To incorporate a company in Columbia the following documents should be prepared.
The afore mentioned documents will enable the local lawyers to finalise the Articles of Incorporation which can be raised to a public deed depending on the type of business entity.
- Register with the Registry of Commerce to obtain a pre tax payer ID (pre RUT)
New companies are exempted from paying certain fees during the first year of operation as per Law 1429 of 2010 and decree 545 of 2011. Law 1258 of 2009 introduced SAS (Sociedad por Acciones Simplificada). A SAS can be incorporated through a private document (or by an Attorney) that is submitted to the Chamber of Commerce. A public deed is not required. However, if the procedure involves the transfer of property, it’s mandatory to set up the company through a public deed (Notary public). Applicants can register these procedures on www.dian.gov.co
Costs involved include the following:
0.7% of capital registration tax
COP (Columbian Pesos) 34,000 fixed fee
COP 4,000 for the registration form
COP 4,000 for the certificate of existence and legal representative (required to open a bank account)
COP 5,500 per book (Libro de Actas de Asamblea and Libro de Registro de Accionistas)
COP 20,600 (COP 10,300 registration per book)
These procedures can take up to 3 days.
- Open a bank account with a pre tax payer id (pre RUT) and deposit nominal capital
To open a bank account the owner must submit the following documents to the bank.
*Certificate of existence and legal representation
*TIN document
*Photocopy of the certificate of citizenship of the legal representative
A minimum deposit of COP 500,000 is required depending on the bank. A savings account maybe opened in minutes. However, it may take up to 3 days to open a checking account.
- Obtain a final tax payer id number
Pre requisites to obtain a final id number (RUT) from the tax agency (DIAN)
*Pre tax ID (RUT)
*Bank account certificate
- Register company with the Family Compensation Fund (Caja de Compensación Familiar), the Governmental Learning Service (Servicio Nacional de Aprendizaje, SENA) and the Colombian Family Institute (Instituto Colombiano de Bienestar Familiar, ICBF)
A unified system to self assess and pay social security and payroll contribution was introduced under the Article 3 of Decree 2390 of 2010. This form can be submitted electronically but not in person. The term to pay contributions to the Family Compensation Fund expires within the first thirteen business days of each month based on the last number of the NIT (tax identification number). It takes upto 5 days to complete this process.
- Register employees for health coverage (public)
Employees must be registered for health coverage by submitting a form that indicates the affiliation of its employees to the national health system (Plan Obligatorio de Salud, POS) be it through a public entity or a private promoter of health(EPS). This entire process should take upto 1 day.
- Register employer and employees for pension with Colpensiones or one of the private funds
- Affiliate the company with the pension system
- Submit a form that indicates employee affiliation to the pension system
- Each employee has the ability to choose between a private or public pension fund
- Register the company with the Administrator of Professional risks (APR)
Company must submit a form a listing its affiliation and its employees to an administrator of labour risks (ALP), private or public (Instituto de Seguros Sociales, ISS)which covers workplace injury and professional illness. The employer chooses the ARP to which it affiliates all employees and then pays monthly contributions. Prior to affiliating employees, some administrators request that the employees attend a short course.
- Register employees with a severance fund
The company must present a form that indicates employee affiliation to a severance fund. Consequently the company is obligated to complete the respective submission to the severance fund requested by the employee. The employer must deposit the employees’ severance payment annually prior to February 15th. This process should take upto one day.
- Newco’s equity should be paid and a registration of the foreign investment must be performed before the Columbian Central bank in order to abide by the Columbian Foreign Exchange laws.
Trade registry fees
The Chamber of Commerce pays a registration fee that varies between USD 17 – 873 depending on the Newco’s equity plus an approximate of 0.7% of the Newco’s equity.
As per Act 1429 of 2010 Law of First Time Employment (LFE), companies incorporated prior to 31st December 2014 with less than 50 workers and equity lower than USD 1.7 million shall pay progressive fees for the Merchants Registry before the Chamber of Commerce and its renewals as follows.
- A 100% discount on the total fee established for the Merchants Registry for the first year of activities
- A 75% discount for the second year of activities
- A 50% discount for the third year of activities
- From 4th year onwards the company must pay full renewal fee
- For the renewal of the merchant’s Registry during the fourth year of activities the full fee must be paid
Types of business established in Columbia
There are 5 types of legal entities that can be established in Columbia. Such entities vary by:
Corporations (S.A. by its acronym in Spanish) and Simplified Stock Corporations (S.A.S. by its acronym in Spanish) belong to this type.
Limited liability companies belong to this type of corporate entities.
- Branch of a foreign company
When a foreign company performs permanent activities in Columbia it’s obliged to incorporate a branch which is a local representation of the foreign company.