According to a ruling 2140 of 2017, the Colombian National Tax Authority (DIAN) pronounced on the cases where pensions are subject to withholding tax.
Article 17 of Law 1819 of 2016 amended article 383 of the Tax Code that provides the withholding tax rates applicable on employment and pension income. Paragraph 4 of article 383 of the Tax Code, regarding pension income, as amended by the tax reform, provides that tax-exempt income determined according to article 206 of the Tax Code cannot be subject to withholding tax.
According to article 206 of the Tax Code, withholding tax may apply on the amount of the pension payment that exceeds 1,000 Tax Value Units.
Hence, DIAN considered that in the case of pension payments, the tax-exempt income as provided by article 206 of the TC must be decreased from the income tax withholding base. The resulting amount will be subject to the corresponding income tax withholding rate according to the table included in article 383 of the Tax Code.
