GUIA_LEGAL_CHAPTER_2_FOREIGN EXCHANGE.pdf

TO DOING
BUSINESS IN
COLOMBIA
LEGAL
GUIDE

This document reflects the valid Colombian
legislation at the date of its development and it seeks
to provide general and basic information of the
Colombian law. This message does not represent or
replace legal counsel of a specific or particular
matter. Such legal counsel must be obtained from
specialized legal services. To that effect, we suggest
that you contact any of the law firms that can be
found in the Investor’s Services Directory located in
the webpage of ProColombia
LEGAL
GUIDE
TO DOING BUSINESS
IN COLOMBIA
www.procolombia.co

FOREIGN EXCHANGE
AND INTERNATIONAL
INVESTMENT REGIME

Colombia has a foreign exchange regime regulated by
the Board of Directors of the Colombian Central Bank.
The Superintendence of Companies and the Colombian
Tax and Customs Authority (DIAN) jointly supervise
compliance to this regime, depending on the nature of the
operation, both with the power of imposing penalties or
fines. The Colombian Government is the regulator of the
international investment regime.
Foreign exchange regime is applicable to both residents
in the country as well as those who do not reside in
Colombia but carry out foreign exchange operations.
For the purpose of the foreign exchange regime, are
considered as residents in Colombia national individuals
or foreigners that spent more than 183 days continuous
or discontinuous in a period of 365 days, private or
publics entities and corporations domiciled in Colombia
and branches of foreign entities incorporated in
Colombia. There are considered as nonresidents, those
that do not meet the mentioned criteria.
The foreign exchange regime is comprised by all the
currencies that enter and outcome the country or the
maintenance by residents of currencies abroad of
Colombia and is divided in two markets (i) foreign
exchange market and (ii) the non-regulated market or free
market.
The foreign exchange market consists of all foreign
currencies or exchange transactions that must be
transferred through authorized Intermediaries of the
Foreign Exchange Market, or compensation accounts.
Additionally, the currencies that do not need to be
transferred through the foreign exchange market, but are
voluntarily transferred through it, are also considered part
of the foreign exchange market.
All the transactions that are executed through the Foreign
Exchange Market must be registered with the Central
Bank filing the required information in the relevant
foreign exchange return either through an Intermediary
The Colombian foreign exchange regime is free,
what implies that there are no restrictions for
currency negotiation and there is a flexible
exchange regime and that the formalization of
those transactions is not subject to prior
authorization by any authority. The Colombian
foreign exchange regime has determined a series of
reporting or registration procedures and obligations
for some specific exchange operations under
foreign exchange control thus, to have statistics
regarding the entrance and outcome of foreign
currencies to the country, accurate registration of
international investments, economic statistics,
among others.
1.
2. There is an obligation to perform any payment
(“channel” is the way the Colombian foreign
exchange regime define the payment performed
through the foreign exchange market) foreign
currency through the foreign exchange market
(either through purchase or sale foreign currency
with Intermediaries of the Foreign Exchange
Market or using a bank account opened abroad of
Colombia and registered as a compensation
account before the Colombian Central Bank
owned by the resident) for the following foreign
exchange operations, under foreign exchange
control:
• Foreign investment in Colombia and
Colombian investment abroad and their
profits.
• Imports of goods .
• Exports of goods.
• Foreign loans (active and passive) and
inherent financial costs.
• Warranties in foreign currency.
• Derivatives operations.
• Financial investment and/or in assets located
abroad of Colombia paid with currencies of
the foreign exchange market.
3. In general, obligations resulting from transactions
subject to registration may not be offset by each
other, nor by any other type of obligations (except
for some important expressly exceptions, as in the
case of derivatives).
4. The registration of foreign investment at the Central
Bank grants the holder, among others, “exchange
rights” including the right to remit abroad the
capital invested and its profits. The remittance
amount results from the sale or liquidation of them
as well as the right to reinvest.
5. Colombian residents may obtain loans in foreign
currency from nonresidents, or Intermediaries of the
Foreign Exchange Market, and may also grant
loans to any nonresident. Foreign Loans may be
agreed, disbursed and paid in foreign currency or
in local currency (COP).
Chapter 2
Five things that should be known about the foreign
exchange regime:
FOREIGN EXCHANGE
AND INTERNATIONAL
INVESTMENT REGIME
2.1 Foreign Exchange Market
02

