Regulation, paperwork and institutions
Ley 1715 de 2014
Also known as: solar tax incentives, renewable energy law, Law 1715.
Definition
Ley 1715 de 2014, amended by Ley 2099 de 2021, promotes renewable energy in Colombia with tax incentives: an income tax deduction, VAT exclusion, exemption from import duties and accelerated depreciation, subject to prior certification with UPME.
Sources: Ley 1715 de 2014 (Renewable Energy Law) (opens in a new tab) · Ley 2099 de 2021 (Energy Transition Law) (opens in a new tab) · Decreto 829 de 2020 (tax incentives decree) (opens in a new tab)
The four mechanisms operate on different planes. The special income tax deduction allows part of the investment to be subtracted from net taxable income, spread over several years. The VAT exclusion applies to the purchase of equipment and services intended for the project. The tariff exemption covers the import of machinery not produced in the country. And accelerated depreciation allows the assets to be depreciated faster, improving cash flow in the first years.
The common denominator is that all of them require the project to be certified with UPME under the procedure in Decreto 829 de 2020, and some also require an environmental benefit certification from the competent authority. They are not automatic discounts at the point of purchase: they are tax benefits applied in the relevant tax returns.
Their real impact depends on the taxpayer's profile. A company with a significant taxable base can substantially transform the return on its project; a household that does not file income tax can, at best, take advantage only of the part related to the equipment. The specific percentages and caps have to be checked against the regulation in force and with a tax adviser, because they have changed with successive reforms.
The essentials of Ley 1715 de 2014
- Four incentives: income tax deduction, VAT exclusion, tariff exemption and accelerated depreciation.
- Amended by Ley 2099 de 2021.
- It requires prior certification of the project with UPME (Decreto 829 de 2020).
- The real benefit depends on each taxpayer's tax situation.
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Frequently asked questions about Ley 1715 de 2014
Are solar panels VAT-exempt in Colombia?
Ley 1715 provides for VAT exclusion on the purchase of equipment, components and services intended for renewable generation projects, subject to the requirements and certifications the regulation establishes. It is not an automatic exemption on any purchase: it depends on complying with the applicable procedure.
Can a household take advantage of Ley 1715?
Only to a limited extent. The income tax deduction and accelerated depreciation are designed for taxpayers with a sufficient taxable base, which leaves out much of the household market. The benefit that can reach a residential project is concentrated in the equipment-related part, and it is worth checking with a tax adviser.
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