How electronic invoicing works in Colombia

Electronic invoicing has a long history in Colombia. As early as 1995, the government granted it the same validity as paper invoices, making Colombia one of the first countries in Latin America to do so. After several initiatives, 2015 marked a key date in its development in the country when the National Tax and Customs Directorate (DIAN) launched the Electronic Invoicing System (SFE). Since its inception, Colombia's new electronic invoicing system has continuously improved and incorporated new tax documents into its electronic filing scheme. To achieve the adoption of electronic invoicing and new tax documents, DIAN has established various mandatory mass adoption schedules for taxpayers in a staggered manner.

For all these reasons, electronic invoicing in Colombia is in constant evolution and is the main driver of the digital transformation of the country's tax system. In this article, we analyze the functioning of electronic invoicing and the main developments in Colombia's electronic tax system.

Changes to Electronic Invoicing in Colombia under Resolution 000119/2024

The National Directorate of Taxes and Customs (DIAN) of Colombia has published Resolution 000119/2024, amending certain provisions of Resolution 000165 dated November 1, 2023.
Key Changes Introduced in the Resolution:

• Equivalence: Taxpayers now have the option to issue either an electronic sales invoice or an equivalent electronic document for their transactions.
• Extension for Equivalent Documents: The implementation schedule has been adjusted, providing a three-month extension for the electronic generation and transmission of certain Equivalent Documents.

The implementation deadline for electronic equivalent documents related to public utility services, passenger transport tickets, and account statements has been extended from August 1, 2024, to November 1, 2024.

• Generation of Equivalent Documents for Airline Ticket Reservations: The equivalent electronic documents for passenger air transport tickets can be generated in a maximum of 48 hours starting from the time the reservation is made in the Global Distribution System (GDS).

Update on Validation of Support Documents for Transactions with Non-Invoicing Entities

As of November 10, 2024, support documents for purchases from non-invoicing entities will be automatically rejected if the seller’s document type does not match a valid value specified in the regulations. According to Resolution 00167 of 2021, the seller's document type must align with the codes outlined in Table 16.2.1 (Fiscal Identifier Type) of Technical Annex 1.0.

Documents issued by non-residents that do not comply with this regulation will be rejected in line with the current provisions for support documents in transactions with entities exempt from electronic invoicing.

Extension of the Deadline for Implementing RIPS to Support Electronic Invoicing in the Health Sector

The Colombian Ministry of Health and Social Protection has published resolution No. 1884, which extends the transition period for implementing the Individual Registry of Health Services Provision (RIPS) as support for the Electronic Sales Invoice (FEV) in the health sector.

The new schedule outlines a phased implementation across three groups, based on the complexity of services provided by health entities:

• Group 1: Providers offering highly complex services. Implementation will begin on October 1, 2024, with mandatory technical assistance provided until November 30, 2024.
• Group 2: Providers offering medium complexity services. Implementation will begin on February 1, 2025, with technical assistance starting in December 2024.
• Group 3: Providers offering low complexity services and independent professionals. Implementation will start on April 1, 2025, with technical assistance provided between February and March 2025.

Additionally, if any RIPS validation process is rejected, entities must complete the electronic billing process without the additional health sector fields and submit the RIPS in accordance with Resolution 3374 of 2000. These entities will have one month from the effective date to implement the necessary improvements and comply with the standard.

Furthermore, healthcare providers and other payers will have until December 31, 2025, to submit the RIPS for care provided before the rule came into effect, in accordance with their usual submission schedules.

Finally, new providers entering the Special Registry of Health Service Providers (REPS) after September 2, 2024, will be required to start transmitting files to the validation platform beginning April 1, 2025.

Electronic Invoicing System – SFE

The Electronic Invoicing System of Colombia follows a pre-validation model. Electronic invoices, as well as other electronic tax documents, must be declared to the DIAN for validation prior to their issuance. Once validated by the DIAN, these are sent by the issuer to the client.