The free market consists of all other operations that are
not under the obligation to be transferred through the
foreign exchange market, such as payments for services
in foreign currency, and transfer of foreign currency for
other types of transactions viz. donations.
This type of transaction does not have to be reported to
the Colombian Central Bank or transferred using the
foreign exchange market.
Nonetheless, these could be voluntarily transferred
through the foreign exchange market through the means
established above, reporting to the intermediary of the
exchange market, or to the Central Bank directly.
Depending on the way it is transferred, to file the
correspondent foreign exchange return of services,
transfers and other concepts in the operation.
During 2021, the FX Information System started
operating. It seeks to gradually replace the Statistical
Exchange System (SEC for its acronym in Spanish) the
first phase aimed at enabling a module for registration of
international investments, not paid in foreign currency.
During 2023 is enabling the second phase modules for
foreign exchange return, compensation accounts and
external indebtedness performed in compensation
accounts and the third phase will be aimed at enabling
a module for other exchange operations.
of the Foreign Exchange Market, or by submitting this
information directly to the Central Bank, that is, if
transferred through a compensation account. The
registration requirement allows the Central Bank to
constantly monitor balance of payments for statistical
purposes and to administrate the registration of certain
foreign exchange transactions.
Pursuant to foreign exchange regime, the following
transactions must be transferred through the foreign
exchange market:
• Foreign investments in Colombia and Colombian
investments abroad and their profits.
• Import of goods.
• Export of goods
• Foreign loans (active and passive) and inherent
financial costs.
• Warranties in foreign currency.
• Derivatives transactions.
• Financial investment and/or in assets located abroad
of Colombia paid with currencies of the foreign
exchange market.
• That by the date of the operation, all requirements
demanded by the investment regime for the
corresponding international investment are met.
• That the investor is or not a Colombian resident, as
per the foreign exchange criteria
• That the assets are established in the law as permitted
destinations for foreign investment,
• That the investment is paid in foreign currency or
acquired by virtue of an act, contract or lawful
operation, and
• That is demonstrable that the resources are effectively
addressed to an investment.
2.2 Nonregulated Market or Free Market
2.3 New FX Information System –
International investment registration
system and compensation accounts
2.4 International Investment
2.4.1 Foreign Investment in Colombia
International investments comprise (i) investment of
resources from abroad, that is, foreign investments in
Colombia and (ii) investment of Colombian resources
abroad (Colombian investments abroad).
In order to qualify an operation as an international
investment, it shall be taken into account:
Foreign investment in Colombia consists of foreign direct
investments, and portfolio investments.
Foreign investors in Colombia and Colombian investors
abroad shall register their investments before the Central
Bank. In the case of capital foreign investors, it is
necessary the investors assign a representative in the
country.
Registration of foreign capital investment in the Central
Bank is automatic when is paid in foreign currency duly
transferred using the foreign exchange market and with
the filling of the International Investment Foreign
Currently, with the phases enabled, the system users must
process the registration, substitution and cancellation of
international investments, unless it must be processed by
foreign exchange return or special request and
registration, cancelation and monthly reports of the
compensation accounts. To carry out operations in this
system, the actors must create a user account, it will be
the same to report any type of transaction. With the
enabling of this phase, the identifications of the non-
residents are unified (under the past regime it was
differentiated the identification of non-residents related to
foreign debt transactions of the international investors).
Certain requests must be processed as "Special
Requests". These are petitions directly addressed to the
Central Bank, since they cannot be made through the
New FX Information System. These type of requests
include: Unification of identifications, registration for
capitalization of endorsements and guarantees informed
by form No. 8, registration of capital recomposition,
among others.
03

• Liquidation of the Colombian company subject to
the foreign investment.
• Capital reduction, that derives in the reduction of
the number of shares, or that of a branch.
• Re-acquisition of shares or quotas.
• When the foreign investor becomes a resident.
• Liquidation of the investor (in the event of a legal
entity).
• Death of the foreign investor (in the event of a
natural person).
• Total or partial termination of the agreement
without any participation in the equity.
• Liquidation of the Colombian company subject to
the foreign investment.
• Capital reduction, that derives in the reduction of
the number of shares, or that of a branch.
• Re-acquisition of shares or quotas.
• When the foreign investor becomes a resident.
• Liquidation of the investor (in the event of a legal
entity).
• Death of the foreign investor (in the event of a
natural person).
• Total or partial termination of the agreement
without any participation in the equity.
2.4.1.1.2. Cancellation of Foreign Direct
Investment
Substitution of foreign investment can be understood as a
transfer of ownership of foreign investment to other
foreign investors, as well as change in the destination or
company receptor of the investment. This procedure will
only apply when there is a previous registration of the
investment.
The substitution of foreign investment must be registered
before the International Exchange Department of the
Colombian Central Bank by the grantor or the new
investor, or through their respective agents or legal
representatives, or by the legal representative or attorney
in fact of the Colombian company where the investment
is registered. This requires filing the information through
the New FX Information System within the following six
(6) months of the relevant transaction. These terms will be
counted from the date of the operation.
If the substitution is derived from a reorganization
process, filing before the Central Bank requires
submitting the information through the New FX
Information System within the following six (6) months for
operations carried out after July 26th 2017.
The cancellation, whether total or partial, of a foreign
direct investment must be reported by the investor or his
agent to the International Exchange Department of the
Colombian Central Bank submitting form the Investment
Cancellation Return through the New FX Information
System, within the next following six (6) months for
operations carried out.
If cancellation of the foreign direct investment is
consequence of corporative re-organization, (mergers
and spin-off) the Investment Cancellation Return, shall be
submitted to the Central Bank, through the New FX
Information System. The period for submitting this form is
within the following six (6) months for operations carried
out.
Please find listed below the reasons for cancellation of
international investment in Colombia, among others:
• In Colombian companies: A company’s capital
contribution by means of the acquisition of shares,
quotas in limited liability companies, or convertible
bonds.
• The acquisition of shares registered in the stock
market (RNVE per its acronym in Spanish) when
acquired with the intention to remain.
• In Colombian trusts: The acquisition of rights in trust
agreements with trust companies, under the
inspection and surveillance of the Colombian
Financial Superintendence.
• In real state: The acquisition of real estate, directly or
by means of trust agreements, or securities issued in
connection with a real state securitization, or real
estate investments trusts (REITs).
• Contributions in agreements without participation in
the equity: Contributions to joint ventures and
concessions, among other type of collaboration
agreements, administrative services, licenses or
agreements that generate technology transfer. As
long as the latter do not represent a contribution to a
company´s capital and the income obtained from
such investment is related to the company´s profit.
• In Colombian branches: Assigned Capital or
Supplementary investment to the assigned capital of
the branches.
• In participation in Private Equity funds: Acquisition of
participations in Private Equity funds.
• Intangible assets: Acquired with the purpose of being
used for the reception of an economic benefit in the
country.
¹ https://www.banrep.gov.co/sites/default/files/guia-diligenciar-declaracion-de-registro-de-inversiones-internacionales_1.pdf
The foreign direct investment is formalized in one the following
assets:
Foreign Direct Investment could be made by virtue of any
act, operation or lawful contract or with the payment of
the investment with currencies, duly transferred using the
foreign exchange market.
2.4.1.1 Substitution of Foreign Direct
Investment
2.4.1.1 Foreign Direct Investment
Exchange Return including the minimum required
information for this operation.
For the registration of the other investment modalities, it is
required to submit the Foreign Investments Registry Return
before the Central Bank through the New FX Information
System. It is important to mention that documentation
supporting the operation is not required, since it may be
subject to control of the authorities.
If the initial foreign direct investment in Colombia is
derived from corporate re-organization (mergers and
demergers), the Foreign Investments Registry Return shall
be submitted to the Central Bank through the New FX
Information System.
04

