Briefing document & Podcast: Columbia E-Invoicing & E-Reporting

SUMMARY

Executive Summary:

Colombia has implemented a comprehensive and mandatory electronic invoicing (e-invoicing) and e-reporting system overseen by the DIAN (Colombian tax authority). This system requires nearly all VAT-registered businesses to issue electronic invoices for all transactions, including domestic (B2B, B2C, and B2G) and cross-border transactions. The system operates on a “clearance model,” requiring DIAN validation before an invoice is legally valid. Non-compliance results in significant penalties, including fines and potential business closure. The system has evolved significantly since its legal basis in 1995, with a mandatory rollout starting in 2019 and expanding to include “equivalent documents” like POS receipts. The DIAN leverages the e-invoicing data to offer pre-filled VAT returns to taxpayers.

Key Themes and Ideas:

• Mandatory and Comprehensive Scope:
  • “All VAT-registered businesses established in Colombia are required to issue electronic invoices, with very few exceptions.”
  • The system covers domestic and cross-border transactions, including exports (via electronic export invoices) and imports (where the Colombian buyer must self-report transactions with foreign suppliers not required to invoice, using a “support document”).
  • The definition of “invoicing system” has broadened to include “all electronic documents relevant for tax control.”
• Implementation Timeline:
  • Recognized legally since 1995, the mandatory rollout occurred in stages.
  • January 2019: Mandatory for large taxpayers.
  • November 2020: Extended to all VAT-registered businesses.
  • 2022-2023: Expansion to electronic equivalent documents (e.g., POS receipts). “From February 2023, large taxpayers had to issue an electronic invoice for any POS sale above a low threshold (5 UVT, a nominal amount). This requirement was progressively extended to all taxpayers by mid-2023…”
  • November 2023: Resolution 000165/2023 consolidated e-invoicing regulations, introducing Technical Annex 1.9 for e-invoices and a new Annex 1.0 for electronic equivalent documents.
  • Early 2024: Staggered go-live dates for various equivalent documents, ensuring all “equivalent” invoice documents are electronic by August 2024.
• E-Invoice & E-Reporting Format:
  • Electronic invoices are issued in XML format following the UBL 2.1 standard.
  • “Each e-invoice must be digitally signed with the issuer’s authorized digital certificate…”
  • Includes a graphic representation (PDF) with a summary and a QR code for validation.
  • The QR code and CUFE ( Código Único de Factura Electrónica ) allow verification.
  • E-reporting (equivalent documents) also uses XML, with specific schemas (e.g., Annex 1.0 for equivalent documents) and CUDE code.
  • Both e-invoices and e-reports (equivalent documents) are issued in standardized XML formats defined by DIAN’s technical annexes, ensuring uniform data reporting to the tax authority.
• Data Requirements:
  • Detailed information required, including supplier and buyer identification (verified against DIAN’s RUT), invoice details (consecutive number, date, time), line items, tax breakdown (VAT, etc.), monetary totals (in COP), payment information, CUFE/CUDE codes, and digital signature.
  • “Omitting any required field or using an incorrect format makes the e-invoice non-compliant.”
  • Data requirements extend to “equivalent” documents.
• Clearance Model & Transmission:
  • “Colombia’s e-invoicing operates on a clearance model, meaning invoices must be transmitted to DIAN for approval before they are legally valid.”
  • Workflow: Generate -> Transmit to DIAN -> DIAN validation -> Approval -> Deliver to buyer.
  • “The act of validation by DIAN is what constitutes ‘issuance’ of the invoice for legal purposes.”
  • Invoices must be sent to DIAN essentially immediately at the time of transaction (pre-clearance).
• Contingency Measures:
  • If DIAN’s platform is down, businesses can issue the invoice without validation but must transmit it to DIAN within 48 hours after the system is back online.
• Penalties for Non-Compliance:
  • “Colombia imposes strict penalties for failing to comply with e-invoicing and e-reporting obligations…”
  • Monetary fines: Up to 1% of invoice value for incorrect format/missing information (capped at 950 UVT); up to 5% of the operation’s value for failing to issue an invoice.
  • Business premises closure: Temporary closure (typically 3 days for first offense), or a fine of 5% of gross revenues from the previous month in lieu of closure. DIAN closed/fined “about 355 taxpayers in 2023” for e-invoicing failures.
  • Tax credit disallowance: Buyer cannot claim VAT credit or deduct expense if the seller doesn’t issue a proper e-invoice.
• Archiving Requirements:
  • Taxpayers must retain electronic invoices and related documents for five years (from January 1 of the year following the invoice date).
  • Both issuer and recipient have archiving obligations.
  • Must maintain integrity, authenticity, and accessibility.
  • Electronic storage is allowed, including data storage abroad, as long as the data can be retrieved.
• Pre-Filled VAT Returns:
  • DIAN uses e-invoicing data to begin pre-filling VAT returns (“Declaración Sugerida de IVA”).
  • This is optional and advisory; taxpayers are responsible for reviewing and confirming/correcting the data.
  • “…because DIAN receives every invoice in real time, it has nearly complete information to estimate a taxpayer’s VAT.”

