The decision of the Constitutional Court of annul Decree 1474 of 2025 change the tax panorama in Colombiaespecially in relation to the VAT on liquor, online betting and other services. The measure, adopted unanimously, derives from the previous collapse of the ‘mother’ decree that supported the economic emergencyconsidering that it did not comply with the constitutional requirements.
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With this determination, all tax measures adopted under that framework lose validity. This includes the 19 percent VAT that had begun to be applied to certain products and services, as well as the reduction of the wealth tax threshold. Consequently, the tax scheme returns to previous rules to the issuance of the decree.
Return the collection
One of the central points of the ruling is the order of return the resources collected during the time the rule was in force. The Court established that the taxes paid must be refunded to those who prove to have assumed paymentand set a term so that the National Tax and Customs Directorate adopt the necessary mechanisms to make it effective.
“The indirect taxes paid while the Legislative Decree 1474 of 2025 produced effects be returned to the passive subjects that they have materially payment made and so it accredit”, indicated the high court.
Although the instruction of return the resources is clear, its implementation presents important challengesespecially in the case of VAT. Being a indirect taxit is not always possible accurately identify who assumed the final cost.
Cut 19% VAT on liquor and online gambling Photo:THE TIME
He former director of the DIAN, Lisandro Juncoexplained that the ruling has retroactive effectswhich forces reverse what was charged. “What we see is a ex tunc rulingthat is, with retroactive effectswhere the Constitutional Court is saying, we must return taxes collected”, he stated.
However, he warned that in many cases it will be difficult to execute that return. “When you buy a bottle of liquor, if it is not for electronic invoiceit can’t be done determine who the buyer wasbecause he VAT is an indirect tax“, he noted. This situation is replicated in services such as digital betting or in low value international purchases.
From legal analysis, Juan David Velasco, tax partner in Baker McKenzie, specified that the return does not operate in the same way for all taxes. “In direct taxeslike income and assets, there is no place for its collection and what was paid in advance must be returned; in indirect, such as VATthe refund applies to whoever prove that he actually assumed the burden”he explained.
Consequently, nearly 105,000 individuals will no longer have to pay the tax. Photo:iStock
What happens to what has already been paid in emergency taxes?
The scope of the tax refund paid during the validity of the decree will depend on the final text of the ruling and of how the Court modulates its effects. While the full official statement is known, the scenario suggests that taxpayers could request refund or compensation of the taxes created or increased in that period.
According to Sebastián Correa, partner of the firm Serrano Martínez CMA, “if the ruling effectively orders the return of the proceedswhat has already been paid could be processed as refund and/or compensation of taxes created or increased by the Legislative Decree 1474 of 2025 during the period in which they were applied.”
This would include the 19% VAT on spirits and online bettingas well as other taxes such as fiscal stability tax. However, the specific scope of these returns will depend on the mechanisms defined by the National Tax and Customs Directorate and the evidentiary conditions required of taxpayers.
Correa warns that aspects such as modulation of sentence effects and the process operational design will be decisive. In particular, the ability to prove payment and the way in which returns are structured will mark the practical application of the decision.
Taxpayers who took advantage of the tax relief enjoy legal status. Photo:iStock
What’s wrong with him estate tax and the reliefs?
The annulment of the decree It also nullifies the changes to wealth tax. The rule had reduced the declarant threshold at 2,000 million pesosexpanding the number of taxpayers. With the ruling, restore previous conditions of the Tax Statute.
According to Eric Thompson, partner at the Cañón Thompson firm, this implies that the tax caused on January 1 is governed by the previous ruleskeeping intact the threshold and current tariff structure. Consequently, about 105,000 natural persons that would have been incorporated under the decree are left out of that obligation.
The expert also pointed out that the decision reinforces the legal security of taxpayers who accessed benefits during the validity of the rule. “The taxpayers who took advantage of tax relief they enjoy consolidated legal situations that are irreversible,” he explained.
This means that, although the taxes created or modified by the decree cease to applythe tax benefits granted in that period are maintained for those who met the requirements. In practice, the ruling sets up a scenario in which the return of some payments coexist and the preservation of certain legal effects derived from the norm.
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