2.4.1.2 Portfolio Investment
2.4.1.3. Special Foreign Exchange Regime
2.4.1.3.1. General description
Advances for future capitalizations, carried out by
non-residents in Colombian companies, are considered
foreign loans for foreign exchange purposes. They must
be informed through the correspondent form for "Inform
of Foreign loan granted to residents" before an
Intermediary of the Foreign Exchange Market, prior to, or
simultaneously with disbursement. Additionally, they must
be informed by Form 43 "Advances for future
capitalizations”.
Disbursement and payment of these operations will be
subject to rules of foreign loans established in the foreign
exchange regime. In the event the nonresident capitalizes
the resources, the Foreign Investments Registry Return
shall be submitted before the Central Bank through the
New FX Information System.
With the modifications incorporated by the Colombian
Central Bank on 2023 [applicable as from November],
the forms for registration of a foreign loan must be
defined by any intermediary of the foreign exchange
market, removing the Form 6 of the Colombian Central
Bank.
Advances for future capitalizations carried out after July
26th, 2017 must have been capitalized within the twelve
(12) months after the channeling of the advance, and
also reported the modification through the respective
International investment Foreign Exchange Return.
If the capitalization is not completed in the deadline
stablished between the parties, the amounts received
shall be reimbursed through an intermediary of the
exchange market, or through a compensation account of
the company complying with the international
indebtedness foreign exchange proceedings.
In case of as per the foreign exchange proceedings
applicable to the date of formalization on the incomes as
advances for future capitalization are registered under
the international investment proceedings (different of the
proceedings described in section 2.4.1.1.3.) or for the
acquisition to other type of assets, for the latter, the
2.4.1.1.3.
Advances for Future Capitalizations
2.4.1.1.4.
International investment not formalized
There is a special foreign exchange regime applicable to
branches of foreign companies that engage in activities
related to the exploration and exploitation of oil, natural
gas, carbon, ferronickel, and uranium; or that provide
• The termination of the fiduciary business.
• Total or partial liquidation of the private
investment fund.
• Sell the investment to a resident (transfer or
allocation).
• Sell the real estate property.
• Corporate reorganization (mergers or spin-off).
International Investment Foreign Exchange Return must be
submitted, including the exchange number 4565
“Foreign investment not completed” based on the amount
in Colombian pesos initially received. The remittance of
the funds abroad is not subject to a deadline. This
proceeding is also applicable in case of the excess of
amounts formalized as international investment.
The remittance of a not formalized international
investment abroad may be subject to the foreign
exchange deposit when is enforceable (currently at the
rate of 0%), thus is not an applicable proceeding.
05
The foreign exchange regime regulates registrations
relating to the various forms of portfolio investments,
de ned as those made in securities registered with the
National Securities and Issuers Registry (“RNVE” as per
its acronym in Spanish), the participation in collective
portfolios, as well as in securities listed in the securities
quotation systems abroad.
As well as for Foreign Direct Investments, the portfolio
investor shall require a representative in Colombia that is
considered the administrator of the investment, an liable
of the compliance of the foreign exchange, tax,
regulatory and any other responsibility that may include
the correspondent of inspection, review and control
entity. Only the following can be administrator of the
investment for foreign portfolio i) the stockbroker
companies, ii) trust companies or investment
management companies (all the foregoing controlled
and examined by the Superintendence of Finance of
Colombia).
The registration for foreign capital investment made by
channeling currency will be carried out automatically, so
long as the minimum data needed has been provided for
the foreign exchange operations regarding international
investments (Exchange Return).
Registration of foreign capital portfolio investment
without currency channeling shall be understood as
made in accordance with an account entry in the
centralized local deposit of securities, in the cases
established in the exchange regimen and with the
Portfolio International Investment Statistics Report [“IPEXT
as per its acronym in Spanish]

