Good to know
Good to Know
- No Colombian co-founder or local nominee shareholder is legally required to incorporate — a foreigner can own 100% of an SAS.
- A lawyer is not legally required to incorporate an SAS, but most guides and firms strongly recommend using one because errors in the bylaws or missed DIAN/Banco de la República registrations are costly to fix after the fact.
- Opening the corporate bank account, not the Chamber of Commerce registration itself, is usually the real bottleneck for foreign-owned companies — budget extra time and expect in-person verification requirements at Colombian banks.
- If you plan to bring capital in from abroad, register it with the Banco de la República — this is required later if you want to repatriate profits or apply for certain investor visas.
- SAS capital can legally be as low as 1 Colombian peso with no minimum, but practically most founders capitalize with a modest working amount rather than a token figure, especially if the company will later support a visa application.
- The SAS is the default recommendation you'll hear from almost every Colombian lawyer and accountant for a foreign-owned small business — it's the only Colombian company type that can legally be formed and owned by just one person, foreign or local.
- Don't be misled by the low headline cost of forming a SAS (no minimum capital, low registration tax): the real ongoing cost is annual accounting, tax filing, and Chamber of Commerce renewal — budget for a local accountant/contador, since DIAN filings are only in Spanish and the system has real penalties for missed or late returns.
- If you plan to send profits back out of Colombia, factor in the dividend withholding on top of corporate tax — the combined effective bite on repatriated profit is meaningfully higher than the 35% headline corporate rate alone.
- A persona natural setup is genuinely simpler and fine for many solo freelancers just invoicing local clients, but it does not protect your personal assets the way a company does — most people who plan to stay and grow a business in Medellin eventually convert to a SAS.
Core Steps
1. Reserve the company name
- Detail
- Check name availability with the Cámara de Comercio de Medellín para Antioquia (each city chamber runs its own registry); names are typically reserved for a limited period while other paperwork is prepared.
2. Draft the bylaws (estatutos / acta de constitución)
- Detail
- Defines company name, registered address, business purpose (can be broad/any lawful activity), capital structure, share distribution, and appointment of the legal representative. For a single-founder SAS this is a private document; a notarized public deed is only required if real estate is contributed as capital.
3. Shareholder documentation
- Detail
- Foreign individual shareholders provide a passport copy; foreign corporate shareholders provide apostilled/legalized incorporation documents. If not signing in person in Colombia, an apostilled power of attorney is used.
4. Register with the Cámara de Comercio de Medellín
- Detail
- Submit the bylaws and shareholder documents to the local Chamber of Commerce; this issues the Matrícula Mercantil and the Certificado de Existencia y Representación Legal, proving the company exists and identifying who can sign for it.
5. Obtain the NIT and RUT from DIAN
- Detail
- Chamber registration triggers (or is submitted alongside) an application to DIAN, the national tax authority, for the company's NIT (tax ID) and RUT (tax registry), including selecting the tax/activity regime (CIIU code). In some cities this is issued as a provisional Pre-RUT first, followed by a final RUT.
6. Open a corporate bank account
- Detail
- Requires the Chamber certificate, RUT, and legal representative ID. Foreign-owned entities commonly face enhanced KYC/AML due diligence and may need the representative to appear in person; this step is frequently the slowest part of the process.
- Step
- 7. Register foreign investment (if capital comes from abroad)
- Detail
- Capital contributed from outside Colombia should be registered with the Banco de la República — required for future profit repatriation and for investor-visa applications.
8. VAT/municipal tax registration
- Detail
- Register for IVA (VAT) with DIAN if applicable, and for municipal industry-and-commerce tax (ICA) in Medellín.
Realistic Timeline
- Typical Range
- 2 to 6 weeks for a straightforward single-founder SAS with all documents in order; 6 to 10 weeks if a corporate bank account and full tax/banking setup are included and the founder is not physically present in Colombia.
- Documents That Slow Foreign Founders
- Apostille and certified Spanish translation of foreign identity/corporate documents add time; a power of attorney is needed if the founder is not signing in person in Colombia.
Stage Breakdown
- Drafting bylaws/estatutos: roughly 3-5 days
- Chamber of Commerce registration: roughly 3-7 business days
- NIT/RUT assignment by DIAN: roughly 2-5 business days (can extend if DIAN requests further documentation)
- Corporate bank account opening: roughly 3-5 business days if smooth, but can extend to several weeks for foreign-owned entities due to enhanced KYC checks
Official Registries And Links
- Name
- Cámara de Comercio de Medellín para Antioquia (Chamber of Commerce — company registration, name check, Matrícula Mercantil)
DIAN — Dirección De Impuestos Y Aduanas Nacionales (NIT / RUT Tax Registration)
- Name
- RUES — Registro Único Empresarial y Social (national business name/registry lookup)
Banco De La República (Foreign Investment Registration)
Business Tax And Structure Options
- Foreign Investment Registration
- If capital used to fund the company comes from abroad, Colombian law requires registering that foreign investment with the Central Bank (Banco de la Republica); failing to do so can create foreign-exchange penalties and complications later when repatriating profits or capital.
