Avoid theese mistakes when bringing money to Colombia - Expats & investors guide 2025
Introduction
We live in a globalized world, but moving large sums of money across borders can still feel like stepping back in time. While platforms like PayPal or Payoneer make small transfers effortless, handling major capital for investments, retirement plans, or business ventures in Colombia is a different story. Hidden fees, bureaucratic hurdles, and legal risks can turn your dream investment into a nightmare.
Colombia welcomes foreign investors, but navigating its currency regulations is no walk in the park. A single misstep could lead to fines of up to 200% of your improperly reported investment (yes, you read that right!). This guide reveals the critical mistakes to avoid and why hiring a lawyer specialized in Colombian foreign exchange law is non-negotiable.
Key Concept: Foreign Exchange Market Intermediaries (IMC)
Assuming that the capital for the incorporation of the company comes from abroad, it’s important to consider the bank commission cost for legalizing or monetizing foreign currency in Colombia. For this, it’s essential to clarify that the only legal currency in Colombia is the Colombian Peso, and in turn, the only foreign currency for which banks exchange Colombian Pesos is the US Dollar. This means that if your investment capital is in Euros, for example, you will have to make two bank exchanges through the bank, first from Euro to Dollar and then from Dollar to Colombian Peso, according to the official rates minus a commission charged by the bank for each Dollar converted.
When transferring money to Colombia—whether through a broker, personal bank account, or corporate account—all investments must be processed through a licensed Foreign Exchange Market Intermediary (IMC). These include banks, brokers, or financial institutions.
While IMCs help file exchange declarations with Colombia’s Central Bank (Banco de la República), the legal responsibility falls solely on you, the investor. Mistakes in these declarations can trigger audits, penalties, or even visa complications. Let’s break down the top errors we see at Start In Colombia
Mistake #1: Misreporting the Purpose of Your Investment
A common error occurs when an investor declares one specific amount as a real state investment bur then use part of the funds for personal expenses or unregistered business activities. Months or years later, the Central Bank identifies the discrepancy during an audit. Penalties can reach 200% of the misreported amount. To avoid this, ensure every transfer aligns with its declared purpose. Different rules govern real estate purchases, corporate investments, loans, or equipment imports. Establishing a corporate vehicle (e.g., an LLC) helps manage funds in a clever way avoinding incurring in fines with the Central Bank.
Mistake #2 Overlooking Exit Strategies for Repatriating Profits
Another frequent mistake involves selling a property for $800,000 and receiving payment offshore to avoid Colombian taxes. This violates the requirement to repatriate all proceeds through Colombia’s financial system. Consequences include visa revocation, legal barriers to future investments, and tax audits. Always repatriate proceeds through an IMC and structure exits with legal guidance to optimize tax efficiency.
Mistake #3 Underreporting Transaction Values in Legal Deeds
To reduce notary fees, some investors declare a property’s sale price below market value. Despite Colombia’s 2018 law mandating sworn declarations of actual values, this practice persists. Underreporting inflates capital gains taxes and creates discrepancies that hinder lawful fund repatriation. Always declare the true transaction value and consider using trusts (fideicomisos) to separate legal ownership from economic benefits.
Mistake #4 Using remittance platforms for Investment Capital
Transfers via PayPal or Wise are classified as personal remittances, not registered investments. This renders funds ineligible for visa applications and unprotected for repatriation or tax purposes. Exclusively use IMCs for investment-related transfers. If errors exist, reclassify past remittances as loans or capital injections with legal support.
Mistake #5 Failing to verify IMC documentation
IMCs occasionally submit forms with typographical errors (e.g., misspelled names or incorrect IDs). These errors disassociate the investor from their capital, leading to visa denials or frozen funds. Always request copies of filed declarations and engage legal experts to audit paperwork.
The Necessity of Specialized Legal Counsel
Colombia’s foreign exchange laws are highly technical, and few lawyers specialize in this field. Errors in compliance risk penalties exceeding your initial investment and jeopardize residency status. At Start In Colombia, we design custom corporate structures (e.g., LLCs, trusts), audit documentation for errors, and negotiate with the Central Bank to resolve disputes.
Conclusion
Colombia’s investment opportunities are vast, but its regulatory framework demands meticulous adherence. By avoiding these mistakes and partnering with legal experts, you protect your capital and ensure long-term success.
Act Now: Schedule a consultation to review your investments, audit past transfers for compliance risks, and secure your financial future in Colombia.