heloo We get a lot of inquiries regarding the differences between the Real Estate and the Business investment visa categories, so we want to give you a thorough review on both visa categories in Colombia so you can make the best immigration plan accordingly. So
Both visa categories are M-type, meaning they allow you to accrue time towards residency, which is good.
After holding any of these visas continuously for 5 years, you will be eligible to apply for the Resident R-visa.
> [!NOTE] Remember that the M-type visas are automatically cancelled if you spend more than 6 continuous months outside of Colombia.
Let's take a closer look at the requirements and procedures for both visa categories. We'll start with the Real Estate Investment visa and then examine the Business Investment visa to better understand what each entails from a local immigration attorney's perspective.
Real Estate Investment Visa
Under the general investment visa category, there are two options to apply for this visa: Wether having registered a Direct Foreign Investment for purchases in the Colombian Stock Market for at least 650 Colombian Minimum Wages or buying a property - or properties - for a value of at least 350 Colombian Minimum Wages. In this article we’ll discuss the second option.
The Real Estate Investment visa is an M-type visa that allows you to stay in Colombia for up to three years and it allows you to bring your Spouse and Children under 25 years old.
During your visa evaluation, the Government officers will focus mainly in two indispensable documents: The Certificado de Libertad y Tradición - Certificate of Ownership- and the Registro de Inversion Extranjera Directa - Direct Foreign Investment Registry -, so we will address some relevant topics about these two documents in this post.
Certificate of ownership
The “Certificado de Libertad y Tradición” - often referred to as “CLT” - is the document issued by an office called “Oficina de Instrumentos Públicos.” It shows the history of that particular property from when it was first registered. It lists all the previous owners, the mortgages, the successions, the seizures, the divorces, the purchases, donations, and so on. Although it is a boring ugly document listing past deals, for me, it tells a fantastic, magical tale of the finca, land, appartment or office, which could inspire a novel of magical realism.
However, the less sentimental immigration officers at the Cancillería will focus solely on the bottom of that certificate. Whether you have one certificate or multiple, due to owning different properties (yes, you can add up different properties for your visa application), their attention will be on the last annotation(s). What they want to confirm is that the most recent registered purchase amount, with you as the sole owner - with no co-owners -, exceeds the minimum financial requirement for the visa application—currently set at 350 Colombian Minimum Wages at the time of applying.
> [!NOTE] As of 2023, with the minimum wage set at $1,160,000 COP, the required investment totals $406,000,000 COP. Converted to U.S. dollars, this is approximately $96,451.96 USD, based on the exchange rate of $1 USD = $4,213.55 COP as of October 23, 2023.
With this in mind, you can now discard properties that are being aggressively marketed to you if they don’t even have a “matrícula inmobiliaria” yet. This includes those being sold under other instruments like “cesión de derechos fiduciarios,” new buildings that haven’t received their construction permits yet, or projects involving crypto-tokens, “lotes en proindiviso,” etc. For your visa application, you’ll want a property that’s already clear; otherwise, you’ll need to develop a proper legal strategy.
Before reaching this point and to obtain that document (which can be downloaded here for $19,200 COP), there were some steps on the sale process that can be backcasted - Note that we’re not discussing some special cases here - as follows:
Direct Foreign Investment Certificate
The Direct Foreign Investment Certificate - Registro de Inversión Extranjera Directa - is a document issued by the Central Bank - Banco de la República - that states the amount of the transaction in USD and COP, the identification of the foreigner and the destination of that money.
This certificate can be downloaded through the Central Bank’s website on their new Sistema de Información Cambiaria. Again, before you can download this document, we are assuming that the transaction has been already registered. But, how is this transaction reported on the first place?
Consider that these reports are done by the so called Exchange Market Intermediaries (Intermediario del Mercado Cambiario), banks, exchange companies, trust fund companies, among others, through a form called “Formulario 4. Declaración de Cambio por Inversiones Internacionales”. You need to make sure that you put in the right registration code.