Key Definitions:

• DIAN (Dirección de Impuestos y Aduanas Nacionales): The Colombian tax authority.
• Factura Electrónica: Electronic invoice.
• Documento Soporte: Support document (used when purchasing from a supplier not required to invoice).
• CUFE: Unique code for electronic invoices.
• CUDE: Unique code for electronic equivalent documents.
• Declaración Sugerida de IVA: Suggested VAT return.
• NIT: Tax identification number.
• RUT: Tax registry.
• Resolution 000165/2023: A major update consolidating e-invoicing regulations in Colombia, replacing the earlier Resolution 000042/2020.

Conclusion:

Colombia’s e-invoicing and e-reporting system is a mature and rigorously enforced framework aimed at improving VAT collection, combating tax evasion, and modernizing tax administration. Businesses operating in Colombia must adhere to the stringent requirements to avoid significant penalties. The system’s evolution towards automation, including pre-filled VAT returns, highlights Colombia’s commitment to leveraging technology for tax compliance.

INDEPTH ANALYSIS

• 2016 (Pilot): The tax authority (DIAN) launched a pilot program with a small group of companies to test the e-invoicing system. [kpmg.com]
• January 2019: E-invoicing became mandatory for large taxpayers (major companies registered for VAT). This marked the beginning of phased implementation of the clearance model. Initially, invoices could be sent to DIAN within 24 hours of issuance (not in real-time), but this grace period was temporary. [kpmg.com] [dlkauditores.com]
• November 2020: E-invoicing was extended to all VAT-registered businesses, covering B2B, B2C, and B2G transactions nationwide. From this point, any business required to invoice had to do so electronically, except for certain very small or special-case taxpayers. Public sector invoicing (B2G) was included as well, meaning government entities only accept electronic invoices. [dlkauditores.com], [kpmg.com] [eldiario.com.co]
• 2021: A new tax law (Law 2155 of 2021) revised the legal framework: it broadened the definition of the “invoicing system” to include all electronic documents relevant for tax control, not just invoices. This set the stage for mandating electronic formats for other documents (such as tickets and receipts that previously were paper). [normograma…ian.gov.co], [normograma…ian.gov.co]
• 2022–2023 (Expansion to Equivalents): DIAN introduced requirements for electronic equivalent documents. By Resolutions and decrees in early 2023 (e.g. Decree 042 of 2020 earlier, and Decree 432 of March 2023), large retailers using POS systems were required to start issuing electronic receipts for sales previously documented by cash register tickets. For example, from February 2023, large taxpayers had to issue an electronic invoice for any POS sale above a low threshold (5 UVT, a nominal amount). This requirement was progressively extended to all taxpayers by mid-2023, effectively phasing out non-electronic POS receipts for significant transactions. [kpmg.com]
• November 2023: DIAN published Resolution 000165/2023, a major update consolidating e-invoicing regulations. This resolution (70 articles long) replaced the earlier Resolution 000042/2020, introducing Technical Annex 1.9 for e-invoices and a new Annex 1.0 for electronic equivalent documents. It mandated that many traditional paper equivalent documents (e.g. concession tickets, transport tickets, lottery stubs, etc.) be converted to electronic format starting in 2024. [dlkauditores.com], [dlkauditores.com]
• Early 2024 (Phased Deadlines): Under Res. 000165’s framework, new technical standards take effect: all taxpayers had to upgrade to the invoice schema version 1.9 by 1 February 2024, and various equivalent documents have staggered go-live dates in 2024. For instance: by 3 Feb 2024 the largest companies must use electronic POS receipts; by 1 May 2024 utility bills and passenger transport tickets must be electronic; by 1 June 2024 airline tickets and gaming receipts; by 1 July 2024 highway toll receipts and stock exchange documents; and by 1 August 2024 cinema and public event tickets, etc., must all transition to electronic formats. This schedule ensures that by August 2024, all forms of “equivalent” invoice documents in Colombia’s tax system are electronic and part of DIAN’s reporting network. [dlkauditores.com], [dlkauditores.com]
• May 2024: As a general milestone, 1 May 2024 was the date by which all taxpayers in scope should have implemented the latest e-invoicing requirements (i.e., using the updated schemas and including any newly required data fields). [kpmg.com]
• April 2025 and Beyond: Ongoing improvements continue. For example, Resolution 000202/2025 (April 2025) introduced further refinements, such as modifying the required data of the purchaser on invoices/equivalent docs (likely to tighten buyer identification). Colombia’s e-invoicing regime is thus in a continuous evolution, with the core mandate firmly in place but technical specifics updated regularly through DIAN resolutions. Future phases are expected to integrate more with accounting systems and international standards, as Colombia stays at the forefront of electronic tax controls in the region. [kpmg.com]

