How to Start a Business in Colombia in 2026: A Guide for Foreigners

Starting a business in Colombia in 2026 is absolutely possible as a foreigner — and in many cases, easier than it seems — if you do three things correctly from the beginning: (1) clear legal incorporation, (2) organized tax compliance, and (3) the correct immigration status to lead operations.

In this guide, I walk you step by step through the essentials: what type of company suits you, how to register it, which taxes and reports you cannot ignore, what changes when you hire employees, and which visas allow you to legally manage the business.

1) Legal incorporation of a business in Colombia

The most commonly used structure by foreigners: SAS (Simplified Stock Company)

For most SMEs and foreign-led projects, the most practical structure is usually the SAS (Sociedad por Acciones Simplificada).

Why?

Because it is Colombia’s most flexible corporate structure and, in practice, the most similar to what in the United States would be an LLC (Limited Liability Company).

The SAS allows:

• Limited liability to the amount of capital contributed
  
  
• A single shareholder (no mandatory partners required)
  
  
• Flexible internal rules defined in the bylaws
  
  
• Fast incorporation through a private document
  
  
• Easy entry and exit of shareholders
  
  

It is regulated by Law 1258 of 2008, which introduced a modern corporate model designed to facilitate entrepreneurship and investment.

💡 Although it is not identical to an LLC from a tax perspective (since Colombian companies are taxed as independent legal entities), structurally it is the closest equivalent in terms of flexibility, control, and asset protection.

When a SAS is usually ideal

• If you want to operate as a formal company without a “heavy” structure.
  
  
• If you plan to have partners (now or later).
  
  
• If you need to open bank accounts, hire employees, issue invoices, sign contracts, receive investment, or apply for business-related visas.
  
  

Step-by-step company incorporation (practical route)

Note: the order may vary depending on the case, but this is the most common and efficient route.

1. Define business in Colombia activity, shareholders, capital, and rules

Before “filing paperwork,” decide:

• Economic activity (CIIU code)
  
  
• Shareholders and percentages
  
  
• Legal representative
  
  
• Domicile (city)
  
  
• Capital (and if it will be used for a visa, plan it from the beginning)
  
  

2. Registration with the Chamber of Commerce (commercial registration)

The company is formalized by registering with the Chamber of Commerce corresponding to its domicile. There you obtain:

• Commercial registration
  
  
• Certificate of existence and legal representation
  
  

3. NIT and RUT before the DIAN

Every company must register with the DIAN to obtain:

• NIT (Tax Identification Number)
  
  
• RUT (Tax Registry)
  
  

This enables you to invoice, file taxes, hire formally, etc. (and connects you with obligations such as electronic invoicing, electronic payroll, RUB reporting, etc.).

4. Corporate bank account (total separation)

For foreigners this is critical: do not mix business in Colombia operations with personal accounts.

Bank traceability is part of the company’s “real life”: payments, rent, payroll, suppliers, taxes, etc.

5. Foreign investment registration (if capital comes from abroad)

If there are foreign shareholders or capital entering from abroad, you must generally register the foreign investment before the Central Bank (Banco de la República) (direct investment / substitutions / changes).

6. Sectorial permits (if applicable)

Depending on the activity, additional permits may apply (health, food, tourism, construction, regulated industries, etc.).

The recommendation is simple: do not assume. Review your activity and city before operating.

2) Key Tax Obligations in 2026 (what you cannot improvise)

In Colombia, your company will have national (DIAN) and local (municipal) obligations.

The key is not “paying a lot,” but paying correctly, on time, and with proper support.

A calendar mistake, a reporting omission, or an incorrect classification in the RUT can cost more than the tax itself.

Below is what you must control in 2026:

Corporate Income Tax (general rate 35%)

The general corporate income tax rate in Colombia is 35%.

📅 Tax year 2025 — filed in 2026

According to the official DIAN 2026 calendar:

Large taxpayers:

• 1st installment: February 2026
  
  
• Filing + 2nd installment: April 2026
  
  
• 3rd installment: June 2026
  
  

Other legal entities:

• Filing + 1st installment: May 2026
  
  
• 2nd installment: July 2026
  
  

💡 Strategic tip: even if you have an accountant, as the owner you must know when income tax is due. Late filing generates interest, minimum UVT-based penalties, and may affect your DIAN risk profile.

VAT (general rate 19%) and consumption taxes

The general VAT rate in Colombia is 19%, except for excluded or exempt goods/services.