> [!NOTE] When bringing the money to Colombia you want to know:
In any case you want to keep something in mind: The Direct Foreign Investments are operations of great importance for the national economy, so they should be are closely looked by the Central Bank officers. And even though you can submit the information to them online, you should be aware that if you are a tax resident (that is, you have spent more than 183 days, continously or not, in Colombian territory over the last 365 days), then that transfer, even coming from abroad, is not technically foreign investment. The sanctions for this are quite high, often the fines are the same amount as invested.
Other than the Certificate of Ownership and Certificate of Direct Foreign Investment, you will need to show proof of financial solvency (trough personal bank statements) and a health insurance with coverage in Colombia against all risks in case of accident, illness, hospitalization, death and repatriation.
They normally approve it for one year for first timers but afterwards gets renewed for longer.
Second and further applications on the Real Estate Investment Visa
Before your initial Real Estate Investment Visa expires, it's advisable to submit a renewal application at least 45 days in advance. Due to the annual increase in the Minimum Wage, the value of the property you purchased may no longer satisfy the requirements in your subsequent applications. For instance, if the minimum wage increases by 10% in 2024, the required property value for that year’s renewal will amount to COP 446,600,000 or USD 105,220.
Therefore, it's commonly recommended to purchase a property valued above the minimum requirement to accommodate for future "renewals".
In your second and further applications, along with fulfilling other requirements (such as CLT, Direct Foreign Investment Registry, insurance, passport, etc.), you will need to provide evidence of maintaining or retaining the initial investment.
Typically, this is achieved by submitting the predial tax payment receipts, the most recent utility bills for electricity, gas, and water (EPM bills), as well as a clearance certificate from the Homeowners Association (HOA) confirming no outstanding dues.
Business Investment Visa
The Business Investment Visa requires a lower initial investment compared to the Real Estate Investment Visa: around $28.000 USD vs $97.000 USD, and it can be applied for by incorporating a new business or buying participation on an ongoing Colombian business.
The Law points out that buying stocks on the secondary market (that is, publicly traded stocks that you buy from individuals or companies and not through the primary market), doesn’t qualify for this visa category. Here we’ll focus in the process of incorporating a business from scratch.
It's advisable not to start a business for the sole purpose of applying for a Business Investment Visa—known as 'socio o propietario'—because the bureaucracy and formalism can be tricky. Hence, it is better to buy something already cleared out, provided it meets the legal requirements.
For newly incorporated businesses, the Law mentions requirements such as presenting the Tax ID (RUT), the number of employees, the bylaws, certificate of incorporation, and a sworn statement by a public accountant, but falls short of clarifying the expectations surrounding these requirements.
Alongside typical startup tasks like renting a space, crafting a menu, hiring staff, and marketing, there are legal steps you'll need to follow to apply for your visa which we will delve into:
Business incorporation - SAS
The first step towards business incorporation is the registration of the constitution act with the Chamber of Commerce.
If you're establishing your business in Medellin, you'll need to register with the Medellin Chamber of Commerce. For businesses in Envigado, Sabaneta, and similar areas, the appropriate registration body is the Chamber of Commerce - Aburra Sur. Meanwhile, if your business is in Rionegro, El Retiro, and other such localities, you should turn to the Chamber of Commerce in Oriente for your incorporation needs.
It's advisable to opt for a Simplified Stock Company, or SAS (Sociedad por Acciones Simplificada), due to its simplicity and popularity, although other company types like Sociedad Anónima, Limitada, and Comandita Simple o por Acciones exist, which will be discussed in a future article.
It's important to note that the capital of a SAS is divided into stocks, and the division is defined within the articles of incorporation.
For instance, you might establish a SAS with a capital of 100 million COP, divided into 100 stocks valued at 1 million COP each, or alternatively, 1 million stocks valued at 100 COP each. While there's flexibility in how you structure the capital, it's prudent to keep it straightforward to avoid complications in the future.
