Doing business in Colombia involves a multi-step process for establishing a company, registering foreign investment, and navigating a dynamic market. Colombia is generally considered welcoming to foreign investment, with opportunities in several key sectors.
Here is a comprehensive guide on how to do business in Colombia:
1. Understanding the Market and Opportunities
Colombia has one of Latin America’s largest economies and is growing, driven by private consumption and services.
Key Business Opportunities & Growing Sectors:
- Technology and Digital Economy: The country, with hubs like Bogotá and Medellín, is seeing a rise in tech startups (Fintech, E-commerce, SaaS) and is a strong market for IT talent outsourcing (BPO/Call Centers) due to a skilled, bilingual workforce and lower operational costs.
- Agribusiness and Exports: Colombia is a world-leader in specialty coffee and a major producer of flowers, cacao, and exotic fruits (like Hass avocados). Opportunities exist in sustainable agriculture, organic food brands, and export ventures.
- Tourism and Hospitality: As a travel hotspot, the tourism sector offers potential for boutique hotels, short-term rentals (Airbnb), and eco-lodges, often supported by government tax incentives for tourism-based investments.
- Real Estate: The market remains attractive, particularly for real estate investment visas, and for developing properties that cater to modern needs (e.g., co-working spaces, loft-type, and eco-sustainable properties).
- Renewable Energy: Given its goal to move away from fossil fuel dependence, investment in renewable energy systems is a priority.
2. Legal Structure and Company Formation
Foreigners can generally own 100% of a domestic company with few exceptions. The most common steps to establish a local presence (which is required for permanent business) are:
| Legal Structure | Details |
| Simplified Shares Company (S.A.S. – Sociedad por Acciones Simplificada) | Most popular and preferred by entrepreneurs. Can be formed with one or more shareholders (no limit). Allows for a private document of incorporation (instead of a public deed), has no minimum capital requirement, and can be set up relatively quickly (5-10 business days). Protects personal assets. |
| Corporation (S.A. – Sociedad Anónima) | Suitable for larger companies planning to go public. Requires a minimum of five shareholders. Incorporation requires a public deed and notary steps, which is a longer process (3-5 weeks). |
| Foreign Company Branch (Sucursal de Sociedad Extranjera) | An extension of the foreign parent company. Not an independent corporate entity. Requires a public deed and board resolution from the parent company. |
The General Incorporation Process:
- Grant a Power of Attorney (POA): If you cannot be physically present, a notarized and apostilled POA is required to authorize a local representative (usually a lawyer) to act on your behalf.
- Choose a Company Name: Check the Single Business Register (RUE) to ensure availability.
- Draft Company Bylaws: This is your company’s constitution, defining operations, activities, capital, and governance.
- Register with the Chamber of Commerce (COC): File the incorporation documents (e.g., private document for an S.A.S. or public deed for S.A./Branch) to obtain legal existence.
- Obtain Tax Identification (NIT/RUT): Register with the National Tax and Customs Directorate (DIAN) to get the Número de Identificación Tributaria (NIT). The company’s legal representative must complete this step.
- Open a Business Bank Account: Most banks require the legal representative to hold a Colombian ID (Cédula de Extranjería) and a valid M or R visa.
- Register Foreign Investment: The investment must be registered with the Central Bank of Colombia (Banco de la República) for statistical purposes, typically using the F4 Exchange Form. This registration is crucial for exchange rights like the free transfer and repatriation of profits and investment capital.
3. Visa and Residency for Foreigners
Foreign entrepreneurs and investors typically need a specific visa to conduct commercial activities and live in Colombia:
- M Visa – Investor: For entrepreneurs with a capital investment that exceeds a certain threshold (historically around $32,500 USD, though this number is subject to change) in a Colombian organization.
- M Visa – Partner or Shareholder: For those investing in a registered company.
- R Visa – Resident: Can be applied for after holding certain M visas for 5 uninterrupted years.
4. Ongoing Legal and Commercial Compliance
Compliance is non-negotiable and failure to meet requirements can lead to sanctions:
- Annual Renewals: Renew your business license (Matrícula Mercantil) annually with the Chamber of Commerce.
- Tax Compliance: Maintain accounting books under relevant standards (NIIF), file all required tax returns (even with zero income), and stay registered in the RUT system with DIAN.
- Beneficial Ownership Report (RUB): File the required reports detailing the final beneficiaries of the company.
- Social Security (if hiring employees): Register employees with all health, pension, and ARL (professional risk) funds, and make monthly social security contributions.
- Sector-Specific Regulations: Companies in regulated sectors or those exceeding certain income thresholds may need to comply with specific anti-money laundering and anti-corruption systems (SAGRILAFT/PTEE).
Disclaimer: This information is a general overview and not legal advice. It is highly recommended to consult with a professional legal and accounting advisor in Colombia to navigate the specific requirements for your business.