The Electronic Invoicing System of Colombia includes:

• Electronic sales invoice.
• Report for the validation of invoice booklets or paper invoices issued due to the issuer’s technological issues.
• Electronic Payroll Support Document.
• Support Document for Acquisitions from non-obligated parties.
• Registration of Electronic Sales Invoices as a Negotiable Instrument (RADIAN).
• Equivalent documents.

Electronic Sales Invoices

Of all the tax documents that make up the electronic invoicing system, the electronic sales invoice is the most widespread. The electronic sales invoice is mandatory for the following taxpayers:

• Legal entities that sell goods and/or services.
• Natural persons who sell goods and/or services with gross income exceeding 3,500 UVT
• Natural persons who are state contractors with gross income exceeding 4,000 UVT, or natural persons other than retailers, artisans, farmers and ranchers with income below 3,500 UVT who:
  - Have more than one commercial establishment.
  - Exploit intangibles.
  - Are customs users.
• Deposits and investments exceeding 3,500 UVT.
• Taxpayers who opted for the Simple Taxation Regime (RST).

The electronic sales invoice includes credit invoices, debit invoices, and export invoices.

Electronic Payroll Support Document

The Electronic Payroll Support Documents have been recently introduced into the Electronic Invoicing System. The use of electronic payrolls is mandatory for individuals requiring this document to support costs, deductions, or deductible taxes in their income tax returns. All companies subject to income tax and VAT that make payments or credits to other individuals due to their employment or legal relationship must issue electronic payrolls.

The electronic payroll issuance process established by the DIAN includes both the issuance of electronic payroll, called Electronic Payroll Support Documents, and adjustment notes for the Electronic Payroll Support Document, which are electronic documents issued to correct or modify electronic payrolls in case of errors.
Both documents must be electronically signed by the companies and sent to the DIAN to support the salary payment process.

Electronic Payroll Issuance Flow

Based on information obtained from the BPO or payroll software, EDICOM's Global Compliance solution generates the electronic payrolls and transmits them to the National Tax and Customs Directorate (DIAN), following the specified legal and technical requirements. The DIAN generates, signs, stores, and sends a validation message with the value "Document validated by the DIAN."

With the obtained validation, the EDICOM platform integrates the DIAN message into the company's BPO along with the graphical representation of the payrolls for automatic forwarding to employees. Additionally, the solution preserves electronic payrolls for the legally established time, guaranteeing their integrity and confidentiality. This issuance flow is equivalent for adjustment notes.

How to Declare the Electronic Payroll Document in Colombia

According to Article 3 of Resolution 000013 of 2021, the electronic payroll support document must be generated monthly, regardless of whether the company or individual in question makes payments in different or shorter periods than bi-weekly payments.

The deadline for transmitting the electronic payroll and adjustment notes to the document is within the first 10 days of the month following the payment or account credit. The electronic payroll cannot be presented on an annual consolidated basis and sent at the end of the tax period.

Registration of Electronic Sales Invoices (RADIAN)

The DIAN has launched a platform called RADIAN for registering electronic sales invoices as negotiable instruments. For a sales invoice to qualify as a negotiable instrument, it must meet a series of technical and commercial requirements and be registered on the RADIAN platform, where it is validated by DIAN.

In Colombia, factoring is regulated by DIAN through the RADIAN platform. Registering an Electronic Sales Invoice as a Negotiable Instrument is mandatory and must be done exclusively through this system.
Events are a key feature of the RADIAN system.

Creating these events allows a taxpayer to register an electronic invoice as a negotiable instrument in RADIAN, allowing for factoring transactions.These events are electronic messages defined within the RADIAN ecosystem and must be digitally signed by the issuer.

To use RADIAN, users need to specify the type of software they will use to generate, transmit, validate, and deliver the events linked to the electronic sales invoice as a negotiable instrument. This software must be registered, and if a technology vendor provides it, the vendor must be pre-approved by DIAN to offer electronic invoicing and event registration services in RADIAN.

