Colombia’s tax authority DIAN has revised its interpretation of the 2005 Colombia-Spain tax treaty, clarifying that the dividend reinvestment condition for the 0% withholding tax rate applied only to the portion corresponding to the additional 35% tax.
Colombia’s tax authority (DIAN) has revised its interpretation of the dividend withholding tax rules under the 2005 Colombia-Spain tax treaty, ruling that the reinvestment requirement for the 0% withholding tax rate applies to the portion corresponding to the additional 35% dividend tax, rather than 65% of total distributed dividends.
In Ruling (Concepto) No. 015313 int 1605 of 1 September 2026, DIAN reconsidered its 2012 interpretation concerning dividends distributed to Spanish residents. The earlier interpretation required foreign investors to reinvest 65% of total distributed dividends in the same productive activity in Colombia for at least three years.
DIAN concluded that the reference to the “said part” in the treaty Protocol refers to the portion corresponding to the additional 35% tax under paragraph 1 of Article 245 of the Tax Code. Therefore, the investor must reinvest an amount equivalent to that tax component to qualify for the 0% withholding tax rate under paragraph 2(b) of Article 10 (Dividends).
The ruling clarified that the special reinvestment rule applies only to dividends distributed from profits that were not taxed at the corporate level. Dividends paid from profits already taxed at the corporate level do not trigger the special Protocol rule.
DIAN also stated that the reinvestment requirement applies to the portion of the dividend subject to the special rate under paragraph 1 of Article 245 of the Tax Code in force when the dividend was distributed or accrued.
