The total cost of registering a company and opening a bank account in Colombia starts at USD 8 000 (the final cost will depend on the structure of the company to be registered, and whether or not the company has local employees).
Company registration and bank account opening take 4 – 6 weeks on average (the final time frame will depend on the structure of the company to be registered and the bank chosen by the client for opening an account).
Colombia has 3 main forms of business registration:
It is also possible to register a branch of a foreign company. However, it is a simplified stock corporation (Sociedad por Acciones Simplificada / S.A.S.) that is the simplest and most convenient option for most cases.
Incorporation of a simplified stock corporation (Sociedad por Acciones Simplificada / S.A.S.) includes the following steps:
This is followed by the procedure of bank account opening.
Company incorporation takes from 4 to 6 weeks (after agreeing and provision of all necessary documents and information), if the shareholders of the company are legal entities. The registration of a company with shareholders who are individuals is a little faster, however, if in the future individuals need to be replaced with legal entities, this will create additional costs.
A complete list of documents and information required for company registration will be made available after reviewing the initial input data provided by the client:
Further, identity verification (personal presence) will also be required in one of our company’s offices or via video call.
Every Colombian company must have a Legal Representative, and it is he who signs all legally significant documents, interacts with government authorities, operates the local bank account – generally performs all the functions that a director usually does. Technically, a representative can be either a Colombian resident or non-resident, but effectively, the normal functioning of the company requires having a local representative (resident of Colombia).
Essentially, in Colombia, a local representative replaces the director of the company (in the usual sense): he is responsible for the good standing of the company and its proper operation (which includes financial liability). Besides, unlike S.A.[2], the S.A.S. is not required to appoint a board of directors and it is not usually practiced, which greatly simplifies (and reduces the cost[3] of) both registration and subsequent administration of this type of companies.
Monthly company administration expenses include:
It is payable once a year (annual compliance check is carried out), as well as upon incorporation of a company, its liquidation or transfer out, upon issue of a power of attorney to a new attorney, appointment of a new local representative and in the case of any other changes in the company structure.
Accounting rules for companies in Colombia have more requirements than countries like the USA, so your company’s accounting and reporting will be handled by local specialists. The company’s underlying documentation and accounting records will also be kept by the registered agent in Colombia in order to comply with local legal requirements.
S.A.S. companies must have an external tax auditor if their annual income exceeds 3 000 Colombian minimum wages. This is not applicable if the company does not receive income within the Colombian territory.
Under certain circumstances, an auditor may not be required since a certificate of accountant can replace an auditor’s opinion when needed by law.
All corporations in Colombia have accounting needs and duties just like any other corporation elsewhere. But Colombian corporate accounting is much different from other countries. Tax filing periods vary depending on the sector in which the company operates (many companies have to file every 2 months). Colombian corporate accountants also set up the electronic document flow and handle withholding taxes.
There are two types of taxes in Colombia: National Taxes and Local Taxes. The collection and enforcement of National Taxes is undertaken by the Colombian Tax Authority (DIAN). The main National Taxes are Value Added Tax (VAT), Financial Transactions Tax, Stamp Tax, Income Tax, and Wealth Tax.
Colombian VAT, also known as IVA (impuesto al valor agregado), is the country’s principal indirect tax and is levied at the rate of 19% on most goods and services in Colombia (with the exemption of water supply, sanitation, and public transport). There are two categories of value added tax: common VAT and simplified VAT. The common category applies to businesses valued at USD 34 000 and over while the simplified category applies to smaller businesses. Regardless of the category, the tax amount remains the same, however, from an accounting perspective, simplified VAT is easier to manage and does not need to be treated separately.
In Colombia, most goods or services are taxed at a general rate of 19% unless specifically listed as an exception as ordered by Article 468 of Colombia’s National Tax Code. There is also special 5% VAT rate, as well as exempt goods taxed at 0% VAT rate[5], and excluded goods which are not liable to VAT.
It should be understood that exempt goods and services are taxed and generate full VAT duties for the providers, this includes the obligation to submit a VAT return at intervals prescribed for the specific taxpayer category. Whereas excluded goods and services are not taxed with VAT at all so providers will not have any VAT duties.
