Investing in Business, Real Estate: Opening Doors to Profits, Visas
The soaring value of the U.S. dollar versus the Colombian peso -- combined with an ever-increasing flow of business-oriented tourism to Medellin – is spurring ever-greater interest in metro-Medellin real estate markets and other investment opportunities.
While it’s relatively easy for Colombian nationals living abroad to invest in Colombian real estate, it can be more complicated for non-resident foreigners to tap into this market.
One reason: A tourist visa won’t allow you to open a Colombian bank account, which you’ll need to transfer money from overseas in order to make a property purchase or to start a business here in Medellin.
However, foreigners who are serious investors, entrepreneurs, retirees and potential permanent residents in Medellin ought to consider securing a “TP7” visa, according to Medellin-based Casacol (see web-address here: en.casacol.co), a real-estate investment advisor, developer, property manager and legal advisor.
In a September 23 interview with Medellin Herald, Casacol attorney Dora Restrepo (a licensed Colombian lawyer) and Casacol’s founder/managing director Brad Hinkelman (a Canadian national who now lives in Medellin) explained why the “TP7” visa increasingly is seen as a practical way to invest, and simultaneously to secure a longer-term stay in Colombia.
Obtaining a “TP7” visa not only can open the door to “doing well” but also to “doing good,” as it enables longer-term stays here (initially one year, with conditional renewals), while helping build the Colombian economy by attracting capital that generates jobs and opportunities, they pointed out.
As Restrepo pointed out, obtaining a “TP7” visa – initially good for one year, but also renewable for subsequent years – involves creating a self-directed “Sociedad por Acciones Simplificadas” or “SAS” company, which can enable you to launch of all sorts of businesses, including participation in real-estate investing.
Retirees also can qualify for “TP7” visas, as long as they’re receiving the equivalent of at least three Colombian minimum monthly salaries (roughly US$700 at today’s exchange rates), she said.
People that haven’t yet reached retirement age also could qualify for a visa as long as they can prove that they’re receiving a certain minimum “passive” monthly income (typically in the range of US$3,000 to $4,000 per month), Hinkelman added.
“A ‘SAS’ is a very rapid and efficient way to obtain a bank account, to allocate and protect your investments, and it’s an efficient way to obtain a ‘TP7’ visa,” Restrepo told us.
Renewing the “TP7” visa will require that you file a financial statement showing the results of the company each year. Over two years, you’ll need to have invested at least COP$65 million (about US$21,000).
It’s possible that after five years holding a “TP7,” you also could apply for a permanent resident visa.
To get your “SAS” in order, first you must register the business properly as a “share purchase by a foreigner in a local company,” which in this case means you are both the share purchaser and the local company, Hinkelman added.
10-Step, 10-Day Process
The best way to get your SAS in proper order – and promptly -- is to empower a legal representative (such as a lawyer) in Colombia, Restrepo explained.
A Colombian notary can handle your power-of-attorney documentation typically for a fee of COP$5,000 to COP$10,000 (about US$2.50 to US$5), plus attorney’s fees, she said.
You’ll also need to avoid having your company name clash with the name of any existing company in Colombia. This registration “is done easily and immediately at the following link: http://www.rues.org.co,” she said. Cost: zero.
Third, your lawyer would draft statutes that will “govern the company, according to the interests of investors and Colombian law,” she said.
You must consider the “number and details of shareholders, names, nationalities, identification numbers, addresses, phone, email, the amount of initial capital, the number and value of shares, identification legal representative and powers, whether to limit those powers or not, the address of the company, the phone number and the address of the commercial establishment,” she added.
Depending upon the complexity of the statutes, this could take two to three days to complete and cost in the range of COP$500,000 (about US$162) to about COP$1,000,000 (about US$325), she said.
Fourth, your legal representative, general manager or auditor “must prepare written documents by which either a) the legal representative of the SAS, b) the owner/general manager c) or the auditor (not required) will accept positions of responsibility within the SAS,” she said.
“These appointments are vital, as are those who act on behalf of the society could make commitments and decision on behalf of the SAS. These documents must be signed by those who accept the position of legal representative or manager, and financial auditor, if necessary. It can be done in conjunction with the statutes in the same letter, or in a separate document.”
Fifth, you’ll need to complete the “pre-RUT” procedure with Colombia’s national tax authority (DIAN). The “RUT” is the “registro unico tributario,” which gives you a unique tax registration number.
“A lawyer with power of attorney must process the pre-RUT of the SAS, which is the document that the tax obligations of the company are tied to,” she said.
“This process is finished with the SAS being granted a ‘NIT’ (Numero de Identificacion Tributaria) from DIAN, which is your tax ID number. At this stage of ‘Pre-RUT,’ the NIT is for the moment only provisional. T
“This procedure can be performed completely online at the following link: https://muisca.dian.gov.co/WebRutMuisca/DefInscripRutCamNatPortal.faces , or it can be performed directly at the offices of the DIAN, with the assistance of onsite staff accompanied by your lawyer.”
There’s no cost to process this form (other than fees charged by your lawyer) and it can be processed immediately. “However, involvement from an accountant may be necessary at this stage depending on the complexity of the SAS and could incur fees as a result,” she added.
The sixth stage in the process is to complete “RUES” forms (Registro Unico Empresial y Social), she said. These forms – costing COP$4,300 (US$1.40) each -- are purchased at the Camera de Comercio (Chamber of Commerce). The forms must be signed by the legal representative or attorney of the shareholder(s) of the SAS.
Seventh, you’ll submit to the Chamber of Commerce your statutes, letters of acceptance, RUES forms, pre-RUT, power of attorney and a copy of the certificate of your legal representative.
“This registration has a cost that must be paid at the time of registration and will carry fees depending on the assets/capital that the SAS will be started with,” she said.
“For example, a company with assets of COP$75 million [US$24,400] will pay the sum of COP$887,000 [US$288]. If everything has been done correctly, then the SAS will be created within 24 hours or the file will be returned back to the legal representative to fulfill any other requirements if necessary,” she said. You’ll also pay legal/professional fees.
The eighth step in the process is to open a bank account in the name of the SAS.
“This must be done at a Colombian bank by the shareholder(s), or by the legal representative of the shareholder(s), by delivering to the bank the Certificate of Existence and Representation (Certificado de Existencia y Representacion) issued by the Chamber of Commerce,” she said.
“You must also deliver a ‘balance inicial’ (a letter describing the initial financial state of the SAS) prepared by an accountant, the professional card and number of your accountant, a photocopy of the identity card of the legal representative or shareholder(s), pre-RUT and NIT, and a minimum initial amount of COP$300,000 [US$97] in the case of Bancolombia. You can process this immediately and open the account in the same day.
“The only additional fees will be monthly corporate banking fees charged by Bancolombia and the professional fees of your accountant for the ‘balance inicial’ -- COP$200,000 [US$65] to COP$500,000 [US$161] depending on complexity of the SAS, and your lawyer fees.”
The ninth step involves delivering a bank certification letter to the DIAN, she said.
“At this point, you request this letter from your bank stating the existence of your banking relationship and associated account numbers and deliver this to DIAN within 15 days. If you fail to complete this in time, then you will need to apply for another RUT/NIT from DIAN and return to step number five.
“There is no fixed cost to the process, but it should be done in person at the offices of the DIAN by your lawyer and you will receive confirmation immediately if the process has been done correctly because the pre-RUT now becomes a RUT.”
The tenth and final step is to register the RUT with the Chamber of Commerce, which doesn’t carry any extra cost, she added.
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