• Identification of parties: Full name or business name of the supplier (issuer) and buyer (recipient), and their tax identification numbers (NIT or cedula). The system cross-verifies that these match DIAN’s tax registry (RUT) to ensure validity. [storecove.com] [dlkauditores.com]
• Invoice details: A consecutive invoice number (assigned from a range pre-authorized by DIAN) and any prefix, as per the invoicing resolution obtained by the company. Also, the date and time of issuance (timestamp) and, if applicable, payment terms and due date for payment. [storecove.com]
• Line items: Description of the goods or services sold, including quantity, unit of measure, unit price, and any applicable discounts or surcharges. Each line will indicate if an item is subject to VAT or not. [eldiario.com.co]
• Tax breakdown: The VAT amount charged (impuesto sobre las ventas) for each rate used, and any other taxes (e.g., national consumer tax – INC – if applicable, or ICA local taxes). If a sale is exempt or zero-rated, the invoice should note that, and if no VAT applies (excluded), that must be indicated as well. The system requires the explicit breakdown of taxable base, tax rate, and tax amount for each category of tax on the invoice. [eldiario.com.co]
• Monetary totals: The total value of the transaction – subtotal and total payable – in Colombian pesos (COP). The law requires invoices be denominated in COP and Spanish language for official purposes, though a secondary currency or language can be included in addition. [eldiario.com.co]
• Payment information: The means of payment (e.g., credit, cash, bank transfer) and possibly payment installments or an indicator if paid immediately.
• Unique codes and validation data: The CUFE (for invoices) or CUDE (for other docs) – a hash code generated from the invoice data and a secret technical key assigned by DIAN – must be included on the invoice. This code uniquely identifies the document and is used by DIAN to ensure integrity. Also, a QR code containing key invoice data and a verification link is mandatory on the printable representation. [storecove.com] [eldiario.com.co]
• Digital signature: The XML includes the digital signature of the issuer (automatically generated during issuance using the company’s digital certificate). This signature and certificate info are part of the data DIAN validates to confirm the document’s authenticity. [eldiario.com.co], [storecove.com]

• Real-Time Submission: In general, invoices must be sent to DIAN essentially immediately at the time of transaction. The system is designed for instantaneous or nearly instantaneous transmission. As the Storecove guide notes, prior to 2019 one rule allowed sending the invoice within 24 hours, but since 2019 the requirement is pre-clearance – i.e., the invoice should be cleared before or at the moment of issuance to the customer. Practically, this means if you are selling something at 3:00 PM, your system should send the invoice XML to DIAN at 3:00 PM, get a response (usually within seconds), and then you can give the customer the invoice (electronically or printed). The buyer is obligated to accept e-invoices (paper invoices are no longer routine), and buyers do not have to perform any online action for the invoice to be valid. (However, buyers may send an electronic acknowledgment or rejection message through the system as a business process, but this does not invalidate the invoice – it’s more for commercial dispute or for using the invoice as a security instrument). [dlkauditores.com] [dlkauditores.com], [normograma…ian.gov.co]
• Acknowledgment Timing: After an invoice is validated, delivery to the buyer must be prompt. Typically, the seller will email the XML/PDF to the buyer or make it available for download. There is an additional rule for credit sales: when an invoice serves as a negotiable instrument (título valor), the buyer is expected to confirm receipt of the goods/services via the system within a certain time, to allow the invoice to be used for deduction and potentially factoring. But this is a post-validation step and not a precondition to issue – it’s relevant for enforceability of the invoice in finance terms. [normograma…ian.gov.co]
• Contingency Measures: In cases where DIAN’s platform is down or unreachable, the law provides a contingency procedure. If a taxpayer cannot get prior validation due to DIAN’s technical issues, they are allowed to issue the invoice and give it to the customer without the DIAN validation, but must then send that invoice to DIAN within 48 hours after the system issue is resolved. This means the invoice will be considered issued (so commerce isn’t halted) but the obligation to report it remains, just deferred slightly. The 48-hour window starts once DIAN’s systems are back online. (Importantly, this is only when problems are attributable to DIAN; if the issuer’s own system is down, they are expected to use backup solutions). There is also an offline invoicing option (contingency invoice) if internet is unavailable in remote areas, but similarly those must be uploaded to DIAN within a limited timeframe after issuance. In all normal situations, no later “due date” exists – the data must be at DIAN essentially immediately. [normograma…ian.gov.co], [normograma…ian.gov.co]
• Equivalent E-Reporting Deadlines: For electronic equivalent documents, DIAN’s regulations similarly require timely transmission. For some, it is real-time (e.g., an electronic POS receipt should be sent as it’s generated, just like an invoice). Others might be allowed periodic transmission: for instance, an electronic support document for purchases from non-invoicing persons must be sent by a certain deadline (previous rules set a deadline, such as by the 15th of the month following the transaction, though this has been tightened over time). And electronic payroll reports (nómina electrónica), which are part of the system, have their own schedule (usually monthly submission by the end of the next month). In summary, whenever a transaction isn’t captured by an immediate e-invoice, it is captured by an alternate e-report, which has a defined submission timeline to DIAN. Exports are reported via export e-invoices at the time of the export sale, and imports are covered through customs mechanisms plus the above-mentioned support documents. The key principle is that all required data must reach DIAN promptly, typically in real-time or close to it, ensuring the tax authority has near-immediate oversight of sales and revenue. [eldiario.com.co] [dlkauditores.com]