> [!NOTE] In the realm of business incorporation, you'll come across terms such as Capital Autorizado, Capital Suscrito, and Capital Pagado. Here's what they mean:
To initiate the incorporation of a SAS, begin by drafting the bylaws or the articles of incorporation. This document should specify essential details such as the name of the company, the partners, the legal representative, the domicile, the number and value of stocks, the company's scope, and any other requisite information as outlined in Ley 1258 de 2008.
A crucial requirement is that your stake in the company should amount to at least 100 Colombian Minimum Wages. This stake should be mirrored in the total value of the stocks you possess in the company.
Now, after setting the number of stocks and its value through the bylaws, you bring those to the Chamber of Commerce where the company will operate and ask for the RUES form and the related incorporation forms. They will ask you the name of the company, address, initial balance (a non formal balance), etc, and you fill out those forms and take them to an officer of the Chamber to register it and pay the registration fees, that are calculated on the capital registered. For $116.000.000 COP, you pay around 1.2 million COP. Remember that you have not put the money on it yet.
After 1 to 5 days, you will receive an email saying that your company has been registered and then you can download the Certificado de Existencia y Representación Legal (CERL) - which we will use for your visa application.
Helping out your Colombian friend with his-her business
If you are investing on an ongoing business, this is important to check because the nominal value of the stock is not often the same as the market value of the stock. So, for example, an ongoing business in Provenza ask you to invest on their restaurant. They are asking $300 Million COP for “30% of the business” through an investment instrument but they will only transfer you 1000 stocks with a value of 100.000 COP for a total amount of 100.000.000 COP, and the remainder they create a loan agreement with fixed interest or something similar. This happens often and, again, not to be opportunistic, but you want to have a local attorney by your side at this moment.
So, since you will need 100 minimum wages for your visa application, that is, $116.000.000 COP in stock values as 2023, you need to make sure that you as partner are holding an X number of stocks with a total nominal value of $116.000.000 COP.
Bringing the money to Colombia
With the CERL that you got from the Chamber of Commerce, you can go to open a bank account for your business in which you want to put in your invested money. But most banks won't open you a bank account if you don’t have a Cedula. So it is recommended to have a local legal representative with Cédula de Ciudadanía or Cedula de Extranjería. This can be changed later on.
Once you open the bank account, is the time to transfer the money from abroad to put it on your business account and register it before the Central Bank.
Again, you want to use a brokerage account because you will normally get a better exchange rate and you will have the chance to register the investment properly, instead of hopping that the traditional banks do their jobs.
Now, to comply with the “certificado de composición accionaria” or stock composition certificate, you need to send the bylaws and CERL of the company to a certified public accountant, who will sign your stock composition for around $300k COP. They need also to send you a copy of their professional ID card.
Finally, you will also need to make a thorough, complete and detailed letter with the description of the business’ activities and purposes: This letter should include the full identification of the company (NIT) and its shareholders, the activities that the company is going to perform, the contacts with potential providers and allies, if it is going to have an open-to-public space, the market segment it wants to aim. The type of services and products it wants to commercialize. The more, the better.
After doing that, you send your visa application and respond to any requerimientos.
Second and further applications
Here is where this visa category gets a little trickier: On further visa applications, besides the referred increase on the Minimum Wage stated in the Real Estate Investment Visa section, you will need to show that the company has continued operations and has actually been doing what you said it will be doing. This implies that the authorities will be asking you for:
- Last tax return
- Accounting balance
- Description of activities
- Payroll and Social Security payments
- Rental agreement of the office or local, if applicable,
Among others.
The recommended strategy for further applications on this visa, is to show the documents that support that the business is still active and performing normal activities.
Final takes
Both investment opportunities can be very profitable, if played right, and can grant you an M - visa that allows you to accrue time towards residency.
Both investment visas will require, in any case, a good tax plan to lower down your taxes impact, because the property will make you tax liable, and the company will need to file taxes every year.
So, in general, the Real Estate Investment visa is more expensive, but easier to “renew”, and the Business Investment Visa requires a lesser amount to bring to the country, but its maintenance requires more attention and diligence.
I hope this awfully long post helps any of you guys, and if you have any questions and want to discuss about it, let’s talk.
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