• Transfer of profits of the investments.
• Reinvestment of the profits of the investment.
• Transfer of the amounts received as consequence
of (i) sale of the investment, (ii) liquidation of the
investment or (iii) the reduction of the capital of
the company.
• Capitalization of amounts with exchange
remittance rights product of obligations derived
from the investment.
• To receive outside the country, directly by the main
office, the profits of the sales.
• Celebrate and make payments and contracts in
foreign currency in the country provided that the
money is a consequence of their operations; and
• Record as investment supplementary to the
assigned capital, capital available in the form of
goods and services, according to the regulations
of the Colombian Central Bank (besides the
foreign currency availabilities).
Under this special regime the branch shall not be able to
complete operations in the exchange market except in the
following cases:
These operations, as well as the refund of money aimed
at assigned or supplementary capital of branches of
foreign companies in the sector of hydrocarbons and
mining, shall be completed through an intermediary of the
exchange market, to whom the International Investment
Foreign Exchange Return with the minimum required
information for this operation must be submitted.
Admitted and with current operations in the special
exchange regime, branches of foreign companies that
want to resign to the application of the regime, must
address a written communication to the Foreign Exchange
Department of the Colombian Central Bank.
The document must express the desire to leave the special
When the branch is liquidated.
In the case of local sales of oil, gas, carbon,
ferronickel, and uranium or services
inherent to the hydrocarbon sector.
Other sums received in legal currency
related to its operation, including the
resources of section a and b explained
above, but not limited to them.
services exclusively to the hydrocarbon sector duly
authorized by the Ministry of Mining and Energy.
Branches of foreign companies in the sectors above,
belong by default to the special regime from their due
incorporation. Branches of foreign companies aimed at
the supply of services related to hydrocarbons only
belong to the special regime once the “Certificado de
dedicación exclusiva” (Certificate of exclusive activity)
has been issued by the Ministry of Mining and Energy
which shall be renewed each year.
The special foreign exchange regime provides:
exchange regime, according to the form provided by the
Colombian Central Bank. Once the letter has been
delivered to the Colombian Central Bank, the branch
office will not be admitted into the special exchange
regime for the following ten (10) years and therefore, the
branch must operate under the general exchange regime.
Branches of foreign companies subject to the special
hydrocarbons and mining exchange regime must submit
Registry of Supplementary Investment to the Assigned
Capital Return and the Patrimonial Reconciliation Special
Regime, to the Foreign Exchange Department of the
Colombian Central Bank, through the New FX Information
System. This proceeding is not subject to a deadline.
For these branches, the term to report the update of the
equity accounts will be six (6) months as of December
31st of the corresponding fiscal year, that means on June
30 of each year. This proceeding must be complied throu-
gh the New FX Information System.
The registration of the Supplementary Investment to the
Assigned Capital for each year, can be filed to the Colom-
bian Central Bank at any time.
https://www.banrep.gov.co/es/operaciones-cambiarias/declaracion-registro-isca
The foreign direct investment duly registered at the
Colombian Central Bank grants the following exchange
rights to the investor:
Colombian investments abroad are defined as shares,
quotas, rights or other participations in the capital of
companies, branches or any type of company, in any
proportion, located outside of Colombia, acquired by a
resident by paying in foreign currency or by virtue of an
act, contract or legal operation.
In general, to register the investments of Colombian
06
2.4.1.3.2 Foreign Investment
Registration Update
2.4.1.4. Rights of Foreign Investors –
Foreign Investment in Colombia
2.4.2.
Investments of Colombian Capital Abroad

2.4.2.2. Substitution of Colombian
Investment Abroad
2.4.2.3. Cancellation of Colombian
Investment Abroad
The cancellation, in whole or in part, of Colombian
investment abroad, must be reported by the investor or his
agent to the International Exchange Department of the
Colombian Central Bank, by filing the Cancellation
Investment Return through the New FX Information System,
within the following six (6) months after the cancellation of
the investment operations.
If cancellation of the Colombian investment abroad is
derived from corporate re-organizational processes, a
Cancellation Investment Return, shall be submitted within
the same period provided above, through the New FX
Information System indicating that the cancellation was
caused by a re-organizational process.
2.4.2.4. Non performed Colombian
Investment Abroad
When the Colombian investment abroad was not carried
out, the Colombian investor shall return to the country the
amounts transferred by this concept. For these purposes,
the operation must be transferred through an intermediary
of the exchange market, to whom the International
Investment Foreign Exchange Return with minimum
required information for this operation must be submitted.
Residents in foreign companies, constitute foreign loans
for foreign exchange purposes that must be informed with
the correspondent form "Inform of foreign loan granted to
nonresidents". That is, before the Intermediary of the
Foreign Exchange Market, prior to or simultaneously with
the disbursement, with purpose 44 “Advances for future
capitalizations”. Sums of money derived from this
operation will be subject to rules applicable to foreign
loans.
the forms for registration of a foreign loan must be
defined by any intermediary of the foreign exchange
market, removing the Form 7 of the Colombian Central
Bank.
In case the resources of the active foreign debt are fully or
partially capitalized, the registration of the Colombian
investment must be requested through the New FX
Information System.
If the resources are not fully or partially capitalized, the
income of currencies must be made through the foreign
exchange market with the International Indebtedness
Exchange Return.
2.4.2.1.
Advances for Future Capitalizations
residents abroad with the Colombian Central Bank, the
investor must undertake the remittance of funds through an
intermediary of the exchange market. The International
Investment Foreign Exchange.
Return with minimum required information for this
operation must be submitted to the Central Bank,
otherwise the title holder of the compensation account
which receives the funds can report it on its monthly form.
In the specific case of investment without channeling
foreign currencies, the investor must file the Foreign
Investments Registry Return before the Central Bank
through the New FX Information System.
Substitution of Colombian investment abroad means the
change of holders by other resident investors and/or the
change in the receiving company (company, branch or
any type of company). The substitution of the Colombian
direct investment abroad may conduct to a total or
partial cancellation of the initial registration and the
issuing of a new registration. For this reason, the investor
shall submit the information to the Central Bank through
the New FX Information System.
The substitutions of Colombian investments abroad,
derived from corporate re-organization processes, shall
be registered through the New FX Information System.
The time for submitting the registration of the substitution
of the Colombian investment is within the following six
(6) months for operations carried out after July 26th,
2017.
In the case of substitution of holders of the investment the
registration must be submitted by the assignor investor
and the assignee and his representatives.
https://www.banrep.gov.co/sites/default/files/guia-diligenciar-declaracion-de-regist
ro-de-inversiones-internacionales_1.pdf
Colombian residents interested in financial investment or
in assets abroad shall complete the amounts for these
operations through the exchange market except when
such operations are completed abroad with currencies
not subject to the exchange market. This investment mode
includes the following (by way of example): (i) purchase
of securities abroad, (ii) purchase abroad with discount of
the total or partial amount of private external obligations,
2.4.2.5. Financial Investment or in
Assets Abroad
07

