{"id":2890,"date":"2026-07-13T19:35:42","date_gmt":"2026-07-14T00:35:42","guid":{"rendered":"https:\/\/hepacom.org\/las-fundaciones-pagan-impuestos\/"},"modified":"2026-07-13T19:35:43","modified_gmt":"2026-07-14T00:35:43","slug":"las-fundaciones-pagan-impuestos","status":"publish","type":"post","link":"https:\/\/hepacom.org\/en\/las-fundaciones-pagan-impuestos\/","title":{"rendered":"Do foundations pay taxes? The myth of VAT and income tax in non-profit organizations"},"content":{"rendered":"

\u00ab"Foundations don't pay taxes, that's why everyone sets one up." We hear that phrase often in the southern Aburr\u00e1 Valley, and it's half true and half legend. The question is whether Foundations pay taxes<\/strong> \u2014or claiming they pay nothing\u2014 are two sides of the same misunderstanding. The honest answer is that a foundation classified under the special tax regime does not pay income tax on the surplus it reinvests in its social work\u2014it is exempt\u2014but it is still a taxpayer: it files an income tax return every year, pays VAT on what it does not reinvest, and pays VAT on its purchases like anyone else. Neither the myth that they "pay nothing" nor the one that they "pay like a company" holds water.<\/p>\n

We are Hepacom, a foundation for dignified housing (non-profit organization with Tax ID 900.841.914-1) that supports families in the southern Aburr\u00e1 Valley. We are not the Colombian Tax and Customs Authority (DIAN) nor tax advisors, but we experience firsthand the obligations of a non-profit organization and understand the harm caused by a misconception: some people create foundations believing they are tax havens, and some donors are wary, thinking their contributions will be "eaten up by taxes." Here, we've compiled information from official sources so you can make informed decisions based on facts, not hearsay.<\/p>\n

Do foundations pay taxes or are they exempt?<\/h2>\n

It depends on the tax and what the foundation does with its money. The confusion arises from mixing two different things: being exempt from income tax is not the same as not paying any taxes. A non-profit entity that is qualified under the special tax regime<\/a> It receives preferential treatment in income tax, but remains responsible for other taxes and a number of formal obligations. That's why the question arises of whether Foundations pay taxes<\/strong> It doesn't have a simple yes or no: it has a "depends".<\/p>\n

Why doesn't a foundation pay income tax on what it reinvests?<\/h2>\n

Because the law rewards money that stays in good use. Tax Statute<\/a> It establishes that entities under the special regime pay income tax at a single rate of 20% on their net profit or surplus (Article 356). But Article 358 adds a significant benefit: this surplus is exempt when it is allocated, directly or indirectly, in the following year, to programs that develop the entity's social purpose and meritorious activity. In other words: if a foundation reinvests its surplus in its work\u2014in our case, in decent housing<\/a> For families\u2014, no income tax is paid on that surplus. If it is distributed or diverted to something else, then it is subject to taxation under the 20% form. And none of this is automatic: one must be registered in the RUT (Single Taxpayer Registry) as an entity under the special regime, a process that the reform of Law 1819 of 2016 made annual and subject to control by the DIAN (National Tax and Customs Directorate).<\/p>\n

Do foundations pay VAT?<\/h2>\n

Yes, just like anyone else. Here's the most common mistake. There are no special VAT regimes for non-profit organizations: liability for this tax is defined by the activity carried out, not by the nature of the entity performing it. When a foundation buys materials, pays for services, or acquires taxable goods, it pays the VAT included in the price and cannot deduct it as a commercial company would. And if it sells taxable goods or services, it would have to collect and declare the VAT. Being "non-profit" is not a free pass from VAT. There are specific exclusions\u2014such as certain goods donated to food banks\u2014but these are specific cases with their own procedures, not a general exemption simply for being a foundation.<\/p>\n

What taxes and obligations does a non-profit organization have?<\/h2>\n

More than people realize. Being in the special tax regime doesn't mean disappearing from the DIAN's radar; on the contrary, the entity is subject to increased transparency scrutiny. It must file an income tax return every year, even if its surplus is exempt, maintain proper accounting records, and, if its income exceeds a certain threshold, submit a financial report detailing its operations. This table summarizes what applies and what doesn't to a foundation under the special tax regime.<\/p>\n

<\/p>\n

\n\n\n\n\n\n\n\n\n\n
Tax or obligation<\/th>\nDoes it apply to an RTE foundation?<\/th>\nLegal basis<\/th>\n<\/tr>\n<\/thead>\n
Income on the surplus reinvested in the corporate purpose<\/td>\nExempt (0%)<\/td>\nArticle 358 of the Tax Code<\/td>\n<\/tr>\n
Income on the surplus that is not reinvested<\/td>\nSingle rate of 20%<\/td>\nArticle 356 of the Tax Code<\/td>\n<\/tr>\n
VAT on purchases of taxable goods and services<\/td>\nYes, he pays it (he doesn't deduct it).<\/td>\nWithout a special VAT regime<\/td>\n<\/tr>\n
Annual income tax return<\/td>\nMandatory, even if the surplus is exempt<\/td>\nRUT rating and update<\/td>\n<\/tr>\n
Economic report of the management<\/td>\nMandatory if income exceeds 160,000 UVT<\/td>\nArticle 356-3 of the Tax Code<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

Prepared by Hepacom based on the Tax Code and DIAN regulations. Rates, limits, and requirements are defined by DIAN and are subject to change. Last updated: July 2026.<\/em><\/p>\n

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Common mistakes with foundation taxes<\/h3>\n