live%and%invest%in%colombia% thelegalstandpoint...why$to$live$in$colombia?$ %...

Live and Invest in Colombia The Legal Standpoint

Nashville

August 2014

WHY TO INVEST IN COLOMBIA?

• GDP Growth: 4.3%

Higher than LatAm (3%)

• Unemployment Rate: 9,6%

9.2% by the end of 2012

• Oil production of 1M barrels per day

4th largest producer in LatAm

•  Foreign Direct Investment: USD 16,8MM

Record Vigure

•  Exports of Goods and Services: USD 60,125 MM (5.6% growth rate)

Record Vigure

• Controlled inVlation: 1.94%

Below the target inVlation

www.gutierrezmarquez.com


Geostrategic position: 2 oceans, several treaties

Investment Grade by 3 of the most important risk qualiViers

Foreign investment has multiplied by 6

in 10 years.

From 2008 to 2013, Colombia jumped 35

positions in the Doing Business

Index. Currently 39 out of 181.

55% of population is under 30 years

Colombia is “C” in CIVETS: Emerging economies that point to be absolutely dynamic in the

coming years

WHY TO INVEST IN COLOMBIA?

WHY TO LIVE IN COLOMBIA?


Extraordinary change in security

Tourists quadrupled between 2002 and 2013. International Vlights increased +130% since 2000

Minor time zone differences and short Vlights

In the last 12 years GDP per capita grew more than 190%.

3 Universities amongst LatAm’s top 30. 26 schools subscribed to SAT Reasoning Test and 19 to the International Baccalaureate Organization (IBO)

Country with most biodiversity per km2

LEGAL LANDMARKS


Foreign investment

Property ownership

Immigration

Corporations and taxes

Money transfer

Miscellaneous

FOREIGN INVESTMENT – BASIC NOTIONS


Foreign Direct Investment (FDI) Comprehends (among others) real

estate purchase and contributions that represent capital on a Colombian

company.

Portfolio Investment

2 TYPES OF INVESTMENT

Individual or corporation holding a foreign investment in Colombia, who also

meets the requirement of being a non resident (Anyone who hasn´t been in Colombia for more than 180 days, continuously or

discontinuously, during a 12-‐month period).

FOREIGN INVESTOR



FDI doesn´t require governmental authorization, however, it must be registered upon Colombia´s Central Bank as a necessary condition for the foreign investor to obtain foreign investment rights, such as:

ü  Reinvest pro,its ü  Remit abroad investment pro,its ü  Remit abroad any proceeds of the investment´s liquidation

Importance of Registration



Keep in mind that

According to the Doing Business Report, 2013, Colombia is ranked 6th in the world and 1st in Latin America in the Investor Protection index.

ü Principles of Equal Treatment and Stability.

LEGAL LANDMARKS


Foreign investment

Property ownership

Immigration


Money transfer

Miscellaneous

PROPERTY OWNERSHIP


Protection, purchase process and costs

ü  Our Constitution guarantees protection to private property.

ü  Any foreigner can own property, no authorization required.

ü  No discriminatory/preferential treatment.

PROPERTY OWNERSHIP


The purchase process Purchasing real estate in Colombia is easy, fast, safe and inexpensive. Customary multi step process consisting in:

1.  No lien title study

2.  Promise of sales contract

3.  Sales contract: Public document (deed)

4.  Registration

ü  No need to be in Colombia to purchase ü  If parties are ready to deliver, the transference can take place in 1 day and

registration in around 15.

PROPERTY OWNERSHIP


Costs

Real Estate purchase implies the following ofVicial fees:

ü  Notary fees: 0,5% of the property´s Viscal value (deed value). Buyer and seller customarily pay them by half.

ü  Departmental Tax: 1.2% of the property´s Viscal value. Parties also pay it by half.

ü  Registration fee: 0.5% of the property´s Viscal value. Only by Buyer.

