How to run payroll in Colombia

Payroll in Colombia runs on a monthly cycle. Payment is usually due by the 30th of each month, though many employers choose the 29th to avoid month-end complications.

Colombian labor law requires employees to be paid at least once per month, but you can pay more frequently if needed. Most companies stick to monthly payments to align with the country's traditional payroll structure.

Payment timing requirements

You must pay salaries no later than the last day of each month. Late payments trigger automatic interest charges at the legal rate of 1.5% per month, plus potential labor sanctions.

For employees earning more than 10 minimum wages (COL$14,000,000 in 2026), you can agree on different payment schedules, but monthly remains the standard.

Mandatory bonus payments

Colombia requires two additional salary payments beyond the 12 monthly salaries:

Prima de servicios (mid-year bonus): Pay 15 days of salary by June 30th, plus another 15 days by December 20th. Calculate based on time worked and salary earned during each semester.

Aguinaldo (Christmas bonus): Pay one month's salary by December 20th for employees earning up to 2 minimum wages (COL$2,800,000 in 2026). Calculate proportionally based on time worked during the year.

Bonus Type	Amount	Payment Deadline	Calculation Base
Prima (June)	15 days salary	June 30	Jan-June earnings
Prima (December)	15 days salary	December 20	July-December earnings
Aguinaldo	30 days salary	December 20	Annual earnings

Vacation pay calculation

Employees earn 15 working days of vacation per year. You must pay vacation at the current salary rate when the employee takes time off.

You can't pay vacation in lieu unless the employment relationship ends. Unused vacation accumulates and must be compensated at termination.

Payment methods and requirements

Bank transfers are mandatory for all employees. You cannot pay salaries in cash, regardless of the amount.

Employees must have Colombian bank accounts. For international hires, help them open accounts during onboarding - most banks require a cedula (national ID) or cedula de extranjería (foreigner ID).

All payments must be in Colombian pesos (COP). You cannot pay salaries in foreign currency, even if agreed upon in the contract.

Payslip requirements

Provide detailed payslips showing:

• Base salary and variable compensation
• Overtime calculations and rates
• Social security and tax deductions
• Transportation allowance (auxilio de transporte)
• Net payment amount

Payslips must be in Spanish and delivered electronically or in paper. Keep copies for at least 5 years as labor inspectors frequently request payroll records during audits.

Tax withholding reports in Colombia are due by the 15th of each month. Late filing means penalties of 10% of the unpaid tax amount, with a minimum of 10 UVT (about COL$445,000 in 2026).

Colombia uses a progressive income tax system with rates ranging from 0% to 39%. The tax-free threshold sits at COL$55,261,000 annually, which works out to about COL$4,605,000 per month.

Income tax brackets

Annual Income (COL$)	Monthly Income (COL$)	Tax Rate
COL$0 - 55,261,000	COL$0 - 4,605,083	0%
COL$55,261,001 - 73,685,000	COL$4,605,084 - 6,140,417	19%
COL$73,685,001 - 122,808,000	COL$6,140,418 - 10,234,000	28%
COL$122,808,001 - 184,212,000	COL$10,234,001 - 15,351,000	33%
COL$184,212,001+	COL$15,351,001+	39%

Withholding requirements

You're responsible for withholding income tax from employee paychecks each month. Register as a withholding agent with DIAN (Colombia's tax authority) before your first payroll run.

File Form 350 (monthly withholding report) by the 15th of the following month. Payment is due on the same date. The filing schedule varies by your company's last digit of NIT - check DIAN's annual calendar for your specific dates.

Annual reconciliation happens through Form 210 for employees, due by August 31st. You'll need to provide employees with their annual withholding certificates by March 15th.

Tax registration

New employers need three key registrations:

• RUT registration with DIAN as a withholding agent
• Activity code for payroll services (if applicable)
• Digital certificate for online filing

Allow 10-15 business days for DIAN to process your withholding agent status. You can't run payroll legally until this approval comes through.

Special tax considerations

Non-resident employees face different rules. They're taxed only on Colombian-source income, but at the same progressive rates. No tax-free threshold applies - they pay from the first peso earned.

