How to Set Up a Company in Colombia

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Colombia is one of the largest economies in Latin America, with access to both the Pacific and the Caribbean and a network of free trade agreements. Foreign investors receive the same treatment as local investors in most sectors, and the process is well established.

1. Choose the vehicle

• Simplified stock company (SAS): the most common choice. It can have a single shareholder, flexible bylaws and no minimum capital.
• Branch of a foreign company: required for certain long-term activities with the State and in some regulated sectors.

2. Main steps

1. Documents: apostilled corporate documents of the foreign shareholder, translated into Spanish by an official translator.
2. Bylaws and registration with the local Chamber of Commerce, which also issues the certificate of existence and legal representation.
3. Tax ID (RUT/NIT) with the tax authority (DIAN), and set-up of electronic invoicing.
4. Bank account and transfer of the capital through the foreign exchange market.
5. Foreign investment registration with the Central Bank (Banco de la República), which protects the right to repatriate profits and capital.

3. Points to watch

• Legal representative: in practice you need someone in Colombia who can act for the company before banks and authorities.
• Bank account: opening it is often the slowest step, because of due diligence on foreign shareholders.
• Exchange regime: capital must enter through the formal exchange market and be correctly reported; otherwise repatriation can become difficult.
• Tax: the general corporate income tax rate is 35%, with VAT, municipal industry and commerce tax, and withholding taxes on dividends to foreign shareholders.

4. After incorporation

The company must renew its commercial registration every year, keep accounts under Colombian standards, file tax returns, issue electronic invoices, update its foreign investment registration and report its beneficial owners.

The views expressed are personal and do not necessarily represent the position of NET CRAMAN. This article is for general information only and does not constitute legal or tax advice. Rules change over time; seek specific advice before acting.