Colombia Court Halts VAT on Online Gambling, Orders Reimbursement
The Plenary Chamber of Colombia's Constitutional Court has issued a ruling that shakes public finances and the regulatory framework of the entertainment sector by declaring Decree 1474 of 2025 null and void. This regulation, which sought to impose a 19 percent VAT on online gambling and alcoholic beverages, was promoted under a state of economic emergency that the high court deemed illegitimate. Unanimously, the magistrates determined that the central administration failed to demonstrate that the crisis was based on unforeseen or unforeseeable events, which disqualified the Executive from arrogating extraordinary legislative powers outside the usual democratic channels.
The judicial decision, with Justice Juan Carlos Cortés as rapporteur, establishes that the National Tax and Customs Directorate (DIAN) must manage the refund of taxes collected directly and indirectly between December 30, 2025, and January 28, 2026. Although the Government aimed to collect approximately 11 trillion pesos with this package of measures, the ruling mandates the reimbursement of amounts to those taxpayers who can materially prove they made the payment. To comply with this mandate, the tax authority has a period of 30 days after official notification to enable the necessary technical mechanisms.
Despite the forcefulness of the ruling, the recovery of funds presents nuances that could leave a large part of the capital in the State's coffers. Sector specialists warn that, while liquor companies and large distributors have solid accounting records to claim volume payments, the average citizen faces an extremely demanding burden of proof. To recover the VAT paid on gambling or alcoholic beverages, claimants must present electronic invoices in their name, bank statements, and certifications demonstrating that the cost was not passed on, requirements that most end consumers do not usually keep.
The labyrinth of "derecho rogado" and the impact on the iGaming sector
In the Colombian legal system, the principle of "derecho rogado" (requested right) prevails, which implies that the State will not act ex officio to locate affected taxpayers. It will be the citizen or the interested company itself that must initiate the formal refund process. According to legal analysts, this scenario suggests that a significant portion of the 25 billion pesos collected from indirect taxes will end up being consolidated in favor of the Nation simply due to the lack of formal claims before the DIAN.
On the other hand, the Court has established a clear distinction regarding funds obtained through amnesties or tax benefits. Those taxpayers who took advantage of the decree to catch up on penalties and interest, which generated 1.6 trillion pesos for the treasury, will not have their money reimbursed. The court considers that these payments correspond to prior obligations and were made voluntarily, so they remain as legally consolidated situations that are not affected by the unconstitutionality of the emergency decree.
A precedent on the separation of powers in economic management
The ruling against the Gustavo Petro government's decree reinforces the principle of separation of powers and limits the Executive's ability to modify the tax system without the approval of Congress. Justice Carlos Camargo Assís stated in his arguments that the appropriation of legislative powers without meeting the strict requirements of the Constitution violates the country's democratic stability. This decision nullifies not only the tax on online gambling and alcoholic beverages but also the reduction of the threshold for the wealth tax, returning tax regulations to their state prior to the declaration of emergency.
With the annulment of these measures, the online gambling market in Colombia regains its previous tax structure, avoiding a 19 percent surcharge that threatened to impact the competitiveness of regulated operators. However, the challenge for the sector now lies in the administrative management of claims and in monitoring how the DIAN will implement the refund system within a timeframe that has already begun.
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