Tax treaties with 15+ countries can reduce withholding rates for certain types of income. Spain, Mexico, and Canada treaties are most commonly used.

Regional taxes don't exist for income tax, but some municipalities charge industry and commerce tax on business activities.

Common tax mistakes

Missing the NIT-based filing dates costs companies 10% penalties. Each NIT digit has specific monthly deadlines - don't assume it's always the 15th.

Incorrect non-resident calculations trigger DIAN audits. Many companies wrongly apply the tax-free threshold to foreign employees.

Late annual certificates to employees result in COL$2,000,000+ fines per missing certificate. DIAN takes the March 15th deadline seriously.

Think your home country has high employer taxes? Colombia's contributions total 28.5% on top of base salary.

Contribution breakdown

Here's what you'll pay as an employer for each Colombian employee:

Contribution Type	Employer Rate	Employee Rate	Salary Cap
Health Insurance (EPS)	8.5%	4.0%	25 minimum wages
Pension (AFP)	12.0%	4.0%	25 minimum wages
Occupational Risk (ARL)	0.522% to 6.96%	0%	25 minimum wages
Family Compensation (CCF)	4.0%	0%	25 minimum wages
ICBF (Child Welfare)	3.0%	0%	25 minimum wages
SENA (Training)	2.0%	0%	25 minimum wages

The occupational risk rate depends on your industry classification. Most office jobs pay 0.522%, while high-risk industries like construction pay up to 6.96%.

Total employer cost example

For a COL$60,000 monthly salary:

• Base salary: COL$60,000
• Health insurance: COL$5,100
• Pension: COL$7,200
• Occupational risk: COL$313 (office job)
• Family compensation: COL$2,400
• ICBF: COL$1,800
• SENA: COL$1,200

Total employer cost: COL$78,013 Cost multiplier: 1.30 (you pay 30% more than base salary)

Contribution caps and ceilings

All social security contributions cap at 25 times the minimum wage. For 2026, that's COL$37,500,000 annually (COL$3,125,000 monthly).

High earners above this threshold still pay contributions, but only on the capped amount. This creates significant savings for executive salaries.

The cap applies to each contribution separately, so you can't reduce one by overpaying another.

Registration requirements

You must register with multiple agencies before hiring:

Complete all registrations within 30 days of hiring. Late registration triggers penalties starting at COL$2,000,000 per employee.

Payment deadlines

Contributions are due by the 10th of the following month. For January payroll, pay by February 10th.

Use the PILA system (Integrated Contribution Payment) to pay all contributions in one transaction. The system generates a single payment slip covering all agencies.

Payment must clear by 11:59 PM on the due date. Bank processing delays don't excuse late payments, so submit 2-3 days early.

Sick leave in Colombia is paid at 67% for the first 90 days by social security, but you'll handle the administrative coordination. Employees need medical certification after day three, and you're responsible for processing the claims and maintaining regular pay cycles.

The system works through EPS (health insurance) reimbursement. You continue paying the employee's full salary, then claim back 67% from their EPS provider. This means your payroll shows the full amount, but your actual cost is 33% of their daily wage.

Annual leave

Colombian employees earn 15 working days of annual leave after completing one full year of service. That's three weeks you need to account for in your payroll planning.

Vacation pay is calculated at 100% of the employee's average salary over the 12 months before taking leave. Include all regular payments like overtime, bonuses, and commissions in this calculation.

Carryover and payout rules

Employees can carry forward unused vacation days, but you must pay them out within the following year. On termination, you're required to pay all accrued vacation time at the current salary rate.

The calculation is straightforward: take their current monthly salary, divide by 30, then multiply by unused vacation days. No rounding down - pay the exact amount.

Sick leave

Social security covers 67% of sick leave pay from day one through day 90. After 90 days, if the employee remains unable to work, they may qualify for disability benefits through the pension system.

You need medical certification for absences longer than three days. The certificate must come from an EPS-authorized doctor or the employee's treating physician.

Payroll impact

Continue processing regular payroll during sick leave. Submit reimbursement claims to the employee's EPS within 30 days. Late submissions face rejection, leaving you liable for the full amount.

