Mandate Agreement for Leasing in Colombia: What It Is, DIAN Responsibilities, and Invoicing

Handing over an apartment, house, or commercial space to a real estate agency seems like the most convenient way to avoid dealing with tenants and maintenance calls. However, when tax season arrives or a corporate tenant demands an invoice to deduct costs, many owners discover with surprise that delegating management does not eliminate their tax commitments. In fact, it introduces a precise legal structure: the agency agreement (mandato).

If you are a capital investor or have a property for rent, understanding how money travels between the tenant, the agency, and your bank accounts is essential to avoid sanctions from the National Directorate of Taxes and Customs (DIAN) or inconsistencies in exogenous information reports.

What is the agency agreement for real estate leasing?

The agency agreement in Colombia is regulated by Article 2142 of the Civil Code and Article 1262 of the Commercial Code. In simple terms, it is a legal act through which a person called the principal (mandante) (the property owner) entrusts the management of one or more businesses to another person called the agent (mandatario) (the real estate agency or professional manager), who takes charge on the principal's behalf and risk.

It is crucial not to confuse this contract with simple brokerage. While brokerage is limited to bringing parties together to close a deal and ends upon signing the lease, the management mandate grants continuous powers: collecting monthly rent payments, hiring repairs, paying administrative fees, and representing the owner before the tenant.

Despite this intermediation, the legal ownership of the asset and the economic benefit of the rent remain with the principal. The real estate agency only acts as a conduit and collects a remuneration or commission for its work.

Electronic invoicing under an agency agreement: Who must issue the invoice?

Historically, rent payments handled by real estate agencies were managed with informal cash receipts. Today, that scheme is a thing of the past under the rules of the Electronic Sales Invoice (FEV) and DIAN Resolution 000165 of 2023.

The governing tax rule is set out in Article 1.6.1.4.9 of Decree 1625 of 2016 (Single Regulatory Decree on Tax Matters), replaced by Decree 358 of 2020:

"In agency agreements, sales invoices and/or equivalent documents must be issued in all cases by the agent."

This means that the real estate agency is legally and operationally responsible for issuing the electronic invoice to the tenant. Within the technical schemes validated by the DIAN, the agency's software must register the operation under the specific mandate category, unequivocally distinguishing:

• Income received for third parties: The value of the rent payment corresponding to the owner.
• The agent's own income: The administration or brokerage commission agreed upon with the principal.

If the real estate agency does not segregate these concepts in its accounting, it mixes the owner's rent with its commission and distorts its own income.

Withholding tax and certificates: Decree 1625 rules

Withholding tax on rent payments creates constant confusion. According to Article 1.2.4.11 of Decree 1625 of 2016, when an agent intervenes, the withholding tax is always applied by consulting the tax status of the principal (the owner) and not that of the real estate agency.

The income tax withholding rate for real estate rentals is 3.5% on the gross rent, according to Article 1.2.4.10.6 of the same decree. However, two conditions must be met:

1. That the payer (the tenant) is qualified as a withholding agent (generally legal entities or natural persons with special tax statuses). Between two natural persons who are not withholding agents, no withholding tax is applied.
2. That the amount exceeds the minimum legal base, regulated in UVT by Decree 1625 of 2016 and Decree 572 of 2025. The legal percentage remains 3.5%; the value in pesos changes with the current UVT.

Under Article 394 of the Tax Statute, the agent must issue a certificate to the withholding agent stating the name and NIT of the actual beneficiary of the payment. In this way, the tenant withholds and remits the 3.5% directly in favor of the owner's NIT, allowing the latter to use that certificate as a tax credit on their annual income tax return.

VAT on rentals under agency agreements: Residential vs. Commercial

The treatment of Value Added Tax (VAT) varies drastically depending on the property's purpose and the service provided:

Even if your apartment is intended for housing and the rent is 100% excluded from VAT, the monthly invoice the real estate agency charges you for its administration percentage will indeed trigger 19% VAT on its service. If you are a natural person not responsible for VAT, that 19% rate on the commission becomes a non-recoverable cost.

The mandatory accounting certification for your income tax return

If the real estate agency hires repairs or maintenance in its own name for the owner's property, how can the owner deduct those expenses before the DIAN if the suppliers' electronic invoices were issued in the agency's name?

Article 1.6.1.4.9 of Decree 1625 of 2016 establishes a strict exception to Article 771-2 of the Tax Statute: for the owner to support costs, deductions, or deductible taxes, the agent must issue them a detailed certification stating the amount and concept of the transactions, which must be signed by a public accountant or statutory auditor.

