Expense Reimbursement Policy in Colombia

Modified on: Mon, 15 Sep, 2025 at 9:24 PM

TABLE OF CONTENTS

Invoicing & Documentation Requirements
Reimbursement & Taxability
VAT and Compliance Considerations
Eligible Expense Categories
Travel & Mileage Reimbursement
Best Practices

Horizons supports the reimbursement of business-related expenses in Colombia, provided they comply with Colombian tax regulations, DIAN invoicing rules, and internal company policies. This guide outlines the documentation, timelines, and compliance requirements for tax-deductible and reimbursable expenses. To ensure proper reimbursement and compliance, employees must follow these steps when handling business-related expenses:

Invoicing & Documentation Requirements

To ensure expenses are tax-deductible and non-taxable for employees, the following documentation rules apply:

All invoices must be issued in the name of Horizonte Recursos Humanos Colombia S.A.S., with NIT 901.694.054.

Ensure to include:

Date of Transaction
Itemized Details of Purchases
Total Amount and Tax Information
Vendor Information
For legal entities, invoices must comply with Article 617 of the Tax Statute and DIAN Resolution 000042 of 2020.
For non-VAT suppliers, a collection account addressed to HRH Colombia is required.
For foreign suppliers, invoices should be issued to HRH Colombia if possible.
All expenses must be supported by an invoice, regardless of amount.
Depending on the tax regime and invoice value, withholding tax may apply, and HRH Colombia is responsible for applying it correctly. If not withheld, the expense may be considered non-deductible, increasing the company’s taxable base.

Reimbursement & Taxability

Per diems (viáticos) are tax-free up to the limits set by Decree 1625 of 2016. Amounts exceeding these limits are taxable.
Client entertainment and gifts may be deductible if:
- They are directly related to commercial activity.
- Proper documentation is provided.
- They comply with Article 107-1 of the Tax Statute.
Employee benefits (e.g., year-end parties) may be deductible with limits. Recurring benefits must be processed through payroll and are considered taxable income.
Health and wellness expenses (e.g., gym, yoga, therapy) are generally taxable unless legally mandated (e.g., occupational health programs). Taxable benefits must be processed through payroll.

VAT and Compliance Considerations

VAT applies to most goods and services in Colombia. Reimbursable expenses must include valid invoices to allow for VAT deduction.
All expenses must comply with DIAN’s electronic invoicing and acceptance rules.
Payments to foreign vendors require:
- Withholding tax compliance
- Currency exchange documentation under Banco de la República regulations
If proper documentation is not provided, HRH Colombia must treat the expense as non-deductible, increasing the taxable base for income tax.

Eligible Expense Categories

Reimbursable expenses must be directly related to business activities and supported by valid documentation. Common categories include:

Travel and accommodation costs
Meals during business travel
Tolls and fuel (with proper invoice)
Office supplies
Client meeting expenses

Travel & Mileage Reimbursement

Mileage reimbursement is not regulated by Colombian tax law. Companies typically set an internal rate. The national public transport rate may be used as a benchmark.
Toll expenses are reimbursable with receipts and must be reported as separate expenses, not part of the mileage log.
Parking tickets for traffic violations are not reimbursable.
Travel expenses (air, bus, train, taxi, rental cars) are reimbursable when directly related to business purposes and supported by valid invoices.
There are no legal caps on travel expenses, but companies may set internal limits. All travel-related expenses must be supported by invoices from registered service providers to be deductible.

Best Practices

Always obtain and submit valid electronic invoices.
Ensure expenses are reasonable, business-related, and properly approved.
Submit expenses promptly to avoid delays in payroll processing, attaching receipts and invoices, through the Horizons platform.

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Colombia