Track sick leave carefully - employees who exceed 180 days in a rolling 12-month period may face dismissal for medical incapacity without severance obligations.

Parental leave

Maternity leave

Mothers receive 18 weeks of maternity leave at 100% salary, paid by social security. You can distribute this as 14 weeks after birth and 4 weeks before, or take the full 18 weeks after delivery.

Process maternity payments through regular payroll, then claim reimbursement from the employee's EPS. Submit claims with the birth certificate and medical documentation within 30 days.

Paternity leave

Fathers get 2 weeks of paid paternity leave, also covered by social security at 100% salary. This extends to 3 weeks for multiple births or premature babies requiring extended hospital care.

The same reimbursement process applies - you pay, then claim back from EPS. Employees must notify you at least 30 days before the expected birth date.

Public holidays 2026

Date	Holiday	Notes
January 1	New Year's Day	Fixed
January 6	Epiphany	Moved to Monday
March 23	Saint Joseph's Day	Moved to Monday
April 17-18	Holy Thursday & Good Friday	Fixed
May 1	Labor Day	Fixed
June 2	Ascension Day	Moved to Monday
June 23	Corpus Christi	Moved to Monday
June 30	Sacred Heart	Moved to Monday
July 20	Independence Day	Fixed
August 7	Battle of Boyacá	Fixed
August 17	Assumption of Mary	Moved to Monday
October 12	Columbus Day	Moved to Monday
November 2	All Saints' Day	Moved to Monday
November 16	Independence of Cartagena	Moved to Monday
December 8	Immaculate Conception	Fixed
December 25	Christmas Day	Fixed

Work on public holidays requires 75% overtime premium on top of regular pay. Most holidays move to the following Monday when they fall on weekdays, creating long weekends.

Mandatory benefits affecting payroll

Transportation allowance

Pay transportation allowance to employees earning up to 2 minimum wages (COL$2,600,000 monthly in 2026). The allowance is COL$162,000 per month and doesn't count toward salary for benefit calculations.

This appears as a separate line item on payslips and reduces your overall social security contribution base.

Severance fund

Deposit 8.33% of each employee's monthly salary into their severance fund (cesantías) by February 14th each year. Employees can withdraw funds for housing, education, or receive the full amount on termination.

Calculate this on total compensation including overtime, bonuses, and commissions. Late deposits incur 12% annual interest penalties.

Miss the 15th monthly filing deadline in Colombia and penalties start at COL$2,890,000 per day. Colombia's tax authority DIAN doesn't offer grace periods, and late submissions can trigger audits that scrutinize your entire payroll operation.

Here's exactly what you need to file, when to file it, and what happens if you don't.

Monthly filing requirements

PILA contributions filing

Submit your PILA (Integrated Social Protection Liquidation and Payment) form by the 15th of each month. This covers health, pension, and occupational risk contributions for all employees.

File through the PILA portal at www.pila.gov.co. You'll need employee identification numbers, salary details, and contribution calculations. The system validates data in real-time, so prepare accurate information before starting.

Late filing penalties start at COL$2,890,000 and increase by 5% monthly. Missing three consecutive filings triggers automatic audit procedures.

Withholding tax returns

Submit Form 350 (monthly withholding tax return) by the 16th of each month through DIAN's virtual portal. Include all employee income tax withholdings from the previous month.

The deadline varies by your company's last digit of NIT (tax ID):

• NIT ending 1-2: 16th of the month
• NIT ending 3-4: 17th of the month
• NIT ending 5-6: 18th of the month
• NIT ending 7-8: 19th of the month
• NIT ending 9-0: 20th of the month

Parafiscal contributions

Report parafiscal contributions (SENA, ICBF, Cajas de Compensación) monthly through each entity's respective portal. Deadlines align with PILA submissions on the 15th.

Annual reporting

Employee tax certificates

Issue Form 220 (annual income and withholding certificate) to all employees by March 15, 2027. Employees need these certificates to file their personal tax returns.

The certificate must include total annual salary, bonuses, benefits, and tax withholdings. Submit copies to DIAN through the Information Exogenous system by the same deadline.

Year-end reconciliation

File your annual income tax return (Form 110) by April 30, 2027. Reconcile all monthly withholding tax payments against actual annual liability.