- Freelancer Vs Company Practical Takeaway
- For an individual doing consulting, remote services, or freelance work, registering as a persona natural is the fastest and cheapest path to invoice legally in Colombia and is common for those just testing the waters. However, it comes with unlimited personal liability and can look less credible to larger local clients or banks. Forming a SAS costs a bit more time and a modest registration tax, but ring-fences personal liability, is the structure most Colombian banks, clients, and immigration processes expect from a 'real' business, and is tax-neutral compared to other company types — which is why most foreign entrepreneurs in Medellin who plan to operate seriously (rather than just freelance short-term) choose the SAS from the outset.
- Scope Note
- This entry covers business/corporate tax and structural choices only.
Filing Obligations
- Register for a NIT (tax ID) and RUT (Registro Unico Tributario) with DIAN, the national tax authority, immediately upon incorporation (or upon starting activity as a sole proprietor).
- File an annual corporate income tax return (declaracion de renta) even in years with no profit — a return is required regardless of whether tax is owed.
- Make advance tax payments (anticipos) during the year based on the prior year's tax liability.
- File periodic VAT (IVA) returns if the business is VAT-registered — VAT filing is generally bimonthly for larger taxpayers.
- File and pay the municipal ICA (Industry and Commerce) tax with the Medellin municipal tax authority (Secretaria de Hacienda) — filing frequency and rate depend on registered economic activity.
- Act as a withholding agent: Colombian entities are generally required to withhold tax on many payments made to third parties (e.g. to contractors, and to foreign non-residents) and file monthly withholding tax returns.
- Maintain formal accounting records (books) and prepare annual financial statements — required of SAS, Ltda, and SA companies; less formal recordkeeping applies to a persona natural, though DIAN still expects income and expense records.
- Register for beneficial-ownership reporting (RUB) and complete annual Chamber of Commerce renewal (renovacion de matricula mercantil) for any registered company.
Corporate Tax Overview
- General Corporate Income Tax Rate
- The current general corporate income tax (CIT) rate in Colombia is 35% on net taxable income, applying to Colombian-incorporated companies (taxed on worldwide income) and to foreign companies with a permanent establishment in Colombia (taxed on Colombian-source income only).
- VAT
- Standard VAT (IVA) is 19% and applies to most goods and most services, including many services a foreign-owned company or freelancer might invoice locally.
- Municipal Tax
- Medellin (like other Colombian municipalities) levies the Industry and Commerce Tax (Impuesto de Industria y Comercio, ICA), a municipal tax on gross revenues from commercial/industrial/service activity carried out in the city, generally in the range of roughly 0.2%-1% depending on activity, and it is deductible against the national tax base.
- Minimum Tax Rule
- Colombia applies a minimum taxation rule (Tasa Minima de Tributacion / TMT) requiring a 'Purged Tax Rate' of at least 15% of adjusted accounting profit; if a company's effective rate falls below that, an additional top-up tax is charged. This TMT does not apply to foreign legal entities without local incorporation, only to Colombian-resident companies.
- Registration Tax
- Incorporating a company triggers a one-time Registration Tax charged on the value of subscribed capital, generally ranging from about 0.3% to 0.7% (a lower 0.2%-0.6% band applies to registered 'micro-enterprises'), paid to the departmental government via the Chamber of Commerce.
- Sector Surcharges
- Additional surcharges apply to specific sectors only (e.g. a 5% surcharge through 2027 for large financial institutions, and separate surcharges for oil, coal, and mining companies) — these are unlikely to affect a typical small foreign-owned service/consulting/remote business.
- Dividend Withholding On Profit Repatriation
- Profits distributed as dividends to a non-resident foreign shareholder (individual or company) are subject to a withholding tax, generally cited around 20%, on top of the 35% corporate rate already paid at the company level — meaning the effective combined tax burden on profit that is earned in Colombia and then sent abroad can run toward roughly 48%.
Structure Options For A Foreigner
Other Company Types
- Sa
- Requires a minimum of 5 shareholders and mandates a formal board of directors and statutory auditor — generally overkill for a typical foreign-run small or medium business and better suited to large or regulated companies.
