Retención en la fuente in Colombia: procedimiento 1 y 2, the UVT, and the Article 383 table

Retención en la fuente in Colombia is the income tax an employer withholds from salaries each month and pays to the tax authority, DIAN. The amount comes from a progressive table in Article 383 of the Estatuto Tributario (ET, the national tax code), written in UVT rather than pesos. In 2026 one UVT is COP 52,374, and nothing is withheld until the monthly taxable base passes 95 UVT (COP 4,975,530). The taxable base is gross salary minus contributions, deductions and exempt income. The employer applies the table to that base under one of two methods, procedimiento 1 y 2 (procedures 1 and 2), and files the result on Form 350.

The UVT: the unit every withholding threshold is written in

The UVT (Unidad de Valor Tributario, or tax value unit) indexes Colombian tax law to inflation. DIAN publishes the next year's value before 1 January, adjusted by the change in the middle-income consumer price index certified by DANE, the statistics office (Article 868 ET). Resolución 000238 of 15 December 2025 set the 2026 value at COP 52,374, up 5.17% from COP 49,799.

Every threshold and cap below is stated in UVT, so the peso amounts change every January. A payroll that keeps last year's UVT withholds against the wrong thresholds for every employee.

Depuración: from gross salary to the taxable base

Depuración is the sequence of subtractions that turns the month's labour payments into the base for the table. Article 388 ET and Article 1.2.4.1.6 of Decreto 1625 de 2016 (the single tax regulation) set the order:

1. Total labour payments: salary, overtime, commissions and other taxable pay.
2. Minus non-taxable income: the employee's mandatory health (4%) and pension (4%) contributions and, from 4 minimum wages, the solidarity fund (Fondo de Solidaridad Pensional) contribution of 1%, rising in steps from 16 minimum wages to 2% above 20. These are subtracted in full and do not count toward any cap.
3. Minus Article 387 deductions: home-loan interest up to 100 UVT a month (COP 5,237,400); prepaid medicine or health insurance up to 16 UVT (COP 837,984); and for dependents, 10% of the month's gross labour income, up to 32 UVT (COP 1,675,968).
4. Minus exempt income: voluntary pension contributions and AFC accounts (savings for buying a home), together up to 30% of labour income and 3,800 UVT a year (Articles 126-1 and 126-4 ET), and then the 25% labour exemption.

The 2022 tax reform (Ley 2277 de 2022) added a separate deduction of 72 UVT per dependent, for up to four (Article 336 ET). Decreto 2231 de 2023 placed that deduction in the annual return rules (Decreto 1625 de 2016, Article 1.2.1.20.3). DIAN's Concepto 3966 de 2023 excludes the 72 UVT from the withholding base because Article 388 refers only to Article 387 deductions. Monthly payroll applies the 10% / 32 UVT deduction; on the annual return, an employee under a labour contract may claim both deductions for the same dependent.

The 25% exempt income and the 40% / 1,340 UVT cap

Article 206, numeral 10 ET exempts 25% of labour payments (the renta exenta del 25%), capped at 790 UVT a year (COP 41,375,460 in 2026). The 25% is calculated last, on what remains after non-taxable income, deductions and other exempt income.

Before 2023 the cap was 240 UVT a month; the law now sets only an annual figure. DIAN's Concepto 3966 de 2023 says only that employers must respect the annual limit for each employee. Some payrolls prorate the annual cap at 790 ÷ 12, about 65.83 UVT or COP 3,447,955 a month; others track the annual total, which high earners can use up before December. Any difference is settled on the employee's annual return, if one is due.

Deductions and exempt income together are then capped at the lower of:

• 40% of labour payments minus non-taxable income, applied to each month (Article 388 ET);
• 1,340 UVT a year (COP 70,181,160 in 2026), set by Article 336 ET and applied to withholding by Decreto 1625 de 2016, Article 1.2.4.1.6, paragraph 3 (as amended by Decreto 2231 de 2023).

Any amount above the limit is lost for that month's withholding.

The Article 383 withholding table

The depurated base is converted to UVT and taxed at marginal rates. The current bands come from Ley 2010 de 2019 (Article 42), are reproduced in Decreto 1625 de 2016, Article 1.2.4.1.17, and were not changed by the 2022 reform:

• 0 to 95 UVT: 0%
• Over 95 to 150 UVT: 19% of the UVT above 95
• Over 150 to 360 UVT: 28% of the UVT above 150, plus 10 UVT
• Over 360 to 640 UVT: 33% of the UVT above 360, plus 69 UVT
• Over 640 to 945 UVT: 35% of the UVT above 640, plus 162 UVT
• Over 945 to 2,300 UVT: 37% of the UVT above 945, plus 268 UVT
• Over 2,300 UVT: 39% of the UVT above 2,300, plus 770 UVT

The result in UVT, multiplied by the year's UVT value, is the amount to withhold.