The international exchange regime allows Colombian
residents and intermediaries of the exchange market, to
2.6.2 Loans Granted to Nonresidents
(Active Credits)
2.6.1. Loans Granted to Residents
(Passive Credits).
Residents and intermediaries of the exchange market may
obtain credits in foreign currency from: (i) other
intermediaries of the exchange market and (ii) from
nonresidents. It is also possible for them to obtain other
resources in foreign currency through international capital
10
The breach of any of the obligations of the international
investment’s regime, or its extemporaneous fulfillment
constitutes an infringement to the international exchange
regime and may cause sanctions by the Superintendence
of Corporations, that are legally stablished at the rate of
maximum the 100%, however normally would not exceed
the 5%.
2.5 Infringement of the International
Investments Regime
Foreign loans are classified in active loans and passive
loans. The first of them corresponds to loans granted by
non-Colombian residents to Colombian residents and the
second of them, credits granted by residents to
nonresidents.
The entrance and exit of foreign currency in connection
with foreign indebtedness must be completed through the
foreign exchange market and registered before the
Central Bank before its disbursement. The breach of this
obligation may be considered an infringement of the
foreign exchange regime. In case of indebtedness
derived from foreign trade operations or relating to the
use of compensation accounts, such a breach may cause
the imposition of penalties by the Superintendence of
Corporations or by the Dirección de Impuestos y Aduanas
Nacionales (DIAN) when foreign loans derive from
foreign trade transactions or involve an individual
Colombian resident.
2.6 Foreign Loans
external public debt and bonds, and securities of external
public debt.
The Colombian residents that acquire those investments
using currencies of the foreign exchange market, the
registration of the transaction before the Colombian
Central Bank is automatic with the filling of the
International Investment Foreign Exchange Return and
those investments and its profits are obliged to be
repatriated through the foreign Exchange market upon
liquidation.
In the event of acquisition of such investments with
currencies of the free market, the transaction is not
registered before the Colombian Central Bank and is
exempt of the liability of repatriation through the foreign
Exchange market.
markets. These loans could be stipulated, disbursed and
paid in legal or foreign currency, as agreed by the
parties.
Foreign loans must be reported to the Colombian Central
Bank by means of filing the correspondent foreign loan
registration “Inform of Foreign loan granted to residents”
with an Intermediary of the Foreign Exchange Market.
Additionally, a copy of the relevant loan agreement must
be submitted. Disbursement of the loan may be registered
through Form for “Inform of Foreign loan granted to
residents” if the registration of the loan and the
disbursement takes place at the same time.
the forms for registration of a foreign loan must be defined
by any intermediary of the foreign exchange market,
removing the Form 6 of the Colombian Central Bank.
On the other hand, the remittance of funds related to
foreign currency for the payment of capital or interests of
debt must be reported to the Colombian Central Bank by
means of filing the International Indebtedness Exchange
Return with the minimum required information for this
operation.
For the registration of the foreign indebtedness report,
when the foreign exchange loans have been granted by
nonresidents who have not been previously assigned a
code by the Colombian Central Bank, the resident must,
beforehand, request the code to the foreign exchange
intermediary. The latter will require the documentation
that supports the financial references, and compliance of
regulations for the prevention of money laundry in the
nonresident´s country.
For the disbursement and the transfer of funds of credits in
foreign currency obtained by residents, the law provides
a requirement: previous to each disbursement, there will
be an establishment of a deposit in the Central Bank
through the intermediary of the exchange market involved
in the credit, in the conditions and time provided by
Central Bank. Currently, the deposit for external
indebtedness is 0%, which means it's non-applicable in
practice.
The law provides particular rules regarding loans
disbursed and/or payable in pesos, including that any
transfer of funds must be completed using a bank account
opened in Colombia by the foreign entity or individual,
with the exclusive purpose of being used in foreign loan
transactions.
08

