Colombia SAS is the preferred legal entity for entrepreneurs who establish businesses in Colombia.

Society Constitution
offshore in Colombia

Country analysis: legal structures

Everything you need to know to set up an operating company with a bank account.

1. Exchange of banking information

β€’ Banks are partially subject to strict customer due diligence regulations (old FATF recommendation 5 / new FATF recommendation 10).

β€’ Banks are fully obligated to maintain sufficient records of customer and transaction data for law enforcement (old FATF recommendation 10 / new FATF recommendation 11).

β€’ Banks and / or other covered entities are required to report large transactions in currency or other monetary instruments to designated authorities.

β€’ The national administration has sufficient powers to obtain and provide bank information on request without qualifications.

β€’ There are undue notification and appeal rights against the exchange of banking information
on request without qualifications

β€’ There are undue notification and recourse rights against the exchange of banking information upon request, but with significant problems.

2. Legal forms

The simplified limited company of Colombia (SAS)

Colombia SAS is the preferred legal entity for entrepreneurs who establish businesses in Colombia. A SAS requires only one director and one shareholder who can be a natural or legal person. The director and shareholder can be of any nationality and can reside in any country. A minimum paid-up share capital of US $ 1 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 designate at least 1 legal representative who must be domiciled in Colombia.

The limited liability company of Colombia (Ltda.)

Colombia Ltda. Requires at least 2 shareholders who can be natural or legal persons at the time of incorporation. A Ltda. You must also appoint at least 2 directors of any nationality and who do not need to be residents of Colombia. A permanent resident of Colombia must also be designated as the legal representative of the company in Colombia.

Generally, this entity is not required to appoint a statutory auditor unless i) its assets exceed US $ 1,655,000 or ii) its annual turnover exceeds US $ 994,000

The stock company of Colombia (SA)

Colombia SA requires the incorporation of at least 5 shareholders who can be natural or legal persons. An SA must also appoint at least 6 directors who can be of any nationality and must not be residents of Colombia. An SA must designate at least 1 permanent resident in Colombia as the legal representative of the company. To constitute an SA, at least 33% of the share capital of the proposed company must be paid at the time of incorporation.

La Colombia SA is required by law to appoint a statutory auditor.

Colombia Branch

The Colombian Commercial Code allows foreign companies seeking to establish permanent legal activities in Colombia to open branches in Colombia. The scope of a branch's operations is defined by the parent company. The branch must designate at least 1 permanent resident in Colombia, of any nationality, to act as the legal representative of the company in Colombia.

In addition, the branch must also appoint a statutory auditor. This entity suffers a higher corporate tax rate of 33%

The representative office of Colombia

A representative office in Colombia is not considered a legal entity and is not allowed to carry out any lucrative activity in Colombia. A representative office must designate at least one legal representative who must be a resident of Colombia. This entity only has the authority to carry out promotional activities and market products and services of the parent company within Colombia.

REMEMBER

Nor a Director resident in Colombia is required. Holding companies are available in Colombia

OFFICES

Foster Swiss helps our Clients secure offices or we provide an office address. Most emerging markets require our Clients to have a 12-month office lease before company registration is approved.

We help our Clients overcome this challenge in the following ways:

Virtual office service

DDepending on the country and city, the rates range from US $ 900 to US $ 2000 and the annual active virtual office services range from US $ 1500 to US $ 4000).

Shared office space

LThe one-time fee is US $ 850. Thereafter, our Client pays the monthly rent directly to the owner).

Permanent office space

D Depending on the country and the city, the rates range from US $ 5.000 to US $ 8.000).

LEGAL ACCOUNTING AND TAXES

Corporate tax in Colombia is applied at a standard rate of 25% for resident companies. All legal entities must register with the National Tax and Customs Office (DIAN) and submit annual tax returns before April / May of the year following the end of the fiscal year.

Branches of foreign companies established in Colombia are subject to a 33% branch tax rate.

A 10% capital gains tax only applies to the sale of assets owned for more than two years.

The Value Added Tax (VAT) in Colombia is applied at a standard rate of 16%. Companies must register for VAT and file monthly returns. However, companies with fewer annual sales can file quarterly or annual reports.

Withholding on dividends is applicable at the rate of i) 33% on dividends paid to foreign companies ii) 20% on dividends paid to resident companies, unless the income for which dividends are paid have been previously recorded at the corporate level A withholding of 14% is applied on interest remitted to non-resident companies. A higher rate of 33% applies when the loan period is less than one year.

Other withholding taxes in Colombia include i) 33% withholding tax on royalties paid to non-resident companies ii) 10% withholding tax on technical service fees iii) 33% tax on remittances from branches on remittances abroad.

Employers in Colombia are subject to i) a monthly payroll tax contribution of 9%; ii) a social security contribution of 8% for medical insurance and 12% for the pension plan.

Colombia has blacklisted some 44 countries as low-tax jurisdictions (tax havens), including Hong Kong, Dominica, Liechtenstein, Angola, Seychelles, Isle of Man, Cyprus, Bahrain, among others.

Business losses in Colombia can be carried forward indefinitely, however, carry-over of losses is not allowed.

