Understanding Employer Tax Obligations in Colombia

As an international HR professional, navigating Colombia's social security system requires understanding the comprehensive employer contributions. These mandatory payments typically range from 16.52% to 36.46% of employee salaries, depending on various factors including company size and industry risk classification.

Key Employer Contributions Breakdown

Pension Insurance: 12%
Health Insurance: 0% - 8.5%
Occupational Risk Insurance: 0.522% - 6.96%
Family Welfare Fund (ICBF): 0% - 3%
National Learning Service (SENA): 0% - 2%
Family Compensation Funds: 4%

Colombia's Pension System Evolution

Colombia's pension landscape is undergoing significant transformation with the introduction of Law 2281 of 2024. The current system, operational since 1993, offers employees a choice between public and private pension funds. The public system managed by Colpensiones operates on a defined benefit model, while private funds follow a defined contribution approach.

The new four-pillar system effective July 2025 introduces:

Contributory pillar for formal workers
Semi-contributory pillar for those nearing retirement
Voluntary savings for additional retirement planning
Solidarity pillar for vulnerable populations

Health Insurance Framework

Employers contribute 8.5% toward the mandatory health insurance system, managed through Health Promotion Companies (EPS). This system ensures comprehensive medical coverage for employees and their families, with employers exempt from contributions for employees earning less than 10 times the minimum wage.

Occupational Risk Insurance Categories

Risk Level	Rate	Industry Examples
I	0.522%	Financial services, administrative work
II	1.044%	Food processing, textile manufacturing
III	2.436%	Leather goods, alcohol production
IV	4.350%	Construction, mining operations
V	6.960%	Explosives handling, oil extraction

Employee Tax Responsibilities

Employees in Colombia contribute between 8% and 39% of their income through various deductions:

Pension contributions: 4%
Health insurance: 4%
Income tax: 0% - 39%

Progressive Income Tax Structure

Annual Taxable Income (in UVT)	Tax Rate
0 - 1,090	0%
1,091 - 1,700	19%
1,701 - 4,100	28%
4,101 - 8,670	33%
8,671 - 18,970	35%
18,971 - 31,000	37%
Over 31,000	39%

International Considerations

Colombia's network of Double Taxation Agreements with countries including the United Kingdom, Spain, France, and Canada provides relief mechanisms for international workers. Companies like SailGlobal specialize in helping multinational organizations navigate these complex regulations while ensuring full compliance with local requirements.

Understanding Colombia's tax framework is essential for successful market entry and sustainable operations. Regular consultation with local experts and monitoring legislative changes through official channels like DIAN (National Tax and Customs Directorate) ensures ongoing compliance.

Colombia Employer Tax Guide 2024: Social Security Contributions & Compliance