What VAT is charged on in your construction contract
On a construction contract, Colombian VAT falls on the builder’s fee, not on the total. On a maintenance contract, on the total. The difference in pesos is not small.
VAT on a construction contract
COP 5,700,000
VAT at 19 % · on 15 % of the contract
| Total value of the contract | COP 200,000,000 |
| Taxable base · Builder’s agreed fee | COP 30,000,000 |
| VAT 19 % | COP 5,700,000 |
| Total including VAT | COP 205,700,000 |
If someone works out this same contract by applying VAT to the full value, they are charging you COP 32,300,000 too much. This is not a matter of opinion: the base for a construction contract is the fee, and article 1.3.1.7.9 of Decreto 1625 de 2016 says so.
Four things that go with the number
The AIU is not a taxable base
A budget saying «AIU 25 %» (the overheads, contingency and profit line Colombian budgets carry) does not turn that 25 % into a taxable base. The special base of article 462-1 of the Tax Code does not mention construction contracts, and the DIAN, the tax administration, confirmed it in Concepto 003524 de 2025.
VAT on materials cannot be reclaimed
In a construction contract, VAT on materials is not deductible: it stays as part of the cost. That is the counterpart of the base being only the fee, and it is why the builder passes it on in the price.
The taxed part has to be written down
The contract must state the part corresponding to the fee or the margin, and that part cannot be below the market rate. A contract that leaves it blank, or sets it at a token figure, is a contract with a problem.
And it is not the same boundary as the permit
The tax boundary does not coincide with the planning one. Waterproofing a façade is upkeep needing no permit and at the same time maintenance taxed on the full value. Settling one does not settle the other.
Where it comes from
The base for a construction contract
Decreto 1625 de 2016, art. 1.3.1.7.9, consolidating art. 3 of Decreto 1372 de 1992: in a contract for the construction of real property, VAT falls on the builder’s fee, or on their margin if no fee was agreed. The contract must state that part and it cannot be below the market rate.
Maintenance is taxed on the full value
Maintenance is not construction for VAT purposes. Repairs, making good, painting and waterproofing façades are taxed on the full value of the contract. Concepto Unificado 1 de 2003, descriptor 9.1, and Concepto DIAN 003524 de 2025. Extension and transformation, on the other hand, are construction.
The AIU does not apply
The special taxable base of art. 462-1 of the Tax Code does not mention construction contracts, and the DIAN confirmed it in Concepto 003524 de 2025. A budget saying «AIU 25 %» does not turn that 25 % into a taxable base.
What this tool does not claim
A tool that answers what its source does not say is worse than no tool at all. This is what is deliberately left unanswered here, and why.
- This is not tax advice, and the difference matters. It is the rule in the regulation applied to two figures you type. A real contract may involve withholdings, special regimes, mixed contracts or items that fit neither box.
- It assumes the general VAT rate. It does not allow for excluded or exempt goods and services, or for public contracts with rules of their own.
- It does not decide whether your contract is construction or maintenance. That is settled by what was agreed and what is actually carried out, not by how the document was titled.
- It does not work out withholdings: not income tax, not VAT, not local business tax. Those are a different calculation from a different source.
- The «how much more they are charging you» compares against a calculation on the full value. That is the frequent mistake, not the only possible one.
I need a professional opinion from someone who knows.
An architect looks at what you already have (a drawing, a quote, someone else’s report) and tells you what is sound, what is missing and what they would ask before signing. The first conversation costs nothing. If the case calls for more, you get a written technical opinion.