2.6.4 Other proceedings related to the
foreign loans
Foreign loans can be divided (one loan into different
The amendments to the Informs of Foreign loans can be
performed by any cause, including the modifications in
the conditions of the loans, mistakes in the registration,
among others.
In these cases it will be necessary to file with an
intermediary of the exchange market, a new “ Inform of
foreign loans granted to resident” or an “ Inform of
foreign loans granted to nonresident” according with the
forms defined by the relevant intermediary of the foreign
exchange market ticking the box “modification.”
In this form it will be necessary to include all information
related to the current conditions of the foreign loan,
including the initial date of registration, the identification
of the loan and the date of the modification.
Amendments of the conditions of a foreign loan may be
reported at any time.
2.6.3. Amendments to Foreign loans
grant loans in foreign currency to nonresidents without
taking into account the term and destination of the
currencies (please note that it is permitted to grant loans
in foreign currency to other residents, unless the lender is
an intermediary of the foreign exchange market). These
credits could be stipulated, disbursed and paid in legal or
foreign currency, as agreed by the parties.
The loan granted must be reported to the Colombian
Central Bank at the same time as the disbursement, by
filing the correspondent form for “Inform of foreign loans
granted to nonresidents” upon the remittance of the funds
from Colombia. Additionally, a copy of the relevant loan
agreement must be submitted.
the forms for registration of a foreign loan must be defined
by any intermediary of the foreign exchange market,
removing the Form 7 of the Colombian Central Bank.
Any other movement associated with the credit, such as
payment of the capital or interest of the loan, must also be
reported to the Colombian Central Bank by submitting the
International Indebtedness Exchange Return with the
minimum required information for this operation.
The law provides particular rules regarding loans
disbursed and/or payable in pesos, including that any
transfer of funds must be completed using a bank account
opened in Colombia by the foreign entity or individual,
with the exclusive purpose of being used in foreign loan
transactions.
loans), consolidated (integration of many loans in one
sole registration), annulled with they have not being
disbursed, or substituted in case of a formalization of the
new loan with the purpose of payment of another foreign
loan registered in the same currency.
2.7 Import of Goods
Colombian residents must conduct, through the foreign
exchange market, the payment of their imports. For these
purposes, they must be transferred through an
intermediary of the exchange market, to whom the Import
of Goods Exchange Return with minimum required
information for this operation must be submitted, unless
the operation is transferred through a compensation
account, in which case the monthly reports of movements
of the compensation account remitted through the System
of Exchange Information of the Colombian Central Bank
is enough.
Imports of goods may be paid with currencies of the free
market as described above, funds in legal currency paid
to a general-purpose bank account opened by the
nonresident (seller), credit cards issued in Colombia or
abroad, debit cards or transfer of funds. There are also
allowed the payments using residents and nonresidents
aggregator payment service providers.
Currencies for the payment of the import shall be
transferred by the importer and it shall be paid directly to
the creditor, its assignee, or residents and nonresidents in
charge of collection or international payments. Residents
cannot canalize payment of importations done by others.
For foreign trade operations that are paid through
resident aggregator payment service providers, it will not
be required that the subjects that are related as importers
in the information of the Import of Goods Exchange Return
match the information contained in customs documents.
It is important to mention that importers may channel
through the exchange market, payments amount higher or
lower than the value of the nationalized merchandise,
provided that there are justified reasons such as,
damaged merchandise, and prompt payments and
discounts by concept of defects in the merchandise.
In case of situations that avoided importers the
observance of the obligation of payment abroad, such as
fortuitous case or force majeure, inexistence etc., the
channeling through the exchange market shall not be
required. Without prejudice of the above, the importer
shall keep the documentation supporting such facts in
case those are required in the future by the competent
authority.
On the other hand, it is important to mention that is
possible to: (i) make early payments of imports when the
09

2.9.2 Warranties in foreign currency
granted by non-residents.
Residents and nonresidents may grant sureties and
warranties in foreign currency generally to secure any
obligation in Colombia or abroad. The intermediaries of
the foreign exchange market may also do so to ensure
those operations that the foreign exchange regime allows
securing.
2.9 Warranty in foreign currency
The foreign exchange regime includes the execution of
warranties in foreign currency as operations of
mandatory channeling though the foreign exchange
market and in this sense, such operations must observe the
exchange regulations.
Colombian residents must channel foreign currency
received from their exports through the foreign exchange
market as an advanced payment for the export, when
they are transferred through the foreign exchange market
before the shipment of the goods.
It is included the cash received directly from the foreign
buyer, that must be transferred through the foreign
exchange market within the six months following the date
of receipt.
The export of goods is an operation of mandatory
completion through an intermediary of the exchange
market, to whom the Export of Goods Exchange Return
minimum required information for this operation must be
submitted, unless the operation is transferred through a
compensation account, in which case the monthly reports
of movements of the compensation account remitted
through the System of Exchange Information of the
Colombian Central Bank is enough.
Exports of goods may be paid with currencies of the
foreign exchange market as it is described above, in
Colombian pesos transferred from a general-purpose
bank account opened by the nonresident (buyer), credit
cards owned by the buyer abroad. There are also
allowed the reception of payments using residents and
nonresidents aggregator payment service providers.
Currencies must be transferred through the foreign
exchange market by the exporter. Such currencies may
have their origin in the debtor, its assignee, or those in
charge of operations of international payments. Similarly,
this is true for residents and nonresidents.
For foreign trade operations that are paid through
resident aggregator payment service providers, it will not
be required that the subjects that are related as exporter
in the information of the minimum data (payment service
providers) match the information contained in customs
documents.
In cases where some situations had avoided exporters the
meeting of the obligation of the reimbursement of
currencies (force majeure, fortuitous events, inexistency,
etc.) such channeling shall not be mandatory. In any
case, it is necessary to have all required documentation.
2.8 Export of Goods
currencies are transferred through the exchange market
before the shipment of the merchandise and (ii) to obtain
financing of the imports after the shipment without the
requirement of reporting such operations to the Central
Bank as external debt operations.
In the case of credits in foreign currency obtained by
importers of the intermediaries of the exchange market, or
of nonresidents’ payment of their obligations, it shall be
necessary to report such operation to the Central Bank as
a passive external indebtedness.
It is important to mention that exporters may channel
through the exchange market, payment amounts higher or
lesser to the value of the nationalized merchandise
provided that there are justified reasons such as,
damaged merchandise, and prompt payment and
discounts by concept of defects in the merchandise.
In this kind of operations, the advanced payments before
the shipment of the goods are allowed, as well obtaining
financing and pre-financing of exportations after the
shipment.
2.9.1 Warranties in foreign currency
granted by Colombian residents.
Colombian residents are permitted to grant endorsements
and warranties in foreign currencies to back-up any
obligations abroad. These operations must be informed to
the Colombian Central Bank only in case of execution of
the warranty. Once the warranty is made effective, and
the beneficiary is a nonresident it shall be necessary that
the resident channel the respective currencies.
It is important to take into account that:
- If the endorsed one is a resident and the beneficiary
is a non-resident, once the warranty is effective, the
resident must channel the currencies with the
exchange return in the same form of the principal
obligation. The debt that is a consequence of the
execution of the warranty is considered an internal
debt and in principle must be paid in Colombian
pesos.
- If the endorsed and the beneficiary are non-residents,
once the warranty is effective, the operation must be
registered as an active passive loan by filing
exchange the correspondent form for “ Inform of
foreign loans granted to nonresident” as per the form
defined by the intermediary of the foreign exchange
market, the payment must be transferred through the
foreign exchange market, using the International
Indebtedness Return with the minimum required
information for this operation.
10