Depending on regime and income level, filing may be:

• Bimonthly
  
  
• Quarterly (four-month period in some cases)
  
  

Deadlines are defined by the DIAN calendar based on the last digit of the NIT.

⚠️ Common mistake: confusing invoicing with accrual. VAT is declared according to the corresponding period, not when you “receive the money.”

Electronic invoicing (mandatory)

If you carry out taxable operations and fall within the obligated category, you must issue electronic invoices or equivalent documents.

The regulatory framework is based on the Tax Statute and resolutions such as Resolution 000042 of 2020 and subsequent developments.

To invoice you need:

• Updated RUT
  
  
• Active DIAN electronic services
  
  
• Electronic signature instrument
  
  
• Authorized software or technological provider
  
  

🚨 Real risk: invoicing late, incorrectly, or outside the system may generate penalties and prevent the deduction of costs and expenses for income tax purposes.

Withholding tax (monthly)

If your company makes payments for:

• Professional fees
  
  
• Services
  
  
• Leases
  
  
• Purchases
  
  
• Payroll
  
  

It likely acts as a withholding agent.

Withholding:

• Is declared and paid monthly
  
  
• Filed the month following payment or accrual
  
  
• Due according to the last digit of the NIT
  
  

An error in withholdings generates double impact: penalties for non-filing and contingencies with the withheld party.

Self-withholding (when applicable)

Some companies must act as income tax self-withholding agents.

Typical example: companies with gross income exceeding 130,000 UVT, or meeting specific DIAN criteria.

In these cases:

• The company withholds tax from itself
  
  
• Declares and pays monthly as an advance on income tax
  
  

⚠️ This is not an additional tax. It is an advance credited in the annual return.

However, it impacts cash flow. Many companies feel it only once they begin to scale.

Electronic payroll (if you have employees)

If you have employees and file income tax, you must report electronic payroll to the DIAN.

It is submitted:

• Monthly
  
  
• Within the first 10 business days of the following month
  
  

Example: December 2025 payroll → reported in January 2026.

🚨 Critical consequence: failure to properly report may lead the DIAN to reject payroll expense deductibility in the income tax return.

It is not just informational. It has real fiscal impact.

Single Registry of Final Beneficiaries (RUB)

Obligated companies must register and update their final beneficiaries before the DIAN.

Since 2023, the system operates on a quarterly review basis:

• January 1
  
  
• April 1
  
  
• July 1
  
  
• October 1
  
  

If there were changes in shareholders or percentages, updates must be filed within the following month.

🚨 Non-compliance may generate penalties and administrative blocks.

UVT 2026 (basis for thresholds and penalties)

The DIAN set the UVT 2026 at COP $52,374.

The UVT is used for:

• Minimum penalties
  
  
• Deduction limits
  
  
• Obligation thresholds
  
  
• Tax calculations
  
  

If you do not understand the UVT, you do not understand the Colombian tax system.

Extraordinary measures 2026 – Wealth Tax

Following the declaration of economic emergency (Decree 1474 of 2025), for 2026 measures were reintroduced such as:

• Wealth tax for certain taxpayers
  
  
• Sector-specific VAT and consumption adjustments
  
  

The wealth tax applies starting at 40,000 UVT and has progressive rates.

Although it may be subject to legal debate, it is the framework in force for 2026.

If your company or business group manages high-level assets, this is not optional.

3) Local Taxes (Example: Medellín and Metropolitan Area)

In addition to DIAN, many companies must comply with municipal taxes depending on where income is generated.

The most common:

• ICA (Industry and Commerce Tax): taxes income generated from activities in the municipality/district.
  
  
• ICA withholding (if applicable).
  
  
• Surcharges: In Medellín, there is a 1% surcharge on ICA (Municipal Agreement 069 of 2022) allocated to the fire department. It is calculated and paid together with ICA. Many companies forget to include it in financial projections.
  
  
• Property tax if the company owns real estate.
  
  
• Vehicle tax: annual payment, generally due before April 30.
  
  

Key point: ICA is not “optional.” If you operate in a city, review local obligations from month one.

4) Labor Aspects in 2026: Hiring in Colombia Without Surprises

Hiring in Colombia requires structure and documentation. In 2026, there is stronger emphasis on internal controls, written support, and due diligence.

4.1 Before hiring: minimum checklist

Before day one:

• Worker identification and documentation
  
  
• References, validations, job documentation
  
  
• Pre-employment occupational medical exam
  
  
• Social security affiliation support (or process initiated)
  
  
• Definition of contract type and probation period
  
  

This order reduces evidentiary and labor risks.