Overall estimate for Buyer: 1.35% of property´s Viscal value

PROPERTY OWNERSHIP


Attention!

In most cases there will be a problematic difference between a property´s Viscally appraised and commercial value

As a foreign investor it is in your best interest that at the moment of its transference, the deed shows the property´s commercial value.

Why? High tax basis, avoiding a capital gains problem when selling and preventing a big headache with the Central Bank.

LEGAL LANDMARKS


Foreign investment

Property ownership

Immigration


Money transfer

Miscellaneous

IMMIGRATION


General Notions

Colombia offers several migratory beneVits to which INVESTORS and RETIREES can apply, depending on their circumstances. Granting a visa is a sovereign act and depends on the discretionary authority of the Government. Visas are renewable as long as their fundaments are maintained.

IMMIGRATION


SOME NATIONALITES DON´T REQUIRE VISA TO VISIT COLOMBIA EUROPE AMERICAS REST OF THE WORLD Germany Argentina Australia England Bolivia South Corea Denmark Brasil UAE Spain Canada Japan France Chile New Zealand Ireland Ecuador Italy USA Norway Mexico Netherland Peru Rusia Uruguay

Note: Chinese and Indian citizens require visas to visit

IMMIGRATION


If you´re not required a visa: As a tourist you´re allowed to visit Colombia a maximum of 180 days per calendar year, continuously or discontinuously. An immigration ofVicer will stamp your passport with the number of days that you´ll be allowed in the country. The number usually depends on length of your visit.

If you want to be allowed more than 180 days you need to apply for a visa

IMMIGRATION


Change of Law

Colombia´s immigration law was changed as of June 24 of 2013. Reasons for change: modernization

IMMIGRATION


Types and Categories

Colombia offers 3 types and several categories of visas

VISA TYPE CATEGORY

BUSINESS (NE)

BUSINESS ANALYSIS (NE 1) BUSINESS UNDER TREATY (NE 2) CEO GOVERNEMENTAL ENTITY (NE 3) CEO PRIVATE COMPANY (NE 4)

TEMPORAL (TP)

TOURISM TRAINING WORK SPOUSE OR PERMANENT COMPANION RELIGIOUS STUDENT SPECIAL (7 sub-‐categories) REFUGEE

RESIDENT (RE)

FAMILY OF COLOMBIAN NATIONAL QUALIFIED INVESTMENT TEMPORAL / TECHINCAL / TOURIST

IMMIGRATION


Business Visa

Term: Up to 4 years, multiple entrances. Granted to: ü Directors, managers or executives of foreign companies that share an economic bond with local companies or foreign companies established in Colombia that intend to develop business activities.

ü Merchants, manufacturers, or businessmen that want to establish commercial presence in the country.

IMMIGRATION


Temporary Visa – Work Visa

Term: Depends on the labor / professional services contract´s term. Maximum term 3 years, multiple entrances.

Granted to: ü  Foreigners engaged via labor or professional services by a company or individual domiciled in Colombia. Requirement of average of funds at bank!

IMMIGRATION


Temporary Visa – Spouse Visa

Term: 3 years, multiple entrances.

Granted to: ü Foreigners validly married to Colombian nationals ü  Foreigners eligible as permanent partners of Colombian nationals

IMMIGRATION


Temporary Visa – Pensioner / Investor

Term: 1 year, multiple entrances Granted to foreigners that: ü Have a pension abroad for at least 3 CMW (USD 950) ü Have a dividend yielding investment abroad for at least 15 CMW (USD 4.500)

ü Have made a capital contribution to a Colombian company for at least 100 CMW (USD32.000)

ü Have invested in real estate at least 350 CMW (USD 105.000)

IMMIGRATION


Temporary Visas – Important Note Temporary Visas can be cancelled if the visa holder remains more than 180 consecutive days without entering the country.