So far, Colombia has only entered into 7 double tax treaties with other countries, including Canada, Chile, Argentina, Mexico, the United States, among others. Each foreign individual must obtain a Colombian identification (cΓ©dula) and a tax identification number (RUT) before we can designate as the bank signatory of a Colombian corporate bank account. It takes up to 6 weeks to obtain the ID and RUT and an additional 3 weeks to obtain the new statement of the company from the Chamber of Commerce before the designation of the bank's signatory.

COUNTRY PROBLEMS

PTo incorporate a commercial entity in Colombia, foreigners must designate at least one permanent resident in Colombia as the legal representative of the company in the country.

Incorporating a company in Colombia is complex and time-consuming, marred by corruption and government bureaucracy, and can take up to four months to complete successfully.

Obtaining electricity for a new establishment in Colombia is quite expensive and time consuming. Entrepreneurs should expect to pay at least US $ 35.000 and wait up to 4 months for a new electrical connection.

Colombian companies are subject to i) a corporate tax of up to 25% ii) a 33% withholding on dividends distributed abroad (only branches) and iii) VAT of 16% on sales in the country.

Even companies established in the Free Zones of Colombia are subject to a 15% corporate tax.

MORE CONFIGURATION SERVICES SOLUTIONS

  • Shareholders and Agents
  • Office permits
  • Protection of trademarks and copyrights. - Market study.
  • Legal support
  • Proportion of details of temporary unions or associations
  • Fusions and acquisitions.
  • Internal control.
  • Group restructuring.
  • Financial management consulting.
  • Buy a business.
  • Valuation of companies.
  • Credit recovery
  • Job solutions
  • Due diligence search on existing companies and individuals

3. Commercial register

The national business registry includes the identity information of the legal owner.

Information on legal owners is not always available online (up to 10 EUR / GBP / USD)

4. Transparency of society

β€’ All businesses require the registration of all legal owners.

β€’ Updating the information on the identity of the legal owners is not mandatory.

5. Shareholders publications

Companies available without registered information on beneficial owners.

Real property is not always available online (up to 10 EUR / GBP / USD).

6. Publication of the company account

β€’ It is mandatory to keep accounting data.

β€’ There is an obligation to present annual accounts for all types of companies.

β€’ Business accounts are not always online (up to € 10 / US $).

7. Country-by-country financial reports

No country-by-country public reporting at all.

8. Corporate tax return

The secondary mechanism is subject to the restrictions imposed by the OECD model legislation; or no secondary mechanism (only the ultimate national parent entity has to present the CbCR).

Unilateral cross-border tax rulings (e.g. advance tax rulings, advance tax rulings) are available in laws or regulations, or administrative practice

9. Identifier of legal entities

β€’ The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory.

β€’ The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory.

β€’ The use of an LEI updated annually for the identification of reporting financial institutions (in accordance with the Common Reporting Standard (CRS) is not mandatory

10. Measures to avoid tax evasion

β€’ Payment of dividends: Unilateral relief for double taxation through a tax credit system for a payment scenario (if the recipient is an independent or related legal person, or a natural person).

β€’ Interest payments: Unilateral relief for double taxation through a tax credit system for both payment scenarios (recipients always receive a unilateral tax credit, regardless of whether it is a legal person or a natural person).

11. Tax matters judicial secrecy

None or restricted access to criminal or civil tax proceedings.

None or restricted access to both criminal and civil tax judgments / verdicts.

12. Opaque structures

β€’ The jurisdiction does not issue or accept the circulation of large notes / cash notes of its own currency (with a value greater than 200 EUR / GBP / USD).

β€’ Bearer shares are not available / not circulated.

β€’ Series LLC / Shielded Cell Companies are not available.

β€’ Trusts with escape clauses are not prohibited.

13. Anti-money laundering legislation

Colombia is not on the FATF list of countries that have been identified with strategic AML deficiencies.

In 2018, the last Mutual Evaluation Report was carried out regarding the implementation of standards against money laundering and terrorist financing in Colombia. According to that Assessment, Colombia was considered to be in compliance with 9 and largely complies with 14 of the 40 FATF recommendations. It was considered Highly Effective for 0 and Substantially Effective for 4 of the Effectiveness and Technical Compliance ratings.

Overall Non-Compliance Score of FATF Standards in Percentage: 45,3%. (100% = all indicators rated as not met / low level of effectiveness; 0% = all indicators rated as completed or highly effective).

14. Automatic exchange of information

You signed the MCAA and committed to sharing information on or before 2019.

Number of significant activated AEOI relationships (under the MCAA) published by the OECD as of October 2019: 94.

What type of private banking exists in Colombia?

International Banking
Local banking

Central bank security ⭐⭐⭐

The international and digital banks They're available.

CRS: SI.

Real bank operations: 90%.

Type of visa: COP $, US $, €.

Joint accounts.

Remote management account: To consult.

Asset management Depending on the rating of the company.

Rates: It depends on the type of account.

Credit / debit cards in local currency

Why with Foster Swiss?

Foster Swiss is an international company registered in Switzerland aimed at providing financial and compliance advice on a variety of topics related to company formation
and commercial banking internationally. We are specialized in the implementation of businesses in different jurisdictions, which means that we offer value-added services helping our clients in their expansion abroad.

Some of these services include:
Advice and consultancy,
visas, offices, nominated director / shareholder / secretary,
accommodation if necessary… to name a few.
Check with your assigned consultant for more information.

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