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Colombia is a developing economy that boasts a growing skilled and unskilled labor market along with good geographical location that makes it a business hub in South America. Many foreign investors and multinationals incorporate in Colombia as the government incentivizes them with flexible regulations and fewer legal hurdles. Let’s take a look at the type of company you can incorporate and how we can assist you with Colombia company incorporation services.

 

Business Incorporation in Colombia

The most commonly incorporated business structures in Colombia are simplified public limited company (SAS), limited liability company (Ltda.) and public limited company (SA).

SAS – This structure is preferred by entrepreneurs who want 100% foreign ownership. One director and one shareholder (individual or entity) of any nationality who may or may not reside in the country are enough to establish the company. 

Ltda. – A limited liability company is established with 2 shareholders (individuals or legal entities) along with two directors of any nationality who may or may not reside in Colombia. A permanent resident of Colombia will have to be appointed as legal representative of the company.

SA – A public limited company can be set up with 5 shareholders (individuals or legal entities) who will appoint 6 directors of any nationality who may or may not reside in Colombia. A permanent resident of Colombia must be appointed as the legal representative and 33% of the capital must be paid at the time of incorporation.

Branch Office – To open a branch office, one permanent resident of Colombia must be appointed as legal representative, regardless of nationality. A statutory auditor must also be appointed. This structure is not favorable because of 33% corporate tax.

Representative Office – This structure is not considered as a legal entity in the country’s jurisdiction and only has the power to carry promotional and marketing activities of its parent company within the country.

 

Procedure

Despite that there are fewer hurdles to incorporation in Colombia, the process can be time consuming and bureaucratic challenges should also be considered.

  1. Registration with the Registry of Commerce to obtain pre RUT (pre-taxpayer ID)
  2. Opening a bank account using pre RUT and depositing nominal capital.
  3. Acquiring final tax payer ID.
  4. Registration with Family Compensation Fund, Governmental Learning Service, and Colombian Family Institute.
  5. Employee registration for health coverage, registration with Pension Funds, registration with ARL (Administrator of Professional Risks), and registration with Severance Fund.

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