Working in Colombia
If you intend to be working in Colombia you must have a work visa to do so. There is no law that prevents the recruitment of foreign workers but the employer must ensure that the employee has the proper visa or permit. Far too often individuals find themselves in Migracion Colombia facing stiff fines because they or their employer did not properly understand the visa process.
The initial work visa must be filed outside of Colombia. Follow the link below for current information. Any educational certificates must be legalized with the Apostille. Not every country is a member of the Hague Apostille Convention, for example Canada. It is best to contact the nearest Colombian Embassy or Consulate to coordinate this certification.
Colombia has numerous regulated professions such as Engineering, Architecture, Geology, etc., that require the approval of the appropriate professional body, before a visa may be applied for. There are also many unregulated professions overseen by the Colombian Ministry of Education that require graduate degree accreditation. Foreign workers must pay all taxes and social security payments which are reviewed below. If you are in Colombia more than 183 days out of 365 you will have to file a Colombian tax return – Declaracion de Renta. Check with your accountant to see if your country has a taxation agreement with Colombia.
The following are some of the professional organization’s websites that you may consult for further information.
– Consejo Profesional de Ingeniería de Transporte y Vías de Colombia
– Consejo Profesional Nacional de Arquitectura y sus Profesiones Auxiliares de Colombia
Many people arrive in Colombia thinking that they will teach English, even if they have no certification or just a university degree. At one time this may have been possible but as Colombia gains more positive press around the world, more professionally trained teachers are interested in living and working in Colombia. There are some smaller language institutes that might consider hiring a less qualified individual but nonetheless to work legally in Colombia you need a work permit or visa.
If you are considering starting your own business there are a number of issues to consider. First of all, do you really need a corporation? Are you looking for limited liability, or succession rights or hiring a number of employees? If this is the case then a company may serve you well. If you are just looking to manage one or two apartments then you may be creating unnecessary costs and obligations in filing tax documents for the tax department.
In Dec. 2010, a new law was passed to encourage the creation of new corporations with less than 50 employees and assets less than 5,000 minimum salaries, which is somewhere between $1,500,000 – $1,700,000 USD depending on the exchange rate. The incentives include a tax rate of 0% for the first two years and then increasing 25 % up to 100 % over the next four. In other words at year six the corporation will be paying 100 % of the taxable income. The Chamber of Commerce also has a reduced fee structure as well. This benefit will be in effect until December 31/14.
The most common types of companies are Limited Liability, Simplified Stock (S.A.S.) and corporations. To create a company there must be a formal set of bylaws. For the S.A.S. (Sociedades por Acciones Simplificadas) this can be a private document as long as part of the assets given to the company are not real estate. If this is the case, the creation of the company must to be done in a Notary, through a deed or escritura. For other types of companies these bylaws must be registered in a notary’s office. The bylaws and a formal application must be submitted to the Chamber of Commerce. This is obligatory. In other countries joining a Chamber of Commerce may be voluntary but in Colombia, it is the Chamber that manages and charges for this process. It is strongly advised that if you wish to create a corporation that you hire an attorney and an accountant. There are very specific steps that must be taken and forms to be filed. It is possible to do this on your own with assistance from the Chamber but you should be fluent in Spanish to undertake this task. You also need to be extremely patient as there are lineups in the Chambers and at the tax office (DIAN).
The creation of a corporation requires a registration with DIAN. You will be making a series of obligations to file forms for IVA the value added tax; Retencion en la Fuente, which is a withholding tax and Declaracion de Renta, which is income tax. Failure to file these forms on time, results in fines.
If you are considering hiring employees in Colombia, whether it be a maid, gardener, chauffeur or staff for an office, you are obliged by Colombian law to follow the labour code of Colombia. Not to do so could be a costly error.
There are various types of contracts but in order to sign a contract a worker must be 18 years or older; otherwise it is mandatory to request an authorization from the Minister of Labor. Contracts may be verbal or written but a fixed term contract must always be written. Unless you are completely bilingual, written contracts prevent any confusion as to the terms. The trial period and the remuneration must always be recorded as well.
The legal work week is 48 hours which can be spread over 5 or 6 days. The maximum does not apply to executive staff, watchmen who work where they reside or individuals who work in domestic service. It is still important not to take advantage or abuse these last two circumstances. Work outside the 48 hour maximum is eligible for overtime pay.
Sundays and Holidays are obligatory days of rest, unless that these days are stipulated in the contract as a working days, but in this case a compensatory day for rest is mandatory. If a worker must provide service on their days of rest, these days they are entitled to their regular salary plus a bonus of 75%.
The basic minimum salary for 2013 is 589.500 COP plus social benefits. Benefits are obligatory. Many people think that the worker should be grateful to receive even the basic salary and refuse to pay the benefits. This can be a costly mistake and incur large cumulative fines. Not only that if the worker is injured you are responsible for their medical costs, their salary and other expenses.
The benefits include an annual severance subsidy (Cesantias), plus 12% interest of the annual severance; service bonuses every 6 month which as 15 days of wages for each half-year; a monthly transport subsidy; work clothes and footwear every 4 months. The last two are payable to workers who do not earn over 2 minimum salaries per month. Workers are also entitled to 15 days paid annual vacation.
Workers must be enrolled in the Social Security System by the employer. Sixteen percent of the monthly salary must be paid into the General Pension. The employee pays 4% and the employer pays 12%. As a foreigner, if you continue to make payments into the pension system of your country you are not obliged to contribute in Colombia.
For Health Care the worker must contribute 8% of their monthly salary and the employer adds an additional 4%.
The System of Professional Risks varies between 0.348% and 8.7% depending on the level of risk the company is assessed with.
If you are thinking about opening a business, this can be used as a stepping stone to obtain a Special Temporary Visa. As of April 2013, for an investment of 100 times the minimum salary (currently 589.500 COP) in a Colombian corporation you can apply for this visa. This is approximately $33,000 USD so as a rule of thumb $35,000 USD is a safe amount to invest. This visa is renewable up to 5 years, at which time you can apply for a Colombian passport. The first issue of the visa may be two years but this is at the discretion of the reviewing officer.
This article is meant to provide general information on employment and corporations. The regulations are complex and it is advised that you speak to an expert in these matters. Failure to complete legal obligations may result in fines and sanctions.
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