As a rule, the provision of services in Colombia or from abroad is levied with value added tax (VAT) at 19%. Contrary to traditional brick-and-mortar casinos, betting and gambling services were initially not taxed when provided exclusively through the internet. However, in February, the Colombian government issued Decree 175 of 2025 and imposed VAT on internet-based betting services until 31 December 2025.
Decree 175 establishes that the taxable event is the deposit in cash. This is defined as a payment or transfer in cash made by each player to the operator, which is then credited to their user account. This gives them the right to bet.
The tax basis of the VAT will be the deposit value in cash, divided by 1.19. The tax charged by the operator will be equal to the tax basis multiplied by the applicable tariff (19%). Consequently, the available betting value will be the difference between the cash deposit and the tax.
From a technical perspective, it is worth noting that this new regulation is taxing the mere deposit by the user, even though VAT only applies to the provision of services, as defined in Section 1.3.1.2.1. of Decree 1625 of 2016:
“For VAT purposes, a service is defined as any activity, labour or work provided by an individual or legal person, that is not an employment relationship with the contracting party. This obligation to perform can take the form of either a material or an intellectual factor and can be paid for in cash or in kind, regardless of the denomination or form of remuneration.”
This means players are charged with VAT even when the operator does not provide an actual service, contradicting the very nature of the VAT and its taxable events.
Why it’s a problem
Now, from a practical perspective, this VAT poses a significant threat to the industry as it directly increases the cost of participation for players and reduces the sector’s competitiveness. This burden discourages consumer spending, pushes players toward informal or unregulated markets where no such tax applies and ultimately undermines the formal industry’s growth and sustainability. This is without taking into account the creative measures that the sector may implement through different types of offers aimed at retaining customers.
Moreover, this also represents an excessive burden on an industry that is already subject to significant sector-specific contributions. Operators are required to pay 15% in exploitation rights, as well as 1% of those rights in administrative expenses, with a specific allocation of these resources to the health system. Imposing an additional VAT charge places further strain on the industry’s financial capacity, leading to a reduction in foreign investment and undermining the sector’s potential for growth.
Even industry representatives such as the Colombian trade body Fecoljuegos have expressed that the imposition of VAT on games operated through internet has serious technical complications in its implementation and disregards the specific operational characteristics of the sector. This misalignment not only creates uncertainty for operators but also results in a direct impact on the collection of resources for the health system.
In summary, the application of VAT to betting and gambling operated exclusively via the internet raises many questions and poses several challenges regarding its conceptual application within the current legal framework, not to mention the potential reduction in foreign investment in Colombia.
Finally, it is important to mention that the Colombian government recently submitted a bill to Congress to levy internet betting and gambling services on a permanent basis. This bill has not yet been approved, but we hope Congress understands the technical and practical difficulties and reconsiders extending this VAT.
Daniela Cañizares graduated from the Law School of Colegio Mayor de Nuestra Señora del Rosario with a specialisation in administrative law. With professional experience in the Ministry of Sports and in advising national and international clients on administrative, sports and commercial matters, she has developed a strong practice in the gaming and betting industry.
Cañizares‘ work focuses on providing legal support to companies in the gambling industry, including regulatory compliance, licensing, contractual matters and strategic guidance to navigate the evolving legal framework governing the industry.
German García graduated from the Universidad Externado de Colombia with a specialist degree in tax law and international tax law. As a member of the tax practice area, he advises national and international clients on matters related to national and territorial taxes, application of treaties to avoid double taxation, tax planning and tax compliance.
The post Unpacking the reality of Colombia’s 19% VAT on deposits first appeared on EGR Intel.
Brigard Urrutia lawyers Daniela Cañizares and German García explain why the tax will undermine the regulated sector’s “growth and sustainability”
The post Unpacking the reality of Colombia’s 19% VAT on deposits first appeared on EGR Intel.