• Monetary Fines: Fines can be levied for various e-invoicing infractions, often proportional to the transaction value. For instance, submitting an e-invoice with incorrect format or missing mandatory information can trigger a fine of up to 1% of the invoice’s value, capped at 950 UVT (Unidad de Valor Tributario). (UVT is a tax unit ~ COP 47,000 in 2024, so 950 UVT is about COP 44.7 million ≈ USD $11,000). In cases of completely failing to issue an invoice when required, the fine can be larger – Colombian law allows a penalty up to 5% of the operation’s value with no specific upper limit in certain scenarios. Additionally, DIAN has mentioned a fine up to 7,500 UVT for technical non-compliance (this likely relates to very severe or repeated breaches, roughly COP 350+ million). These fines underscore that even seemingly small mistakes (like neglecting a required field) can scale into significant monetary penalties if many invoices are affected. [storecove.com] [kpmg.com]
• Business Premises Closure: The law provides for temporary closure of the establishment for not complying with invoicing obligations. Specifically, if a business is caught not issuing proper invoices, DIAN can order the premises shut down for a period (commonly 3 days for a first offense). In practice, DIAN will notify the intent to close, and the taxpayer often has the option to pay a substantial fine in lieu of closure. One such alternative penalty is 5% of the taxpayer’s gross revenues from the previous month to avoid a 3-day shutdown. Notably, this 5% fine has no fixed maximum and can be enormous for larger businesses. DIAN used this sanction extensively – press releases indicated about 355 taxpayers in 2023 had their premises closed or paid the 5% fine for e-invoicing failures. Repeat offenses or failure to correct issues can lead to longer closures (up to 18 or 30 days under the statute), effectively halting business operations. [kpmg.com]
• Tax Credit Disallowance: Apart from direct sanctions, non-compliance has tax consequences. If a seller doesn’t issue a proper e-invoice, the buyer cannot claim VAT credit or deduct the expense, since the document is not valid for tax purposes. Similarly, if a company fails to report purchases via the proper support document, it might lose the right to deduct that cost. This means non-compliance can hit both sides of a transaction: sellers face fines, and buyers lose tax benefits. The inability to deduct or credit taxes acts as a deterrent and effectively forces businesses to demand compliant e-invoices from their suppliers. [eldiario.com.co]
• Enforcement and Audits: DIAN has ramped up enforcement in 2023–2024, conducting targeted audits and inspection visits focused on e-invoicing compliance. They check that systems are parametrized correctly and every required invoice is in fact issued and transmitted. The authority publicly announced it would increase sanctions where it finds deficiencies in the issuance or delivery of e-invoices. In short, the risk of getting caught is high, and the penalties are severe – from hefty fines (which can be cumulative) to operational stoppage. Businesses are advised to actively monitor their compliance (e.g., ensure all invoices are successfully validated by DIAN, no gaps in numbering, and that their IT systems meet the latest specs) to avoid these outcomes. [kpmg.com], [kpmg.com] [kpmg.com]