Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

May 13, 2020

Colombia issues holding company regime regulations

The Colombian Government issued Decree 598 (26 April 2020), which contains the Colombian holding company (CHC) regime regulations.


The CHC regime was re-established when Law 2010 of 2019 reenacted Law 1943 of 2019, which was declared unconstitutional due to procedural flaws. The CHC regime may apply to any domestic company and foreign entities with an effective place of management in Colombia. To qualify for the CHC regime, one of the company’s main business activities must be holding securities, investing in either foreign or Colombian shares, or managing such investments.

The CHC regime exempts, for income tax purposes, certain items of income, such as: (i) dividends distributed by foreign entities to a CHC entity; (ii) dividends distributed by a CHC to nonresident shareholders out of profits from foreign entities; (iii) gain realized on the transfer of shares held by the CHC in foreign companies; and (iv) gain realized from the transfer of shares owned by a nonresident in the CHC, in proportion to the gain attributable to the value of the participations held by the CHC in foreign entities.

To be eligible for the CHC regime, Colombian entities must meet the following requirements:

i. Own, directly or indirectly, at least 10% of the equity in two or more Colombian and/or foreign entities for a minimum of 12 months

ii. Have human and capital resources to achieve the corporate purpose, which entails having at least three employees and an address in Colombia, as well as proving that the CHC’s strategic decision-making is made within the Colombian territory

Decree 598

Decree 598 clarifies the scope of the eligibility requirements by:

i. Defining the direct or indirect ownership concepts, and the method for calculating the ownership

ii. Establishing the requirements that the company’s employees must meet for the company to apply the CHC regime

iii. Outlining the nature, and providing examples, of strategic decision-making activities

iv. Specifying what is deemed as having an address in Colombia

Furthermore, the decree establishes the procedure for applying for the CHC regime, including the supporting documentation companies must attach to the request submitted to the National Tax Authority.

If the Tax Authority rejects the CHC application, the decree allows the company to submit an application again in the following tax year. Likewise, the decree allows a company to withdraw from this special regime at any time and to re-apply to be re-qualified as a CHC in the future.

Finally, Decree 598 establishes the documents required to support an application (1) for a capital gains tax exemption, or (2) to characterize the disposal of shares owned by or in the CHC as foreign-source income not subject to taxation in Colombia.


For additional information with respect to this Alert, please contact the following:

Ernst & Young S.A.S., Bogotá
Ernst & Young LLP (United States), Latin American Business Center, New York
Ernst & Young Abogados, Latin America Business Center, Madrid
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific




The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


Copyright © 2024, Ernst & Young LLP.


All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.


Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.


"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.


Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or Please refer to the privacy notice/policy on these sites for more information.

Yes, I accept         Find out more