Additionally, the real estate agency reports exogenous information to the DIAN regarding payments, withholdings, and income received for third parties. The economic income remains the owner's and is cross-referenced with their income tax return. Any discrepancy between what the agency reported and that return may generate a request for information.

Real estate agency mandate vs. Direct rental: Financial analysis

In the Colombian real estate market, management fees under a mandate contract are not fixed by law; they are determined by free commercial negotiation. In practice, they typically range between 8% and 10% per month of the rent, plus 19% VAT on that commission.

Be careful with the price of that commission: it is agreed upon with the administrator. If you handle the lease on your own, you can post the ad in the housing section and talk directly with whoever is interested.

Let’s look at a comparison for an apartment with a monthly rent of COP 2,500,000:

• Rental under a mandate contract (10% commission + VAT): The real estate agency retains a monthly commission of COP 250,000 plus COP 47,500 in VAT (total COP 297,500). Annually, the intermediation cost amounts to COP 3,570,000, excluding potential deductions for insurance or maintenance costs.
• Direct rental between landlord and tenant: The landlord does not pay a management commission and receives the full rent (COP 30,000,000 per year before a 3.5% withholding tax when the tenant is a withholding agent), maintaining control of the agreements, signing legally enforceable contracts, and verifying the applicant's solvency.

Many landlords opt for the mandate contract to avoid the search for prospects or due to fear of late payments. However, if you know the regulations of Law 820 of 2003—including how the annual rent adjustment is calculated, which you can review in the guide to calculate the rent increase—and use digital dissemination tools, self-managing the rental allows you to keep the entirety of your capital's return. For the direct contract between landlord and tenant, start with an urban housing lease template.

If you currently have a mandate contract with a real estate agency and are evaluating taking direct control of your property, review the notice period and termination clauses of the agreement. You can also consult our article on how to draft a lease termination letter with legal notice to learn the guidelines for property handover.

Frequently Asked Questions

❓ Who must issue the electronic invoice to the tenant when renting through a real estate agency?

The real estate agency (the agent) is the party that must issue the electronic sales invoice to the tenant in all cases, as stipulated by Article 1.6.1.4.9 of Decree 1625 of 2016. The invoice must be generated under the technical classification of a mandate, separating the rent corresponding to the owner from the fees charged by the agency. This rule was still in effect as of September 2026.

❓ In whose name is the withholding tax applied in a mandate contract?

The withholding tax is applied and recorded in the name of the property owner (the principal), based on their individual tax status and not that of the real estate agency. According to Article 394 of the Tax Statute, the intermediary issues a certificate so that the tenant withholds tax from the actual owner's NIT (Tax ID). This rule was still in effect as of September 2026.

❓ Does housing rent attract VAT when collected through a mandate contract?

No, rent intended for urban housing is excluded from VAT in Colombia, regardless of whether it is rented through an agency or directly. What does attract 19% VAT is the commission charged by the real estate agency for providing the management service. This exclusion was still in effect as of September 2026.

❓ What document must the real estate agency provide for me to file my income tax return?

The agent has the obligation to issue an annual certificate signed by a public accountant or statutory auditor stating the income received, commissions charged, deductible expenses, and withholdings applied. This document replaces original third-party invoices for accounting support purposes before the DIAN. This obligation was still in effect as of September 2026.

❓ How much does a real estate agency charge on average to manage a rental in Colombia?

In the Colombian market, the commission is usually negotiated between 8% and 10% per month plus VAT, because there is no fixed rate by law. Added to this is usually the cost of the collective rental bond or policy. This commercial range was still in effect as of September 2026.

❓ What risks do I run if the administrator or real estate agency does not report data to the DIAN?

The main risk is suffering inconsistencies in exogenous information and fiscal discrepancies before the DIAN, which can lead to requirements or penalties for the principal. If the corporate tenant withholds tax but the real estate agency does not certify it, you will not be able to deduct it on your income tax return. This risk was still in effect as of September 2026.

❓ Can I terminate the mandate contract and list the rental directly?

Yes, you can revoke the mandate according to the deadlines and causes provided in the civil or commercial contract to assume direct control and keep the rent without an agency commission. Direct platforms allow you to filter tenants, request proof of solvency, and draft enforceable contracts without commission-based intermediaries. This right was still in effect as of September 2026.