With Resolution 000015 and the release of Resolution 000085, electronic factoring in Colombia is now regulated, including the requirement to register these transactions electronically through the RADIAN platform.

Electronic Invoicing Solution for Factoring in Colombia

EDICOM, as an Authorized Technology Provider by DIAN, offers a certified electronic invoicing solution that allows for the issuance and receipt of invoices, along with features like generating, transmitting, delivering, and registering events in RADIAN, all seamlessly and automatically integrated with your internal management system.

• Manages the exchange of messages with both the issuer and DIAN, ensuring an invoice can qualify as a negotiable instrument (including receipt acknowledgements and tacit or explicit acceptance).
• Once the tax and commercial requirements set by DIAN are met, the invoice is registered on the RADIAN platform.
• EDICOM's solution connects with the platform to issue and track events that provide information on the document's status as a negotiable instrument.

Equivalent Documents

The new P.O.S. document serves as an equivalent to the electronic sales invoice. It is generated through software and validated in advance by the National Tax and Customs Directorate (DIAN) but is used in cases where the supplier is not required to issue an electronic invoice.

The implementation schedule for the electronic equivalent document for cash register machine tickets with a P.O.S. system will vary depending on the taxpayer’s classification with respect to income tax and complementary taxes:

• GROUP 1 – May 1, 2024: Large Taxpayers
• GROUP 2 – June 1, 2024: Income tax filers who are not classified as Large Taxpayers
• GROUP 3 – July 1, 2024: Non-income tax filers and entities that do not fall under the above categories

Implementation schedule for other electronic equivalent documents:

• Passenger air transport ticket – September 1, 2024
• Instrument for games of chance – September 1, 2024
• Document for localized games – September 1, 2024
• Tolls – October 1, 2024
• Stock Exchange voucher – October 1, 2024
• Agricultural Stock Exchange voucher – October 1, 2024
• Entertainment ticket voucher – November 1, 2024
• Movie admission ticket – November 1, 2024
• Household public utilities – November 1, 2024
• Passenger transportation ticket – November 1, 2024
• Bank statement – November 1, 2024

EDICOM as an Authorized Technology Provider by DIAN

EDICOM is an authorized electronic invoicing provider in Colombia. To obtain DIAN authorization, EDICOM met all the criteria established in Article 12 of Decree 2242 of 2015:

• A valid and updated Unique Tax Registry (RUC).
• Responsibility for sales tax and belonging to the common regime.
• ISO 27001 accreditation for information security management systems.
• Financial status certification by a public accountant or fiscal auditor, showing a net worth over 20,000 UVT (Tax Value Unit) and fixed assets over 10,000 UVT.
• Use of the standard XML electronic generation format established by the DIAN.
• Consecutive numbering authorized by the DIAN.
• Compliance with applicable requirements from Articles 617, 512-9, and 512-11 of the ET.
• Inclusion of a digital or electronic signature ensuring authenticity and integrity, according to DIAN's signature policy.
• Inclusion of the Unique Electronic Invoice Code.

Moreover, as a Digital Certification Entity accredited by ONAC, EDICOM issues digital certificates necessary for signing electronic invoices and other tax documents like electronic payrolls.

As an authorized electronic invoicing provider by DIAN and a Digital Certification Entity accredited by ONAC, EDICOM offers the most comprehensive technological solution for electronic document exchange in Colombia.

The EDICOM global e-Invoicing platform meets the requirements set by the DIAN in Colombia and most tax authorities across Latin America, Europe, and Asia. EDICOM has developed e-Invoicing solutions for sending and receiving electronic invoices, adapted to the specifications of the countries where its clients operate. The platform integrates with the company's ERP or internal management system, automating electronic invoicing while complying with legal requirements in any country.