Residents and Intermediaries of the Foreign Exchange
Market may enter into derivative transactions on
commodities with authorized foreign agents.
Duly authorized Intermediaries of the Foreign Exchange
Market may also enter with residents or other
Intermediaries of the Foreign Exchange Market’ derivative
transactions on commodities stipulated in foreign
currencies.
2.10 Derivatives
Transactions related to derivatives have to be completed
through the foreign exchange market, therefore, such
operations have to be informed and registered before the
Colombian Central Bank.
Derivative transactions may be registered daily before the
Colombian Central Bank, pursuant to the regulations
provided by such entity. In some cases, such registration
is the main requirement to enable early terminations and
accelerations (close-out netting) under insolvency
circumstances (however, in other cases the registration
before an independent transaction system is also
necessary).
For derivatives executed with financial entities
incorporated in Colombian and recognized as
Intermediaries of the Foreign Exchange Market: to be a
foreign entity which has either entered with an
intermediary of the exchange control market into a master
agreement (such as an ISDA Master Agreement) with a
close-out netting clause with an FX Intermediary for the
purposes of entering into OTC Derivatives;
For derivatives executed with the rest of the Colombian
residents: (i) to be a non-financial foreign entity that has
executed Derivatives transaction in the year immediately
preceding the date of the proposed transaction in an
aggregate nominal amount exceeding USD 1 billion (USD
1,000,000,000) or to be a foreign chamber of
compensation and liquidation in case of negotiation of
the derivative in the stock market or novation of a
precedent transaction.
2.10.1 Authorization to Carry Out
Derivative Transactions on Commodities
The report, performance and restitution of these sureties
must be made through the foreign exchange market
pursuant to the proceedings provided in the regulations of
international exchanges.
Sureties or warranties granted by nonresidents do not
require any report to the Colombian Central Bank (except
for those granted by or in favor of intermediaries of the
foreign exchange market, which are subject to their own
registry rules), unless there are executed.
Likewise, warranties in foreign currency may be granted
in order to back the compliance with other sureties,
among them, those ordered by a third party other than the
secured (ordering party). The rules corresponding to the
foreign exchange regime are applicable to international
indebtedness relationships between the contracting
parties for the execution and restitution of sureties.
In the event of execution of a warranty, if the guarantor is
a nonresident in Colombia, is required to register the
transaction as a passive foreign loan, by filling the
correspondent form for “ Inform of foreign loans granted
to resident Inform of foreign loans granted to resident” as
per the form defined by the intermediary of the foreign
exchange market. Any sum related to the execution of the
warranty and its restitution, must be formalized in an
International Indebtedness foreign exchange return.
In any case of the execution of a warranty in foreign
currency is advisable to define the debt relation created
and to register an active or passive international loan
operation. It shall be reported by any of the interested
parties, at the latest at the time of execution of the
surety/warranty. For such purpose, the provisions of the
international indebtedness exchange control regime shall
be applied.
The execution and restitution of warranties in foreign
currency may be made in foreign currencies or legal
tender, as agreed by the parties. Except for declared
cases, the performance and restitution of the surety must
be made through the foreign exchange market by any of
the interested parties. This requires the supply of the
international indebtedness foreign exchange return with
the minimum information of the transaction, by the debtor
in case of a passive loan or the creditor in case of an
active loan.
It is important to note that no foreign loan transaction may
be generated between branches of foreign companies
and their parent companies arising from the execution of
sureties or warranties.
Branches of foreign companies belonging to the special
foreign exchange regime may be secured. Or they may
be beneficiary of sureties or warranties in foreign
currency, granted by intermediaries of the foreign
exchange market, residents and nonresidents. Resources
in foreign currencies resulting from the execution or
restitution of these sureties or warranties must be drafted
or received by the non-regulated market accounts of the
branches, or the accounts abroad of their main offices
abroad.
The capitalization of endorsements and warranty bonds
registry reported with Form No. 8 "Report of
endorsements and warranty bonds in foreign currency"
must be made through a Special Request.
11