Worked example: withholding on a COP 10,000,000 salary

An employee earns COP 10,000,000 a month in 2026, with no dependents or voluntary savings, under procedimiento 1.

1. Non-taxable income. Health COP 400,000, pension COP 400,000, and the 1% solidarity fund (COP 100,000), because the salary exceeds 4 minimum wages (4 × COP 1,750,905 = COP 7,003,620). Net: COP 10,000,000 − 900,000 = COP 9,100,000.
2. 25% exemption. 25% × COP 9,100,000 = COP 2,275,000, below both the prorated COP 3,447,955 and the 40% cap of COP 3,640,000.
3. Base. COP 9,100,000 − 2,275,000 = COP 6,825,000, or 130.31 UVT.
4. Table. 19% band: (COP 6,825,000 − 4,975,530) × 19% = COP 351,399.

The withholding is about 3.5% of gross salary, although the marginal rate is 19%.

Now add one dependent, COP 500,000 of prepaid medicine and COP 1,500,000 of contributions to a voluntary pension fund. The dependents deduction is COP 1,000,000 (10% of gross), and the 25% exemption is now 25% × (9,100,000 − 1,000,000 − 500,000 − 1,500,000) = COP 1,525,000. The total claimed is COP 4,525,000, but the 40% cap allows COP 3,640,000, so COP 885,000 is lost. The base is then COP 5,460,000 and the withholding is (5,460,000 − 4,975,530) × 19% = COP 92,049.

Procedimiento 1 y 2: monthly table or fixed six-month percentage

Articles 385 and 386 ET let the employer choose between two methods that use the same depuración and table.

Procedimiento 1 applies the table to each month's depurated pay, so withholding changes from month to month. Cesantías (severance fund payments) and their interest follow separate rules, and the legal prima de servicios (the service bonus paid in June and December) is looked up in the table on its own rather than added to that month's salary.

Procedimiento 2 fixes a percentage per employee twice a year. In June and December the employer adds up the previous 12 months of taxable payments, excluding cesantías and their interest, and divides by 13, which spreads the prima (one month's salary a year) across the average. The table is applied to the depurated average, and the resulting tax divided by the depurated income gives the percentage for the next six months. Employees with under 12 months of service are averaged over the months worked; new hires are withheld month by month until the first calculation.

For the employee above, 12 salaries plus one year of prima total COP 130,000,000, or COP 10,000,000 after dividing by 13. The tax of COP 351,399 on COP 6,825,000 gives a percentage of about 5.15%, so at a steady salary both methods withhold almost the same. In a month with a COP 5,000,000 commission, the base is COP 10,237,500 (195.47 UVT, the 28% band). Procedimiento 1 withholds COP 1,190,532; procedimiento 2 applies 5.15% and withholds about COP 527,000. Any difference from the employee's actual annual tax is settled on the annual return.

Form 350: monthly filing and payment by NIT digit

The employer files Form 350 (the monthly withholding return) and pays the withholding in the following month. Under Decreto 2229 de 2023, the deadline falls between the 7th and 16th business day, set by the last digit of the employer's NIT (tax ID). October 2026 withholding is due from 11 November (digit 1) to 25 November (digit 0).

A return filed without full payment has no legal effect unless it was filed on time and paid within two months of the deadline (Article 580-1 ET). Late filing costs 5% of the withholding per month or part month, up to 100% (Article 641 ET), plus late-payment interest.

Summary

Colombian income tax withholding on salaries applies the Article 383 ET table, written in UVT, to gross labour income minus contributions, deductions and exempt income. Deductions and exempt income are capped at 40% and 1,340 UVT a year. In 2026 one UVT is COP 52,374; a COP 10,000,000 salary with no extra deductions has COP 351,399 withheld a month. Procedimiento 1 applies the table monthly; procedimiento 2 applies a percentage reset each June and December. Form 350 is due between the 7th and 16th business day of the following month.

The UVT is reset every January and the minimum wage is set each December, so these peso figures will change for 2027. Flux works with payroll partners in Colombia to keep these values current for their clients.