions are for orientation only.

Key facts

Tax loss carryforward period for companies12 yearsEstatuto Tributario art. 147, as of 2026-10-26 · in force
Annual cap on loss offsetnone Estatuto Tributario art. 147, as of 2026-10-26 · in force
Loss carrybacknot allowed Estatuto Tributario art. 147, as of 2026-10-26 · in force
Review period of returns that determine or offset losses5 yearsLey 2010 de 2019 art. 117, as of 2026-10-26 · in force
UVT for 202652374 COPDIAN Resolución 000238 de 2025, as of 2026-10-26 · in force
TRM used for USD conversions (valid 24 to 26 October 2026)3158.43 COP per USDOfficial TRM series, Superintendencia Financiera de Colombia, as of 2026-10-24 · in force

The rule

1. Companies may offset tax losses against ordinary net taxable income of the following 12 tax years. Shareholders cannot use the company's losses against their own income. There is no carryback and no annual percentage cap in the article.
Example: A 2026 loss of COP 800,000,000 can absorb taxable income up to tax year 2038; offsetting it all in 2028 saves COP 280,000,000 of tax at 35 percent. / About US$253,290 of loss: about US$88,652 of tax saved.Estatuto Tributario (Decreto 624 de 1989), as amended by Ley 788 de 2002 art. 24 and Ley 1819 de 2016 art. 88, Art. 147, first paragraph, 2016-12-29 official text · verified 2026-10-26
2. In a merger, the absorbing or resulting company may offset the losses of the merged companies up to the percentage that their equity represents in its equity; in a spin off, the resulting companies may offset the losses of the company split up to the share of its equity they received, and a split company that survives keeps its losses in proportion to the equity it retains. In all cases the years already elapsed and the annual limits of the law under which the loss arose still apply, and losses can be used only if the companies carried on the same economic activity before the merger or spin off.Estatuto Tributario, as amended by Ley 788 de 2002 art. 24, Art. 147, second to fifth paragraphs, 2002-12-27 official text · verified 2026-10-26
3. Losses arising from non taxable income, or from costs and deductions without a causal link to taxable income, can never be offset, except those from the fixed asset investment deduction of art. 158-3.Estatuto Tributario, as amended by Ley 1111 de 2006 art. 5, Art. 147, sixth paragraph, 2006-12-27 official text · verified 2026-10-26
4. Income tax returns that determine or offset tax losses become final five years after filing, instead of the general three years.Ley 2010 de 2019, applying to art. 147 and art. 714 of the Estatuto Tributario, Ley 2010 de 2019 art. 117, 2019-12-27 official text · verified 2026-10-26
5. If a company that received assets as a tax neutral contribution sells those fixed assets within two years, it cannot offset accumulated tax losses or excess presumptive income against the gain; the same restriction applies to a contributor who sells the shares received within two years.Estatuto Tributario, added by Ley 1607 de 2012 art. 98, Art. 319, par. 4 and 5, 2012-12-26 official text · verified 2026-10-26
6. For the 15 percent minimum tax, losses offset in the year that did not affect book profit are subtracted from adjusted book profit (item C of the formula), so using old losses does not by itself trigger a top up.Estatuto Tributario, as amended by Ley 2277 de 2022 art. 10, Art. 240, par. 6 (UD formula, item C), 2022-12-13 official text · verified 2026-10-26
7. Presumptive income has been 0 percent since tax year 2021, so no new excess of presumptive over ordinary income arises to be carried forward.Estatuto Tributario, as amended by Ley 2010 de 2019 art. 90, Art. 188, 2019-12-27 official text · verified 2026-10-26
8. Foreign portfolio investors may offset a month's losses against the following months' profits, and excess monthly withholdings against withholdings of the following 12 months.Estatuto Tributario, as amended by Ley 1607 de 2012 art. 125, Art. 18-1 num. 7, 2012-12-26 official text · verified 2026-10-26
ItemCOPApprox. USD
Losses of B1,000,000,000US$316,613
Usable by A (30 percent, same activity required)300,000,000US$94,984
Tax value at 35 percent105,000,000US$33,244
Lost if the activities differ1,000,000,000US$316,613

Loss use after a merger: absorbing company A takes over B, which has COP 1,000,000,000 of losses; B's equity is 30 percent of A's equity after the merger

Worked example

  • A foreign owned start up in Medellín loses COP 800,000,000 (about US$253,290) in 2026 and becomes profitable in 2028: it can offset the whole loss in 2028 or spread it until 2038, but DIAN can review the 2026 return for five years from filing.

Step by step

  1. Record each year's loss and its expiry year (12 years) in a loss schedule attached to the tax working papers.
  2. Keep the supporting documents for at least five years from filing of every return that creates or uses a loss (Ley 2010 de 2019 art. 117).
  3. Before a merger or spin off, check that the companies carry on the same activity and compute the equity percentages that limit loss use (art. 147).
  4. Exclude losses generated by non taxable income or non causal expenses (art. 147).

Common traps

  • Merger losses are lost entirely if the merged companies did not carry on the same economic activity (art. 147).
  • Returns with losses stay open five years, so DIAN can challenge a loss long after the three year general period (Ley 2010 de 2019 art. 117).
  • Selling assets received as a tax neutral contribution within two years blocks the use of losses against that gain (art. 319 par. 4).
  • Shareholders cannot use company losses; a branch's losses stay in Colombia.

Sources

Related pages

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