Tax incentives
Tax incentives for solar energy in Colombia
Laws 1715 of 2014 and 2099 of 2021 make investing in solar energy more profitable. This is what they offer and how to access them.
Quick answer
In Colombia, solar energy projects can access four tax incentives under Ley 1715 de 2014 (amended by Ley 2099 de 2021): a special income tax deduction, VAT exclusion, exemption from import duties and accelerated depreciation. To obtain them, the project has to be certified with UPME following the procedure in Decreto 829 de 2020.
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 benefits
What each incentive offers
| Incentive | What it consists of | Who it applies to | Regulation |
|---|---|---|---|
| Income tax deduction | Allows part of the investment in the renewable energy project to be deducted from net taxable income, spread over several years. | Legal entities and individual income tax filers investing in the project. | Ley 1715 de 2014, as amended by Ley 2099 de 2021 |
| VAT exclusion | Excludes from VAT the purchase of equipment, components and services intended for the renewable generation project. | Whoever purchases the equipment and services for the certified project. | Ley 1715 de 2014, Ley 2099 de 2021 |
| Tariff exemption | Exempts from import duties the machinery and equipment that is not produced in the country and is intended for the project. | Importers of equipment for the certified project. | Ley 1715 de 2014 |
| Accelerated depreciation | Allows the project's assets to be depreciated at a higher annual rate, improving cash flow in the first years. | Holders of the asset (companies). | Ley 1715 de 2014 |
The process
How to access the incentives, step by step
- 1
Define and design the project
With your installer, define the capacity, the equipment and the budget of the renewable energy project. The incentives apply to projects, not to isolated purchases.
- 2
Gather the technical documentation
Prepare the technical and financial information about the project that the assessment requires: description, equipment, investment and schedule.
- 3
Apply for certification with UPME
File the application with UPME to obtain the certificate that unlocks the tax benefits, following the procedure in Decreto 829 de 2020.
- 4
Handle the environmental benefit (if applicable)
Certain benefits require an environmental benefit certification from the competent authority. Confirm which ones apply in your case.
- 5
Apply the benefits in your tax return
With the certifications in hand, apply the deduction, the VAT exclusion and the other benefits in the relevant returns, with support from your tax adviser.
Sources: UPME (opens in a new tab) · Decreto 829 de 2020 (tax incentives decree) (opens in a new tab)
Questions about incentives
Frequent doubts about Law 1715, the income tax deduction and the UPME process.
Can anyone access the Law 1715 incentives?
The benefits apply to non-conventional renewable energy projects certified with UPME. In practice they are used mostly by companies and income tax filers with enough investment; a household can benefit from the VAT exclusion on the equipment, but the income tax deduction and accelerated depreciation only make sense for someone filing income tax with a taxable base.
What is the special income tax deduction?
It is a benefit that allows part of the project investment to be deducted from net taxable income, spread over several years and subject to the caps set by the regulation. It reduces the tax payable and, with it, shortens the payback on the investment.
Do I need to go to UPME in person?
The application is filed with UPME following the procedure in Decreto 829 de 2020. Most serious installers support or handle this process as part of their service; confirm that it is included in the proposal.
Does the VAT exclusion apply to an installation at my home?
The VAT exclusion is provided for equipment, components and services intended for certified renewable generation projects. The specific scope for a household depends on the project's certification and on the regulation in force; it is worth checking with your installer and your tax adviser.
Does your company want to use these incentives?
We connect you with installers who size the project and support the UPME process. Tell us about your case.