Investing from Colombia

Gains from selling shares listed on the Colombian stock exchange (bvc) are not taxed if you sell no more than 3 percent of a company's shares in one year. For most private investors, that means no tax on these gains. Some foreign ETFs traded on the bvc's global market (MGC) can use the same rule, under conditions set by the DIAN. Gains on other assets held for two years or more are usually taxed as an occasional gain, a ganancia ocasional, at 15 percent. Assets held for less than two years are taxed as ordinary income, at rates from 0 to 39 percent.

Colombian dividends are added to your income and taxed at the normal rates. On the part above 1,090 UVT a year, the company withholds 15 percent, and you get a tax credit of 19 percent. The UVT is the tax unit the DIAN sets each year, and it is 52,374 pesos in 2026. For US shares and funds, the US keeps 30 percent of dividends, because Colombia and the US have no tax treaty. Interest from CDTs and TES is taxed as income, but the part that only makes up for inflation is not taxed.

Voluntary pension funds and AFC accounts give you a tax benefit. Contributions can be tax-free income up to 30 percent of your income and 3,800 UVT a year. A second limit usually applies first. All exemptions and deductions together cannot be more than 40 percent of your income or 1,340 UVT a year, about 70 million pesos in 2026. The money must stay for 10 years, or be used to buy a home. If you take it out earlier, you lose the tax benefit. The 2024 pension reform is not in force yet, and after a court ruling in September 2026 most of it is due to start in 2027.

Bank deposits and CDTs are protected by Fogafín up to 50 million pesos per person per bank. Shares, investment funds and TES held through a broker are not covered. Brokers, called sociedades comisionistas de bolsa, are supervised by the Superintendencia Financiera (SFC). Withdrawals from one marked savings account are free of the 4x1000 tax up to 350 UVT a month. If your foreign assets are worth more than 2,000 UVT on 1 January, you must also file a declaration of foreign assets.

Many investors in Colombia still think the 10 percent rule for listed shares applies, or that AFC accounts shelter up to 3,800 UVT. The first rule is out of date. The second limit still exists, but a tighter cap of 1,340 UVT usually applies first. Moving money into a broker can also make you file a tax return, because deposits and investments above 1,400 UVT a year count toward the filing limit.

Four pages go deeper. Government bonds in Latin America explains TES and similar bonds. Currency risk explains what the exchange rate does to savings in dollars. Asset allocation explains how to split your savings between types of investment. The expense ratio shows what a yearly fund fee costs over time.