IMMIGRATION


Resident Visa

Term: 5 years to indeVinite, multiple entrances. Resident visas can be granted to:

ü Investors ü Holder of a temporary visa ü Family related

IMMIGRATION


Resident Visa -‐ Investors

Term: 5 years, multiple entrances. Requirement: Having made a Foreign Direct Investment in Colombia for at least 650 CMW (USD 210.000) Foreign Direct Investment comprehends real estate, corporations, escrows.

IMMIGRATION


Resident Visa – Holder of Temporary Visa

Term: 5 years, multiple entrances. Requirements:

ü Having held a temporary visa for at least 5 continuous and uninterrupted years.

ü Having held a spouse visa for at least 3 continuous and uninterrupted years.

IMMIGRATION


Resident Visa – Family Related

Term: 5 years, multiple entrances. Requirement:

ü Being a parent of a Colombian national. ü Foreigner legally of age that has been a beneViciary of a resident visa for at least 5 continuous and uninterrupted years.

IMMIGRATION


Resident Visa – Important Notes

ü  Can be cancelled if the visa holder remains more than 2 consecu5ve years without entering the country.

ü  Allow holder to exercise any non regulated profession, as well as to be employed.

IMMIGRATION


Citizenship Requirements: Hold a Resident Visa and complete Vive (5) years of continuous domicile in Colombia.

If the applicant is married to a Colombian citizen or has Colombian children, the term is reduced to two (2) years.

IMMIGRATION


Domicile A foreigner is consider to be domiciled in Colombia from the moment he/she is granted a Resident Visa.

Domicile is interrupted if the foreigner remains outside of Colombian territory for more than one (1) continuous year.

IMMIGRATION


BeneViciaries

With the exception of a few visa types, Visa holders can request beneViciary visas for the following individuals, provided that they depend economically on the visa holder:

ü Spouse or permanent partner ü Parents ü Children under 25 years

IMMIGRATION


BeneViciaries – Important Notes

ü BeneViciaries are not allowed to engage in activities others than “home” or studying

ü Term = holder´s visa term

IMMIGRATION


Registration and Colombian ID

Holders and beneViciaries of visas must register upon Colombia´s migratory authority within 15 days following their entrance to the country or the expedition of the visa if such visa was issued in Colombia.

Registration triggers the expedition of a Colombian ID card (Cedula), which will have a term equal to the visa´s term.

IMMIGRATION


Embassies and Consulates

KEEP IN MIND THAT: To consult the list of Colombian Embassies and Consulates around the word: https://tramites.cancilleria.gov.co/ciudadano/directorio/Misiones/enExterior.aspx

LEGAL LANDMARKS


Foreign investment

Property ownership

Immigration


Money transfer

Miscellaneous

CORPORATIONS AND TAXES


Incorporating in Colombia CORPORATIONS are the most popular investment vehicles in Colombia. BRANCHES of foreign companies and FIDUCIARY SCHEMES are other commonly constituted vehicles. BeneVits of incorporating: ü  Anonymity ü  Liability ü  Limitation ü  Continuity



Flexible Rules

The most popular type of corporation in Colombia is the S.A.S. due to the Vlexibility of its internal structure ü  1 shareholder ü  Unlimited term and indeVinite object ü  No need for Board of Directors ü  Constituted by private document (no need for Notary)



Simple Procedure Incorporating is a matter of: ü  DeVining bylaws: name, internal rules, capital structure, domicile and managers

ü  Registering at the Chamber of Commerce ü  Obtaining a bank account ü  Capitalizing the company and getting started.

This entire process normally doesn’t take more than 1 week



Corporate Taxes

Ordinary corporate taxes and rates are: ü  Income tax: Gross income–costs/expenses/deductions. Rate: 34% ü  Capital Gains: Taxes income generated by the sale of a Vixed asset owned by a corporation for more than 2 years. Rate: 10% New!

