Colombia (CO)
Colombia offers expats an extraordinary combination of year-round spring climate (especially in Medellín), very affordable living, rich culture, improving safety, and one of Latin America's most welcoming visa systems.
Capital: Bogotá
Region: Americas
Language: Spanish
Currency: COP ($)
Cost of living: Very affordable (index 30)
Emergency: 123
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Business Setup
Start a business or go freelance in Colombia.
🧑💻 Freelancer / Self-Employed Guide
Steps to register:
- 1 Obtain or activate your RUT with DIAN: select economic activity code (CIIU) matching your services; declare as Persona Natural responsable de IVA or Régimen Simple
- 2 If total annual income > 4,500 UVT (COP $224,095,500 in 2026): mandatory IVA (19%) registration; below this threshold: Non-IVA contributor (No Responsable) but issue facturas electrónicas
- 3 Register with DIAN's sistema de facturación electrónica: obtain digital signing certificate and FEL (Factura Electrónica Legible) provider (Alegra, Siigo, Aspel, Vlex are popular SaaS options)
- 4 Register for PILA (social security contributions) as trabajador independiente: contribute monthly to EPS (12.5% of declared income) and AFP/Colpensiones (16% of declared income). Minimum IBC = 40% of gross monthly income or 1 SMMLV, whichever is higher
- 5 Open a business bank account (or use personal account — Persona Natural may use personal account for business)
- 6 Complete your first monthly PILA declaration (PILA-independiente) by the 20th of each month
- 7 File annual Declaración de Renta (income tax return) with DIAN by April–May for the previous year
- 8 Register with Cámara de Comercio if you have a formal commercial establishment (not required for pure service freelancers)
Tax registration
Register at muisca.dian.gov.co (DIAN portal) with your CC/CE and RUT. For Persona Natural: update/complete your RUT to reflect your freelance activities. DIAN assigns your tax regime: (1) Régimen Ordinario — standard income tax, quarterly advance payments; or (2) Régimen Simple de Tributación (Simple) — simplified unified tax for small businesses (replaces income tax + VAT + industry tax); SIMPLE rate: 1.8–8.5% of gross income depending on activity. Most freelancers choose Régimen Ordinario unless income is very low.
VAT threshold
IVA threshold: COP $224,095,500/year (4,500 UVT × COP $49,799 in 2026). If your gross annual services income stays below this: you are a No Responsable de IVA (do not charge or remit VAT). Still must issue factura electrónica. Above the threshold: charge 19% IVA on all services to Colombian clients and file bimonthly IVA declarations. Services to foreign clients (exportación de servicios): zero-rated IVA if documented as foreign service export — this is important for digital nomads with foreign clients.
Invoicing
Colombia mandates electronic invoicing (facturación electrónica) for all formal business transactions. Register as facturador electrónico with DIAN. Use an autorized software provider (Alegra, Siigo, Helisa, Facturador Gratuito DIAN) to issue FEL (factura electrónica validada). Each invoice: includes your NIT, receiver's NIT/CC, date, CUFE (unique code), digital signature. Cash receipts (documento equivalente) allowed for very small transactions. Foreign invoices (from abroad): must include supplier's foreign tax ID; Colombian buyer may apply retención en la fuente (withholding tax).
Social security
Monthly PILA contributions as independiente: EPS: 12.5% of declared IBC. Pensión: 16% of declared IBC (Colpensiones or AFP based on Reforma Pensional thresholds). ARL: 0.348% (Level I, typical for office-based freelancers). Self-employed declare their IBC monthly; minimum = 40% of gross income for that month or 1 SMMLV, whichever is higher. PILA due by the 20th of the following month. Digital Nomad visa holders: technically obligated to contribute to PILA if earning from Colombian sources; income from foreign sources only = no Colombian PILA obligation.
💡 Retención en la fuente (withholding tax): Colombian companies paying you as a service provider will withhold income tax at source — typically 3.5–11% depending on the service type. This is not double taxation — it is an advance on your annual income tax, credited when you file your declaración de renta. Always issue a factura electrónica for every payment to enable withholding treatment and deductions. If you're a Digital Nomad working exclusively for foreign clients: your income is foreign-source, not subject to Colombian income tax or PILA, but you still need a RUT and may need to file a declaración de renta if you meet the asset/income thresholds.
🏢 Business Structures
Persona Natural (Sole Trader) · Persona Natural con actividad económica
Sole Trader / Self-Employed
None required
Min. capital
1–3 days
Setup time
Liability: Unlimited personal liability — business debts are personal debts
Setup cost: COP $0–100,000 (RUT registration free; Cámara de Comercio registration ~COP $90,000 if needed)
Best for: Freelancers, consultants, digital nomads with Colombian income, and small independent service providers. Fastest to set up. Adequate for individual professionals (Persona Natural) providing services under a RUT.
SAS · Sociedad por Acciones Simplificada
Simplified Joint-Stock Company (closest to UK Ltd or US LLC)
None (can be COP $1 theoretically, but opening a bank account requires COP $1,000,000+ deposit)
Min. capital
3–7 business days (online via Cámara de Comercio + DIAN)
Setup time
Liability: Limited liability — shareholders liable only for amount invested
Setup cost: COP $300,000–800,000 (Cámara de Comercio registration fee scales with declared capital; plus notary/accounting costs)
Best for: The most popular company form in Colombia. Used by startups, small businesses, and foreign investors. Very flexible: single shareholder allowed, no board requirements, simplified governance. Can be 100% foreign-owned. Must have a domicilio (registered address) in Colombia.
LTDA · Sociedad de Responsabilidad Limitada
Private Limited Company (Ltd)
Minimum 2 partners; no minimum capital
Min. capital
1–2 weeks (requires notarial deed)
Setup time
Liability: Limited liability for partners
Setup cost: COP $600,000–1,200,000 (notarised escritura pública required; more expensive than SAS)
Best for: Traditional professional partnerships (law firms, accounting firms, small medical practices). Being displaced by SAS for most new businesses. Requires a notaría (notary) for formation documents — more expensive and slower than SAS.
SA · Sociedad Anónima
Public Limited Company (Plc / Corp)
Minimum 5 shareholders; no legal minimum capital but complex governance
Min. capital
2–4 weeks
Setup time
Liability: Limited liability for shareholders
Setup cost: COP $2,000,000–5,000,000+ (complex governance, notary, prospectus-type documents)
Best for: Large enterprises seeking public listing, significant external investment, or complex ownership structures. Increasingly rare for SMEs — SAS has replaced SA for most purposes.
Sucursal Extranjera (Foreign Branch) · Sucursal de Sociedad Extranjera
Branch Office
Must assign Colombian capital via Inversión Extranjera registration with Banco de la República
Min. capital
4–8 weeks
Setup time
Liability: Parent company fully liable for Colombian branch obligations
Setup cost: USD $2,000–8,000 (legal fees; foreign investment registration with Banco de la República; apostilled parent company documents)
Best for: Large foreign companies establishing a full operational presence without creating a separate Colombian legal entity. Complex compliance requirements including annual financial statements registered with Superintendencia de Sociedades.
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