If you want to open a café in Colombia, run a small agency or let out holiday flats, you almost always end up with the same three letters: S.A.S., the sociedad por acciones simplificada. It is the company form the country created in 2008 with Law 1258, and it is built for flexibility.
For expats the SAS is attractive because it works with a single shareholder, needs no board and is formed by private document. But it also has quirks you will not know from home, and a tax burden many people underestimate. The basics, what a company in Latin America gets you and when it makes sense at all, are in our overview setting up a company in Latin America. This is what the Colombian form looks like in detail.
What the SAS is in law
Article 1 of Law 1258 says it in one sentence: an SAS can be formed by one or more natural or legal persons, who are liable only up to the amount of their contribution. As a rule, shareholders are not liable for the company's employment, tax or other debts. The exception is in Article 42.
The SAS acquires legal personality on entry in the commercial register (registro mercantil), kept by the chamber of commerce (cámara de comercio) of the place where the company has its principal office. Until then the position is uncomfortable: if you form it alone and already sign contracts, you are personally liable under Article 7. Several founders are treated as a de facto partnership until registration.
Under Article 3 the SAS is always a commercial company, whatever it does, and for tax purposes it is treated like a public limited company (sociedad anónima). Under Article 4 its shares may not be traded on the stock exchange. For an expat project that is not a drawback but rather a clarification: the SAS is the form for private, unlisted businesses.
Formation step by step
The incorporation document
Under Article 5 the SAS is formed by contract or unilateral act in a private document. You only need a notarial deed if you contribute assets whose transfer requires a public deed, typically real estate. Before registration the signatories must have their signatures authenticated, in person or through a representative. This is the point at which founders abroad usually work with a power of attorney.
The document must contain at least: the name, identity document and address of the shareholders, the company name with the suffix "sociedad por acciones simplificada" or "S.A.S.", the principal office, the duration, the corporate purpose, the capital, the management and at least one legal representative (representante legal).
Two rules make the SAS so convenient. If the document says nothing about duration, the company is deemed to be of unlimited duration. And instead of a precise list of activities, the purpose may simply state that the company can carry out any lawful activity. If the purpose is left out, exactly that applies. Under Article 6 the chamber of commerce checks that the mandatory details are complete and otherwise refuses registration.
Capital and paying it in
Law 1258 sets no statutory minimum capital. In the document you fix authorised, subscribed and paid-in capital, and payment may be spread out, but under Article 9 over no more than two years. In the articles, shareholders can also set minimum or maximum shareholdings, create different classes of shares (preference shares, non-voting shares with a preferential dividend) and lock share transfers for up to ten years or make them subject to the assembly's approval. For co-founders or partnerships with Colombians, exactly these clauses are the tool for settling disputes in advance.
Governing bodies: as lean as possible
Under Article 25 the SAS needs no board (junta directiva) unless the articles provide for one. Management and representation then rest with the legal representative. As long as there is only one shareholder, that shareholder may exercise all the powers of the governing bodies under Article 17, including those of the legal representative. Under Article 26 the legal representative can be a natural or legal person. You only need a revisor fiscal, a kind of statutory auditor, under Article 28 if a law requires one in the specific case.
Registering capital from abroad
If, as a non-resident, you bring money from abroad into the SAS, that is a foreign investment. Under Article 2.17.2.5.1.1 of Decree 1068 of 2015, as amended by Decree 119 of 2017, foreign investors must register their investments with the Banco de la República, following the procedure the central bank lays down. Later changes and the winding-up of an investment must also be reported, within a deadline of six months. Have your bank and your contador deal with this right when you pay the money in, rather than catching up later: the decree provides for penalties for late reporting.
Where limited liability ends
Limited liability is the reason many people form a company at all. Article 42 draws a clear line: if the SAS is used to circumvent the law or to the detriment of third parties, the shareholders and managers who took part are jointly and severally liable for the resulting obligations and damage. The Superintendencia de Sociedades decides whether such transactions are void. Article 43 adds that anyone who abuses their voting rights to harm the company or fellow shareholders is also liable.