ü  Commerce and Industry Tax: Taxes gross income of corporations. Rate: depends on activity, ranges from 0.2% to 1%

ü  Sales tax: taxes sales of goods, services and imports. Rate: depends on the good/service. Exemptions apply. General rate is 16%



Incentives

Our government is decided to promote foreign investment:

Law 1429 of 2010: starting December 2010, companies with less than 50 employees and less than 5.000 Colombian minimum wages (1.5 million USD) in assets, shall pay Income Tax progressively as follows:

For the Virst 3 years: 8,5% (25% of the general rate)

For the 4th year: 16,5% (50% of the general rate)

For the 5th year: 24,75% (75% of the general rate)

For the 6th year on: Full rate (34%)



Income Tax for Individuals

There are 2 basic criteria that determine when individuals are obligated to Vile/pay income tax in Colombia: 1.  Income Generation: individuals that obtain gross income for more

than $38.000.000 (aprox. 20.000 USD) shall Vile and pay income tax at a variable rate that goes from 1% to 30%.

2.  Asset Acquisition: individuals with gross estate exceeding $110,000,000 (aprox. 58.000 USD) shall Vile taxes. Payment is triggered when gross estate exceeds $1.100.000.000 (aprox. 596.000 USD).

LEGAL LANDMARKS


Foreign investment

Property ownership

Immigration


Money transfer

Miscellaneous

MONEY TRANSFER


Perks and Process

Entering and exiting money into and from Colombia is simple.

A strict although transparent multistep process needs to be followed to successfully complete a money transfer from a foreign destination.

MONEY TRANSFER


The Process 1.  Create a landing account: Use banks or securities brokers. No Colombian ID needed.

2. Wire transfer the funds from abroad. 3.  Convert the funds: Mind the exchange rate. Conversion fee 4.  Deliver currency exchange forms: the form depends on the destination of the transferred funds.

5.  Obtain Clearance: for the converted funds to be credited to the landing account the client needs to prove their legal origin. Ordinary proofs: copy of tax return and bank statements.

LEGAL LANDMARKS


Foreign investment

Property ownership

Immigration


Money transfer

Miscellaneous

MISCELLANEOUS


Bringing a Pet

Visit the ICA ofVice at the designated airports for a routine inspection and present: ü Health certiVicate issued by a certiVied vet: Must certify that the animal doesn´t have infectious diseases and no signs of rabies within 48 hours prior to the trip.

ü  Updated Vaccination certiVicate: Must specify type and date of vaccination for certain diseases.

Attention! Some canine breeds are not permitted in Colombia: Staffordshire, American Staffordshire, Pit Bull, American Pit Bull Terrier, or any crosses or hybrids thereof

The ICA ofVice issues a certiVicate. Cost: around 25 USD

MISCELLANEOUS


Household Goods

Foreigners that wish to set their residence in Colombia have the right to bring along their personal effects and household goods.

Household goods is constituted by furniture, appliances y accessories that are “normal” in a family house.

A list of households goods that are tax free is crafted by DIAN every year.

WHO ARE WE?

ü  Gutiérrez Márquez Asesores ü  Legal – Taxes – Finances -‐ Bookkepping -‐ Projects

ü  40-‐year experienced Colombian corporation specialized in providing personalized and client-‐oriented services.

ü  38 professionals with different specialties

ü  7 areas of business (one stop shop)

ü  Over 400 satisVied foreign clients

ü  Correspondents in other Colombian cities

ü  Bilingual


OTHER SERVICES

ü  Gutiérrez Márquez Asesores – Investment Division

ü  Unique Colombian investment opportunities featuring high proVit margins (13% annual onwards) at a low/moderate risk


Contact Us [email protected]

www.gutierrezmarquez.com Follow us on twitter: @GMA_Asesores

Facebook and LinkedIn: Gutierrez Marquez Asesores Calle 7 Sur No 42 – 70. OfVice 1601. Medellin, Colombia

+57 (4) 444 5044

live%and%invest%in%colombia% thelegalstandpoint...why$to$live$in$colombia?$ %...

Documents