2.11.1 Registration of the Compensation
Accounts in the Central Bank
Colombian residents and Intermediaries of the Foreign
Exchange Market may enter into financial derivative
transactions with other Intermediaries of the Foreign
Exchange Market and agents abroad duly authorized
and described in section 2.10.
Authorized intermediaries of the Foreign Exchange
Market may enter with residents, or other Intermediaries
of the Foreign Exchange Market’ financial derivative
transactions stipulated in foreign currency.
In the event of financial derivative transactions entered
into between residents or Intermediaries of the Foreign
Exchange Market and authorized foreign agents,
compliance may be financial or effective and the payment
of the transaction shall be in legal tender or in foreign
currencies, as agreed by the parties.
In case of financial derivative transactions begun among
residents and Intermediaries of the Foreign Exchange
Market, or between Intermediaries of the Foreign
Exchange Market, compliance may be financial or in
cash, and the payment shall be in legal tender. For
derivatives of cash compliance peso-foreign currency or
foreign currency-foreign currency, the payment shall be
made with the exchange of legal tender and/or foreign
currencies, as applicable.
Payments corresponding to premiums, fees, margins,
collateral deposits and other revenues and expenses
relating to derivative transactions entered into between
residents and Intermediaries of the Foreign Exchange
Market, or between them, shall be in legal tender.
For transactions between residents and authorized
foreign agents, such payments may be made in legal
tender or foreign currencies, as agreed by the parties.
Derivative transactions, in foreign currencies, commenced
by Intermediaries of the Foreign Exchange Market and
branches of the hydrocarbons and mining sector subject
to the special regime, must be paid as follows:
2.10.2 Authorization to Enter into
Derivative Transactions
Registration of the compensation accounts in the Central
Bank shall be done as follows:
- Directly by the interested person, with the registration
of compensation accounts through the System of
Exchange Information of the Colombian Central Bank
- At least, within the month following to the moment
where the first operation through the exchange
market took place or that of the payment of the first
operation between residents.
In the event of derivative transactions on commodities with
authorized foreign agents, compliance may be financial
or effective. Money obligations resulting from the
transaction may be paid in legal tender or in foreign
currencies, as agreed by the parties.
In case of derivative transactions on commodities
between Intermediaries of the Foreign Exchange Market
and residents; or, between other Intermediaries of the
Foreign Exchange Market, compliance must be financial,
and the payment in legal tender.
In the event of derivatives with effective
compliance peso-foreign currency or foreign
currency-foreign currency, the transactions
must be paid by exchange of legal tender and
foreign currency and two foreign currencies,
as applicable.
In the event of derivatives with financial
compliance, the transactions must be paid in
legal tender.
These transactions may have cash compliance when
made to hedge transactions. With the latter, these
branches have access to the foreign exchange market (in
accordance with their special regulations, namely foreign
exchange revenues from foreign investment as assigned
capital, or investment supplementary to the assigned
capital, or expenditures when they receive the product of
their sales in pesos, or the branch is liquidated) and
transactions entered into the foreign exchange.
These transactions must be made exclusively on behalf of
the branch in Colombia. Therefore, the branch may not
enter into transactions on behalf of the account of its main
office abroad, and that office may not enter into
transactions on behalf of the account of the branch in
Colombia.
Compensation accounts are savings or checking accounts
opened by Colombian residents in financial institutions
abroad of Colombia and registered with the Colombian
Central Bank, with the purpose of perform transactions
under foreign exchange control.
Incomes and outcomes in compensation accounts may be
caused in payment of obligations derived from exchange
operations, subject or not to channeling through the
exchange market. This is also true for obligations derived
from internal operations (payments in foreign currency
between residents). In any case, it is important to take into
account that through these accounts only can be used for
transactions of the owner of the bank account
2.11. Compensation Accounts
12

Once the account is registered, its holder shall inform to the Central Bank on a monthly basis, the operations done during the
month immediately previous through the monthly report of movement in System of Exchange Information of the Colombian
Central Bank, which shall be sent by electronic means.
The obligation of informing the movements of the compensation account (i) shall exist until the date of cancellation of the
compensation account and (ii) must be done without prejudice of the fact that the account had or did not have movements. The
infringement of this obligation of the lately filling of the monthly report of movement in System of Exchange Information of the
Colombian Central Bank constitutes a violation of the international exchange regime and may be subject to penalties by the
DIAN.
Additionally, the holder of the account shall report every three months to the DIAN, to meet the operations of surveillance by
this entity. This can be achieved by submitting “Información Exógena Cambiaria”. For the 4° quarter of 2023 and 1° and 2°
of 2024, the deadline of the submission of this inform will be July 2024.
The Central bank will proceed with the cancelation of the registry of the compensation account if the account does not have
any movement for twelve (12) continuous months.
2.11.2 Obligations Derived from the Registration of a Compensation Account
As a general rule, except for some very specific cases, payments in foreign currency between residents are forbidden, except
for:
- Companies (including branches of foreign entities subject to the special foreign exchange regime and Colombian
corporations) carrying out exploration and extraction of oil, natural gas, carbon, ferronickel, and uranium, or engaging
exclusively in the provision of services related to the oil and gas sector, which are only permitted to execute payments in
foreign currency among themselves with funds resulting from their operation.
- Payments performed through compensation account registered in the Central Bank. In this case the compensation accounts
must be owned by both the payer and the recipient and the formalization of such payments must be done using the
exchange numbers established by the foreign exchange proceedings.
- Payments expressly authorized by the foreign exchange regime: purchases of goods from free trade warehouses, freight
and international transport tickets, personal expenses incurred through international credit cards, premiums for insurance
denominated in foreign currency as referred to in Decree 2821/1991 and its corresponding regulating norms and for the
payment of reinsurance obligations abroad or to make payments abroad or in the country of the value of the claims that
insurance companies established in Colombia must cover in foreign currency, in accordance with To be determined by the
National Government in accordance with the provisions of article 14 of Law 9/1991.
2.10 Payments in Foreign Currency Between Colombian Residents
2.11. Regulatory Framework
Law 9/1991 (modified)
Decree 1068/2015 and Decree 119/ 2017
Regulatory Circular DCIP 83 (modified)
Regulatory Circular DOAM 144 (as amended)
Decree 1746/1991
Decree 2245/2011
External Resolution 1/2018 (as amended)
Framework Law on international exchange.
Regulations on foreign investment and relevant rules
on exchange transactions.
Foreign exchange regime.
Foreign exchange regulation.
Foreign exchange regulation (only for derivative
transactions).
Enforcement regime applicable to the
Superintendence of Companies for foreign
exchange operations supervised by such entity.
Enforcement regime applicable to the Colombian
Tax Authorities for foreign exchange operations
supervised by such entity.
Standard Subject
13

14
Address:
Phone:
Web page:
Calle 70 Bis #4 - 41, Bogotá, D.C. Colombia
+57 (601) 346 2011
https:/
/www.bu.com.co/es

GUIA_LEGAL_CHAPTER_2_FOREIGN EXCHANGE.pdf

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