DIAN requires detailed payroll annexes showing employee-by-employee calculations. Discrepancies trigger automatic review processes that can delay refunds or create additional assessments.

Employee documentation

Employment contracts

All employment contracts must be written in Spanish and include specific mandatory clauses. Verbal agreements aren't legally recognized for payroll purposes.

Required contract elements include:

• Exact job description and responsibilities
• Base salary amount in Colombian pesos
• Work schedule and location details
• Benefit entitlements and calculation methods
• Termination notice periods

Payslip requirements

Issue detailed payslips every pay period showing earnings, deductions, and net pay. Colombian law requires 15 specific line items on every payslip.

Payslips must include employee and employer contribution amounts, overtime calculations, and cumulative year-to-date totals. Missing any required element can result in COL$1,445,000 penalties per occurrence.

Record retention

Maintain all payroll records for 20 years from the employee's termination date. This includes contracts, payslips, time records, and benefit calculations.

Digital records are acceptable if they meet DIAN's technical requirements for authenticity and readability. Lost records during an audit result in automatic maximum penalty assessments.

Penalties and enforcement

Violation	Penalty Amount
Late PILA filing	COL$2,890,000 + 5% monthly
Missing payslip elements	COL$1,445,000 per occurrence
Incorrect tax withholding	160% of underpayment
Unregistered employee	COL$7,225,000 per employee
Missing employment contract	COL$3,612,500 per contract
Late annual filing	5% of tax due (minimum COL$1,445,000)

Regulatory oversight

Primary agencies

DIAN (National Tax and Customs Authority) oversees all tax-related payroll compliance. Contact them at:

• Website: www.dian.gov.co
• Virtual portal: muisca.dian.gov.co
• Phone: +57 1 567-8888

Ministry of Labor handles employment law compliance and workplace inspections:

• Website: www.mintrabajo.gov.co
• Inspection requests: +57 1 330-2323

Social security entities

• Health (EPS): Each provider has separate reporting requirements
• Pensions (AFP): Coordinate through PILA system
• Occupational risk (ARL): Monthly reporting through provider portals

DIAN's audit selection algorithm prioritizes companies with late filings, payroll discrepancies, or employee complaints. Maintain accurate records and meet all deadlines to minimize audit risk.

Effective January 1, 2026, all employers in Colombia must apply the new minimum wage of COL$1,423,500 monthly, representing a 9.5% increase from 2025's COL$1,300,000.

Minimum wage adjustment - January 1, 2026

The 2026 minimum wage affects more than base salaries. Your transportation allowance also increased to COL$162,000 monthly (up from COL$148,000), and this applies to all employees earning up to twice the minimum wage.

Key impacts:

• Update payroll systems with new base calculations
• Adjust overtime rates (based on minimum wage multiples)
• Review any salary bands below the new threshold
• Recalculate social security contributions tied to minimum wage

Social security contribution rates - January 1, 2026

Health insurance employer contributions increased to 8.7% (from 8.5% in 2025). Employee contributions remain at 4.0%, but the combined rate change affects your total payroll costs.

Pension contributions stayed stable at 16% total (12% employer, 4% employee), but the salary cap for high earners increased to COL$34,164,000 monthly.

Action required:

• Update contribution calculations in payroll software
• Notify employees of the slight health insurance rate change
• Verify high-earner pension calculations against new salary cap

Tax bracket adjustments - January 1, 2026

Income tax brackets shifted upward by approximately 7% to account for inflation. The tax-free threshold increased to COL$52,800,000 annually (from COL$49,350,000).

Income Range (Annual)	Tax Rate	Previous Threshold
COL$0 - COL$52,800,000	0%	COL$49,350,000
COL$52,800,001 - COL$84,480,000	19%	COL$78,900,000
COL$84,480,001 - COL$211,200,000	28%	COL$197,400,000

Vacation day calculation update - March 1, 2026

New regulations clarify that partial vacation days must be calculated to the nearest half-day, not rounded down. This affects employees who take fractional vacation time or leave mid-employment.

Update your vacation accrual systems to handle half-day increments and ensure final settlement calculations comply with the new rounding rules.