DIAN rules that dividends to Andean Community holding companies with comparable regimes are exempt from withholding tax, while others remain taxable.
Colombia’s tax authority (DIAN) issued Ruling 8935 int 1037 on 10 July 2025, providing guidance on the withholding tax treatment of dividends distributed to a holding company located in an Andean Community member country.
According to the ruling, dividends paid to a company in another member country will be exempt from Colombian withholding tax if that company is governed by a holding company regime comparable to the Colombian holding company regime (CHC) and benefits from similar tax treatment, such as exemption for foreign dividends.
This ruling relies on the non-discrimination clause of the 2004 Andean Community tax treaty (Decision 578), which states that “No Member Country shall apply to persons domiciled in other Member Countries less favourable treatment than that applied to persons domiciled in its territory concerning the taxes that are the subject of this Decision.”
If dividends are paid to a company in another member country that does not operate under a comparable holding company regime or does not receive similar tax treatment, the non-discrimination clause does not apply, and such dividends remain subject to withholding tax in Colombia.