- LTDA
- Requires a minimum of 2 and maximum of 25 partners; partners can be held personally liable for the company's labor and tax debts in some circumstances, a real downside compared to a SAS.
- Branch Of A Foreign Company Sucursal
- A foreign parent company can instead register a branch rather than a separate subsidiary; branches are taxed on the same profit-based attribution method, and profits remitted to the foreign head office are treated as dividends for tax purposes.
SAS Simplified Stock Company
- Best For
- The large majority of foreign-run businesses in Medellin — consulting practices, agencies, cafes/shops, tech startups, or a local subsidiary of a foreign parent company — largely because it can be formed and run by one person with minimal formalities.
- What It Is
- The Sociedad por Acciones Simplificada (SAS), created by Law 1258 of 2008, is by far the most commonly used company type in Colombia and the standard recommendation for foreign entrepreneurs and foreign-owned subsidiaries.
- Tax Treatment
- Taxed identically to other Colombian company types at the 35% general corporate rate — the choice of SAS vs Ltda vs SA is tax-neutral; the real differentiators are liability, governance flexibility, and shareholder-count rules.
- Foreign Ownership
- A foreigner can be the sole shareholder and hold 100% of a SAS; no Colombian partner is required. A visa/residency is not strictly required to form one, though having one simplifies logistics such as opening a bank account.
- Formation Mechanics
- Formed via a private document filed with the local Cámara de Comercio (no notarial public deed needed unless real estate is contributed as capital), followed by NIT/RUT assignment by DIAN. Typical timelines quoted by legal service providers run around 2-4 weeks end-to-end.
- Capital And Liability
- No minimum capital is required to incorporate; capital can even be paid in over up to two years. Shareholder liability is limited to the amount contributed, shielding personal assets from company debts.
Sole Proprietor Persona Natural Comerciante
- Best For
- Freelancers, independent consultants, and very small operations wanting the fastest, cheapest way to invoice legally in Colombia, without plans to raise investment or scale significantly.
- Liability
- Unlimited personal liability — business debts and obligations are not legally separated from personal assets (the empresa unipersonal variant creates some asset separation, but a plain persona natural does not).
- What It Is
- Operating as a persona natural comerciante (or the related empresa unipersonal) means doing business under your own name/trade name without creating a separate legal entity. Business income is treated as personal income for tax purposes.
- Tax Treatment
- Income tax obligations depend on whether income/asset thresholds set by DIAN are exceeded (there is no separate 'corporate' tax rate — it's folded into the individual's obligations); VAT registration and the municipal ICA tax can still apply if the activity is covered.
- Who Can Use It
- Foreign nationals can register as a persona natural, generally needing valid ID/passport and appropriate immigration/visa status; requirements can vary by activity.
Why SAS
SAS is the entity used by the vast majority of new companies in Colombia, including in Medellín. It requires only one shareholder (natural person or legal entity, Colombian or foreign), has no legally mandated minimum capital, and can be formed via a private document rather than a notarized public deed when there is a single founder — making it faster and cheaper than the alternatives (SA, which needs 5+ shareholders and a board; Ltda, which needs 2-25 partners with full capital paid in upfront; or a branch/Sucursal of a foreign company, which exposes the parent company to unlimited liability in Colombia).
Primary Recommended Entity
SAS (Sociedad por Acciones Simplificada)
Estimated Incorporation Cost
- DIY Low
- COP 2,000,000
- DIY High
- COP 4,000,000
- Full Service With Lawyer Low
- COP 3,500,000
- Full Service With Lawyer High
- COP 5,000,000
- Chamber Registration Fee Only Low
- COP 200,000
- Chamber Registration Fee Only High
- COP 500,000
- Cost Note
- There is no legal minimum capital for an SAS (it can technically be formed with 1 COP), but most founders declare a modest working capital figure. Costs above cover name reservation, drafting bylaws, Chamber registration, and DIAN tax registration; they exclude ongoing accounting/compliance retainer fees, certified translation of foreign documents, or apostille fees.
Local Partner Or Sponsor Mandate
- Details
- Colombia allows 100% foreign ownership of an SAS. A foreigner can be the sole shareholder without a Colombian co-founder or nominee partner. There is no residency or visa requirement to be a shareholder. A legal representative must be appointed for the company (this can be the foreign owner or another foreigner, but if that person is a foreigner they must hold a valid Colombian migratory/visa status, or the founder can instead act via an apostilled power of attorney and use a Colombian-resident representative/lawyer to sign locally). Full foreign ownership is permitted in most sectors, with restrictions in a small number of sensitive sectors such as defense, media, and mining.
- Required
- No
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