Tax bulletin on the export of services

This bulletin provides guidance on the treatment of Value Added Tax (VAT) applicable in Colombia and the export of services rendered from Colombia to abroad, in accordance with current regulations.

The export of services has seen significant growth in Colombia, as evidenced by official data from Asobancaria. To help companies benefit from the VAT exemption, fortunately for taxpayers, there are express rules that provide for such exemptions as follows:

Paragraph C of Article 481 of the Colombian Tax Code establishes: "Services rendered in the country and used exclusively abroad by companies or individuals with no business or activities in Colombia, in accordance with the requirements set forth by regulations. Those who export services must retain the documents that duly evidence the existence of the operation. The National Government shall regulate the matter."

Considering the above and in order to clarify this issue, it is important to address the following questions:

1.     Are all exported services VAT-exempt?

2.     What documentation supports the export of services? Is a DEX (Export Declaration) required?

To answer these questions, the following legal framework must be considered:

• Decree 1805 of 2010
• Decree 2223 of 2013
• Decree 1080 of 2015

These decrees outline the services eligible for the VAT exemption and the requirements for taxpayers wishing to apply for the bimonthly VAT exemption.

It is crucial to note that many exported services today are provided to related companies or parent companies. Therefore, it is essential to ensure that services are not looped back into the country in whole or in part.

To better illustrate this concept, we refer to the issue addressed in ruling Sen-022282-21, in which a Colombian company provided services produced within the national territory to be used exclusively abroad. In fact, this was clearly established in the contract and supporting documents. But what was missing?

The conclusion was that the service consisted of audiovisual material produced in Colombia for the purpose of being broadcast outside the country. However, it was later shown that this material was also reproduced, televised, or viewed within Colombia. As a result, the condition requiring the service to be used exclusively abroad was breached, thus disqualifying it from the VAT exemption.

This ruling clarifies that for a service to qualify as “used abroad,” the entire utility or economic benefit derived from the service must take place outside Colombia and be provided to entities that have no business operations within the country. If any portion of that benefit or income occurs in Colombia, the VAT exemption is lost.

Although the National Government has sought to increase service exports and enhance Colombia's competitiveness in international markets, it must be noted that, as a rule, exported goods and services are exempt from taxes. However, it is important to emphasize that every rule has its exceptions. The legislator, through existing regulations, has aimed to prevent excessive benefits. For this reason, specific rules were established to uphold the principle of tax equity.

If a service is exported and then re-enters the country—generating income in Colombia for the exporting company—and still remains VAT-exempt, the exporter would gain an unfair advantage by offering the service at a lower cost to foreign clients. The legislator intended to avoid a scenario in which a Colombian entit y provides a service VAT-free, exports it, and then it returns to be consumed domestically again without VAT. 

For this reason, the answer to the first question is that not all services are VAT-exempt. However, if the requirements are met—such as the service being used exclusively abroad and having all the supporting documentation described below—then such services will be considered exempt. It is also important to clarify that what is being exported is intangible, which is why the control mechanisms differ from those required for the export of goods. Therefore, a DEX (Export Declaration) is not required.

But in the case of services rendered to related parties, what should be considered to maintain the exemption?

To properly answer this question and in accordance with the existing regulations described above it is important to ensure the following:

1.     Services must be rendered within Colombia.

2.     Services must be genuinely exported.

3.     Services must be used exclusively abroad. A legal representative's   certification to this effect is required.

4.     Adequate support documents (contracts, invoices) must be kept.

5.     Services must not re-enter the country.

6.     A statutory auditor's certification must detail the export date, documents, country, service description, value, and recipient's name and address abroad.

7.     The exporter must be registered as such in the RUT.

Regulations recommend explicitly stating in the contracts that services will be used abroad, including details like country, address, and other relevant data. This enables the legal representative and statutory auditor to issue the necessary certificates.

Exports between related parties have faced scrutiny. However, Council of State ruling 26919-23 clarified that if services are entirely used abroad, and the revenue is earned abroad, VAT exemption applies—even if there is a corporate relationship.

Exporting VAT-exempt services makes offerings more competitive, as Colombia's standard VAT rate is 19%, reducing client costs.

What about the VAT paid by service exporters?

Law 44 of 1987, incorporated into Article 481 of the Tax Code and amended by Article 189 of Law 1819 of 2016, allows for the bimonthly refund of VAT paid by exporters. Exporters may recover this VAT through the refund process established in Resolution 151 of 2012, as amended by Resolutions 57 of 2014 and 82 of 2020.

Other important aspects:

Before exporting, the RUT must be updated with the export activity:

• Request a virtual or in-person appointment with the DIAN.
• Register the following:

o   Box 53: Responsibilities Code 10 - Customs User.

o   Box 54: Customs Users Code 22 - Exporter.

o   Box 55: Export types: Direct, Indirect, or Both.

o   Box 56: Export type code 2 for services.

o   Box 57: Export method:

• Commercial Presence
• Cross-border movement of services
• Consumer movement
• Temporary relocation of individuals

Once updated, the RUT fulfills the prerequisite for service export.

Conclusion:

Service exports have grown in Colombia over the past decade. In the absence of a strong industrial sector, service quality has become a national strength. Consequently, more regulations, rulings, and jurisprudence have emerged to clarify and regulate these activities fairly.

Each case should be evaluated individually. If you have questions or need assistance, please don’t hesitate to contact us.