When establishing a legal business presence in Colombia, foreigners typically choose between four main structures: the SAS, the Sociedad Anónima (SA), the Sociedad de Responsabilidad Limitada (LTDA), or a Foreign Branch (Sucursal). Each has distinct advantages, requirements, and tax implications.
Side-by-Side Comparison
| Feature | SAS | SA | LTDA | Foreign Branch |
|---|---|---|---|---|
| Min. shareholders | 1 | 5 | 2 | N/A (extension) |
| Min. capital | None | Required | None | N/A |
| Liability | Limited | Limited | Limited | Parent liable |
| Board required | Optional | Mandatory | Optional | N/A |
| Profit remittance tax | 20% dividend withholding | 20% dividend withholding | 20% dividend withholding | 20% remittance tax |
| Recommended for | Most foreign investors | Large public companies | Small partnerships | Specific sectors only |
Why the SAS Wins for Most Foreign Investors
The SAS (Sociedad por Acciones Simplificada) was created in 2008 specifically to simplify business creation. It's the most flexible entity type in Colombia because:
- One shareholder is sufficient — perfect for a single foreign investor or a foreign parent company
- No minimum capital requirement — you decide what capital to inject
- Custom governance rules — define how profits are distributed, how decisions are made, and succession structure in the statutes
- Easy administration — no mandatory statutory auditor (revisor fiscal) unless thresholds are met
- Fastest registration — typically 5–10 business days at the Chamber of Commerce
When to Consider an SA Instead
The traditional Sociedad Anónima (SA) makes sense when:
- You anticipate going public or raising institutional equity
- You need to issue tradeable shares publicly
- Regulatory requirements in your sector mandate an SA structure
The LTDA (Limitada) — Now Mostly Legacy
The LTDA was Colombia's standard entity before the SAS. It requires a minimum of 2 partners and has more restrictions on share transfers. The SAS has replaced it for most new businesses. The LTDA is best for small, stable partnerships where all partners want strong control rights and transfer restrictions by design.
Foreign Branch (Sucursal) — When It Makes Sense
A branch is not a separate legal entity — it's an extension of the foreign parent company. This means the parent is directly liable for all branch obligations. Pros: simpler setup for some sectors (insurance, banking). Cons: more complex tax treatment (35% corporate tax + 20% remittance tax on profits sent abroad), and the parent bears full legal exposure.
Corporate Tax Rate Is the Same
Regardless of structure (SAS, SA, LTDA, or branch), the Colombian corporate income tax rate is 35% on net taxable income. The main difference is in profit repatriation: branches pay a straight 20% remittance tax on profits; companies (SAS/SA/LTDA) pay dividends subject to 20% withholding for foreign shareholders.