The foreign exchange and international investment regime in force in Colombia are based on the criteria that some transactions shall be under foreign exchange control, and thus, must be paid using authorized methods, and in some cases will be subject to registration before the Colombian Central Bank.

International investment (foreign investment in Colombia and investment made by Colombian residents abroad) is a transaction under foreign exchange control and subject to registration before the Colombian Central Bank. International investment payments must be performed using the foreign exchange market and by means of a local financial entity or bank account opened abroad in Colombia and registered as a compensation account before the Colombian Central Bank.

Once a foreign investment is duly registered before the Colombian Central Bank, foreign exchange rights are recognized by the foreign investor. Currently, there are no regulations that limit or restrict international investment or the flow of cash inside or outside of Colombia.

The foreign exchange regime in Colombia is a combination of protecting the economy and national security. The main purpose of the foreign exchange regime is to promote economic and social development and the exchange rate equilibrium. Also, the internationalization of the Colombian economy, the promotion of foreign trade, the stimulation of foreign investments, and the accurate implementation of control on movements of capital are part of the proposals of the regime. The foreign exchange regulations are also a method to prevent money laundering in Colombia.

It is important to note that foreign exchange regulations are open and limit neither the entrance of funds to Colombia nor the transfer of funds abroad, however, it does set certain proceedings, registration obligations and payment methods that must be fulfilled in transactions under the scope of foreign exchange control. These transactions under the scope are international investments, international indebtedness and warranties, derivatives and import and export of goods. Any other transaction not listed is considered a free-market transaction and can be freely performed and paid without further restrictions (as is the case of services, industrial property, goodwill, owning assets abroad of Colombia among others).

Foreign investors must meet one of the following foreign exchange non-resident criteria:

1. Individuals’ foreigners and nationals who have not spent more than 183 continuous or discontinuous days in a 365-day period,
2. Any kind of entity/company domiciled abroad in Colombia,
3. Any kind of entity without legal personality administrated abroad of Colombia (trust/funds / among others).

In general terms, all countries are covered. However, it is worth noting that Colombia has executed Bilateral Investment Treaties (ALL/Bits) and TLC including investment chapters with certain countries in order to grant special protection rules to foreign investors (i.e. Canada, Chile, China, Korea, United States, France, UK, Switzerland, Europe Union, among others).

As a general rule, foreign investment is not restricted nor subject to prior authorization, except in defense activities or the processing and disposal of hazardous or radioactive products not produced in Colombia which are activities completely forbidden for foreign investors.

Foreign investment in financial institutions will require prior authorization from the Superintendence of Finance (when the investment is above 10%).

Foreign investment in national television may not exceed 40%.

The registry of foreign investment before the Colombian Central Bank is mandatory.

The payment or transfer of funds derived from international investment should be completed using the foreign exchange market. A breach of the latter may cause the imposition of fines. As per local law, the Superintendence of Companies is entitled to impose fines up to 200% of the amount of the transaction, however, such fines usually range between 2.2% and 4% of said amount. These fines are commonly applied in case of a belated registry of substitution, modification, or cancelation of foreign investments.

No. Foreign investment proceedings are normally complied with post-closing. However, the Superintendence of Companies is entitled to impose fines if an international investment (duly registered before the Colombian Central Bank) is false or if it has not been materialized according to the registered destination.

The Colombian government, which acts as an international investment regulator, has not issued any modifications or special rules related to international investment due to the COVID-19 impact in Colombia.

The foreign investment during COVID-19 (2020/2021) has decreased a 34% compared to the investment received before COVID-19. This percentage matches the general decrease percentage of direct foreign investment on a global basis including in the recent “World Investment Report 2021” issued by the United Nations Conference on Trade and Development – UNCTAD. (-35%)

During 2022 and 2023 the direct international investment statistics have shown an important increase. By the end of 2022, it increased to 46.1% compared to 2021 and during 2023 it has maintained such levels.

Recent rules and regulations on international investment were issued in 2017 with the purpose of facilitating the methods to perform international investments in Colombia and removing specific legal deadlines, in order to avoid blocking or delaying the reception of foreign investment.

In 2022 the Colombian Central Bank modified some registration of international investment proceedings, allowing the investor or Colombian residents to perform directly in the system of this entity the registration of the international investment. This proceeding applies to an investment in kind or any lawful contract or to cancel or modify current registration.

On no grounds enforcers can block foreign investment, however, they are entitled to temporarily restrict the remittance of funds abroad derived from the liquidation of the foreign investment or profits (as a consequence of a wind-up / or sale of assets) only if the international reserves fall to less than three months of imports of goods. Currently, the international reserves are at their historically highest level.

In the following months, the National Government as regulator of the international investment regime, will perform a review (and probably amendment) of the foreign investment rules in the portfolio [the investment in the Colombia Stock market], since Colombia is currently part of the integration of the stock market with Chile and Peru. So far the Government has not defined the treatment of such investments. This amendment may not affect the international direct investment current regime.