In practice: an SAS protects you from business risk, not from the consequences of sharp practice. Use it to outwit creditors or the tax authority and you lose the protection.
Tax: what the SAS really costs
Corporate income tax
For tax purposes the SAS is treated like a public limited company, and under Article 240 of the Estatuto Tributario that pays the general rate of 35%. Surcharges apply to financial institutions and certain special sectors, not to your café or agency. By Latin American standards, 35% is high. If you associate Colombia with a low-tax company, you are mistaken.
Dividends
What is distributed after corporate tax is taxed a second time. If you are not resident in Colombia, the tax on dividends under Article 245 is 20%, withheld at source. If you are resident, dividends go into your income tax base under Article 242 and are taxed at your personal rate. For profits that were not taxed at company level, special rules apply in each case, with the 35% rate charged first.
Under Article 10 of the Estatuto Tributario you are resident, among other things, if you spend more than 183 days in the country within any period of 365 consecutive days, counting days of entry and departure. So if you move to Colombia with your SAS, after a little over six months you switch from the 20% withholding tax to the personal rate.
The Régimen Simple: residents only
Colombia has a simplified single-tax regime, the Régimen Simple de Tributación, which bundles several taxes into one payment. The hurdles are in Articles 905 and 906 of the Estatuto Tributario, and two of them hit expats directly.
First, a legal entity may only take part if its shareholders are natural persons resident in Colombia, Colombian or foreign. As long as you are not yet resident, your SAS stays out. Second, companies that are a subsidiary or branch of a Colombian or foreign company are excluded. If you hold your SAS through a company back home, you close off this route as well.
On top of that there is a turnover limit: gross income in the previous year must be below 100,000 UVT. The UVT is Colombia's tax unit of account; DIAN set it for 2026 at 52,374 pesos in Resolution 000238. The limit in 2026 is therefore around 5.24 billion pesos. The wording of the law also excludes, among others, asset management, the letting of assets and activities where passive income makes up 20% or more of gross income. An SAS that mainly collects rent does not fit into the Simple regime.
What the SAS is not: a visa
Many people link setting up a company with the residence question. The SAS itself gives you no right of residence. The route from an investment in a Colombian company to the investor visa is described in our article on the Colombian residence permit. Still, plan the company and the visa together from the start, because if you want a visa through an investment in your own company, the two procedures have to be aligned.
The trap at home: where is your SAS managed from?
This is where expats most often get it wrong, and it has little to do with Colombia. An SAS with its registered office in Bogotá is Colombian. But if it is run from abroad, because you still live there and make every decision from your desk back home, the question arises whether the country you run it from also claims the right to tax it. Whether that happens, and whether a tax treaty with Colombia resolves the conflict, depends on your home country:
The safest solution is the same in every case: the company is managed where it is located. If you still live abroad, you need a legal representative in Colombia who genuinely decides, not just signs. If you have already moved, document that decisions are taken in Colombia.
SAS, US LLC or no company at all?
The SAS is the right choice if you generate revenue in Colombia: with local customers, employees, a shop or property on the ground. Then you need a Colombian legal form anyway, and the SAS is the most flexible.
If, on the other hand, you work location-independently for clients in Europe or the United States, the calculation is different. Which structures are worth considering then, and when a US LLC or an offshore solution makes more or less sense, is compared in our article on company structures in Latin America. Whether Colombia suits you as a place to live at all, with all its pros and cons, is covered by the Colombia reality check; the key data on residency, tax and passport are on the Colombia country page.
The checklist before your appointment at the chamber of commerce
Answer these seven points before formation and the SAS gives you a company that fits a life in Colombia. Skip them and you end up with a company in Medellín and a tax assessment from home.
Carpe Diem. Life is short and fleeting. One shot. Make it count.