Financial Transaction Tax in Colombia is levied on money transacted from banks. The rate is set at 0.4% of the amount transacted. The transactions that are liable for taxation include ATM withdrawals, internet banking, wire transfers, promissory notes, bank checks, bank drafts, overdrafts, money held on term deposit, several forms of off-balance sheet coverage like commitments made on security underwriting, documents in safe custody, items kept in bank safe deposit boxes, unit trusts as well as currency exchange.
Colombian Income Tax is levied either as corporate or individual. All local or foreign corporations are subject to this tax at a rate of 35% of their annual income.
Colombia also has other taxes, such as withholding taxes. However, companies on simplified taxation regime (applies to many categories of taxes, but not to VAT – VAT is subject to separate tax regimes) may be exempt from withholding taxes. This regime can be applied to small and medium-sized businesses.
In terms of reporting, S.A.S. companies must file monthly and annual tax returns with local and national tax authorities (in some cases corporations are required to file and pay tax monthly, bimonthly and annually). It is important to have an accountant in Colombia to assist with your books on a weekly basis and it is very important to stay current on monthly, bimonthly, quarterly and annual filings to avoid fines.
In the light of this and given that Colombian tax legislation is constantly changing (tax reforms are passed every year in the last week of the year), you will be provided with a turnkey offer for accounting, preparation of financial statements and interaction with local tax authorities.
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Services
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Fees (USD)
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Total cost of company incorporation
(registering a company in Bogotá, obtaining a tax number, opening a local bank account, and setting up an electronic document management system); translation services are not included in the incorporation cost and are payable additionally |
from 8 000[7]
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Translation services
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depending on the volume of the document(s)
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Monthly company administration expenses, including fees of the local representative and accounting (payable from the company’s local bank account)
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from 2 000 to 5 000 / month[8]
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Interaction with the local agent regarding the administration of the company or other questions the client may have (payable at an hourly rate, depending on the time spent by a GSL consultant on handling the matters)
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200 / hour
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Opening a local bank account
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included in the company incorporation cost (opening an additional account is to be discussed separately)
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Compliance fee
Payable in the cases of: - incorporation of a company, - renewal of a company / annual compliance check, - liquidation of a company, - transfer out of a company, - issue of a power of attorney to a new attorney, - change of director / representative / shareholder / beneficial owner, except the change of one local representative to another at the initiative of the agent, - signing of documents. |
350 (standard rate, includes the check of 1 individual)
+ 150 for each additional individual (director, shareholder or beneficial owner) or legal entity (such as shareholder) if such legal entity is administered by GSL + 200 for each additional legal entity (such as shareholder), if such legal entity is not administered by GSL 450 (rate for High Risk companies, includes the check of 1 individual) 100 (signing of documents) |
[1] The exception in Colombia being cases of proven fraud – in these cases, the shareholders of S.A.S. may be held personally liable.
[2] In Sociedad Anónima / S.A., the appointment of a board of directors is mandatory. According to Colombian law, the board must include 3 main directors and 3 alternates – a total of 6 people (and all of them are considered directors of the company).
[3] Having a board of directors in the S.A.S. does not eliminate the requirement to appoint a Legal Representative. Therefore, in practice, the company usually appoints only a local representative. However, at the request of the client, a board of directors can also be appointed.
[4] Please note that having a local employee significantly increases the cost of administration of a Colombian company, since in this case the company is required to be connected to the electronic payroll system, as well as register with various government departments and funds (Family Compensation Fund, Colombian Family Institute, Governmental Learning Service, etc.); in addition, the company will need to be enrolled on the Colombian pension system and register employees in the public health system.
[5] The purpose of this special category is to allow the providers of certain goods and services to seek the return of the VAT paid for the goods and services.
[6] The fees are valid as of June 2023.
[7] The prices do not include 19% VAT (the standard VAT rate in Colombia). The final calculation will be made after all the details and options required for registering a company in each specific case are known and assessed.
[8] The prices do not include VAT. The fees of the local representative will depend on the client’s requirements for the representative and on the activities of the company, and will be agreed with each client separately before proceeding with company registration.