Business entities in Colombia
Since 2003, Healy Consultants provides our Clients with the best corporate structures for business in Colombia. There are several ways of doing business in Colombia, the most common being the setting up of a simplified public limited company (SAS). Alternatively, entrepreneurs have an option of establishing a limited liability company (Ltda.) or a public limited company (SA). Foreign legal entities may also set up a branch office or a representative office.
The Colombia simplified limited company (SAS)
- The Colombia SAS is the most preferred legal entity used by entrepreneurs setting up businesses in Colombia. A SAS requires only 1 director and shareholder who can either be an individual or a legal entity. The director and shareholder can be of any nationality and can reside in any country. A US$1 minimum paid-up share capital is also required to complete the incorporation process;
- This entity is only required by law to appoint a statutory auditor if i) its total assets exceed US$1,655,000 or ii) its annual turnover exceeds US$994,000. The SAS must also appoint at least 1 legal representative who must be domiciled in Colombia.
The Colombia limited liability company (Ltda.)
- The Colombia Ltda. requires at least 2 shareholders who can either be individuals or corporate bodies when being incorporated. A Ltda. must also appoint at least 2 directors of any nationality and who need not be resident in Colombia. A Colombia permanent resident must also be appointed as the company’s legal representative in Colombia;
- Generally this entity is not required to appoint a statutory auditor unless either i) its assets exceed US$1,655,000 or ii) its annual turnover exceeds US$994,000.
The Colombia public limited company (SA)
- The Colombia SA requires at least 5 shareholder who can either be individuals or corporate bodies to be incorporated. An SA must also appoint at least 6 directors who can be of any nationality and must not be resident in Colombia. A SA must appoint at least 1 Colombia permanent resident as the legal representative of the company. To incorporate an SA at least 33% of the proposed company’s capital must be paid in at incorporation;
- The Colombia SA is required by law to appoint a statutory auditor.
The Colombia branch
The Colombian Commercial Code allows foreign companies looking to establish permanent legal activities in Colombia to open branches in Colombia. The scope of operations for a Branch office is defined by the parent company. The branch must appoint at least 1 Colombia permanent resident, of any nationality, to act as the company’s legal representative in Colombia. Additionally, the branch office must also appoint a statutory auditor. This entity suffers a higher corporate tax rate of 33%.
The Colombia representative office
A Colombia representative office is not considered a legal entity and is not allowed to conduct any profit making activities in Colombia. A rep office must appoint at least one legal representative who must be a Colombian resident. This entity only has the authority to carry out promotional activities and market products and services of the parent company within Colombia.
Comparison table between Colombia business entities
|LLC||PLC||SLC||Branch office||Rep office|
|Also known as||Ltda.||SA||SAS||sucursal||Oficina de representacion|
|How long to set the company up?||6 weeks||8 weeks||8 weeks||7 weeks||6 weeks|
|How long to open company bank account?||4 weeks||5 weeks||5 weeks||5 weeks||5 weeks|
|Wholly foreign owned?||Yes||Yes||Yes||Yes||Yes|
|Minimum share capital?||US$1||US$1||US$1||US$1||US$1|
|File annual tax return?||Yes||Yes||Yes||Yes||No|
|Tax registration certificate required?||Yes||Yes||Yes||Yes||No|
|Recommended corporate bank account?||Standard Chartered||BBVA Colombia||Banco de Bogota||Santander Bank||Bancolombia|
|Does our Client need to travel?||No||No||No||No||No|
|Resident director required?||No||No||No||No||No|
|Resident shareholder required?||No||No||No||No||No|
|Minimum directors allowed?||2||6||1||1||1|
|Tax identification code (TIN) needed?||Yes||Yes||Yes||Yes||No|
|Colombia resident company secretary required?||No||No||No||No||No|
|Colombia resident legal representative required?||Yes||Yes||Yes||Yes||Yes|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes||Yes|
|Corporate director(s) allowed?||Yes||Yes||Yes||Yes||Yes|
|Colombia corporate tax rate?||25%||25%||15%-25%||33%||0%|
|Annual financial statements required?||Yes||Yes||Yes||Yes||No|
|Statutory audit required?||No||Yes||No||Yes||No|
|Regulated by?||Bogota Chamber of Commerce||Bogota Chamber of Commerce||Bogota Chamber of Commerce||Bogota Chamber of Commerce||Bogota Chamber of Commerce|
|Allowed to issue sales invoices?||Yes||Yes||Yes||Yes||No|
|Allowed to sign contracts?||Yes||Yes||Yes||Yes||No|
|Allowed to import and export goods?||Yes||Yes||Yes||Yes||No|
|Can rent an office space in Colombia?||Yes||Yes||Yes||Yes||Yes|
|Can buy Colombia property?||Yes||Yes||Yes||Yes||No|
|Can own equity in other Colombia companies?||Yes||Yes||Yes||Yes||No|
|Total Colombia business setup costs in Yr. 1||US$13,390||US$15,390||US$13,590||US$17,200||US$15,200|
|Subsequent annual costs (incl. accounting and tax fee)||US$4,600||US$4,600||US$4,600||US$4,600||US$4,600|
|Sample engagement invoice|