4.2 Mandatory affiliations

The employer must affiliate and pay contributions to:

• Health
  
  
• Pension
  
  
• Occupational risk insurance (ARL)
  
  
• Compensation fund
  
  

Parafiscal contributions apply when required. (ARL rate depends on risk level.) The UGPP plays a key role in oversight.

4.3 Employment contract (always in writing)

Although verbal contracts exist in theory, in a formal company it should always be written: salary, duties, working hours, location, contract type, termination clauses, etc.

Probation period

• Indefinite-term contracts: up to 2 months (common practice and legal framework).
  
  
• Fixed-term/others: proportional to duration, not exceeding two (2) months.
  
  

4.4 Minimum wage and transportation allowance 2026 (official figures)

• SMMLV 2026: COP $1,750,905
  
  
• Transportation allowance 2026: COP $249,095
  
  

These figures affect contribution bases, benefits, and thresholds.

4.5 Social benefits you must budget

In addition to salary:

• Service bonus (twice a year)
  
  
• Severance (annual deposit to fund)
  
  
• Interest on severance
  
  
• Vacations
  
  
• Overtime, night, Sunday and holiday surcharges when applicable
  
  

Direct advice: in Colombia the “real cost” of an employee is not just salary. If you do not model it from the start, cash flow will remind you.

4.6 Work equipment (uniform and footwear)

Applies under certain conditions and must be delivered periodically. If your business in Colombia hires operational roles, this appears quickly and is often overlooked.

4.7 Termination and due diligence

Terminations must be handled with:

• Formal notice/support
  
  
• Full final settlement
  
  
• Employment certificates
  
  
• Ideally, documented disciplinary procedure when applicable
  
  

5) Visas to Start and Manage a Business in Colombia (Updated 2026)

If you plan to “lead” the business in Colombia as a foreigner, you need immigration status consistent with your role: managing, signing, hiring, invoicing, representing, etc.

M Visa – Partner / Business Owner (most relevant for entrepreneurs)

This visa allows legal residence and development of activities linked to your company. It is regulated by the Ministry of Foreign Affairs and frameworks such as Resolution 5477 of 2022.

Essentials

• Residence up to 3 years (depending on grant), renewable upon compliance.
  
  
• May serve as a pathway to long-term residence depending on continuity and regulations.
  
  

Key requirement: minimum investment (reference 100 SMMLV)

For this category, the typical threshold is investment equivalent to 100 SMMLV.

With SMMLV 2026 (COP $1,750,905),
100 SMMLV ≈ COP $175,090,500.

Important: it is not about “showing money,” but proving real investment and active business in Colombia with proper support (certificates, bank statements, real operations).

Typical documents required

• Chamber of Commerce certificates
  
  
• Proof of shareholding
  
  
• Investment support
  
  
• Letter explaining activity, NIT, address, etc.
  
  
• Passport, photo, forms, immigration documents
  
  

Applications are submitted online via the Foreign Ministry platform.

Costs and timelines must be verified in official Ministry tables and may vary by category and location.

6) Final Recommendations (the ones that prevent most problems)

1) Legal and tax planning from day one

Do not wait to “see if it works.” The company must be born organized:

• Bylaws that reflect reality
  
  
• Clear shareholding structure
  
  
• Coherent legal representation
  
  
• Tax model aligned with income and operations
  
  

2) Accounting and compliance as a system, not a “favor from the accountant”

The DIAN 2026 calendar exists for a reason: non-compliance is expensive. Use it as your business in Colombia control board.

3) If there is foreign capital, register the investment

Beyond compliance, it protects you. Proper foreign investment registration avoids future problems (banks, sale, repatriation, corporate changes).

4) Migration aligned with your real role

If you will manage, sign, represent, and work within your company, your visa must support that activity.

Ready to start a business in Colombia?

At Nexo Legal, we support foreigners with an integral vision: legal + tax + immigration, so your business in Colombia starts correctly and stays compliant.

We assist with:

• Company incorporation (SAS and other structures), bylaws, Chamber of Commerce, NIT/RUT.
  
  
• Tax strategy and DIAN compliance (electronic invoicing, calendar, returns, electronic payroll, RUB).
  
  
• Foreign investment registration and exchange compliance.
  
  
• Labor structure: contracts, affiliations, payroll, benefits, terminations.
  
  
• Entrepreneur visas (M Visa – Partner/Owner) and continuity pathway.
  
  

If you tell us your city, business type, and whether you plan to hire staff, we will design a clear roadmap (with timelines, estimated costs, and documentary checklist).