For those considering Colombia as a location for individual business operations, this article details the availability and conditions for establishing a sole proprietorship status, specifically the Persona Natural Régimen Simple de Tributación (SIMPLE) as recognized under Colombian law in 2025.
Overview of Sole Proprietorship Status in Colombia
Colombia offers a formal path for individuals to conduct business without creating a separate legal entity. The legal figure, known as Persona Natural under the Régimen Simple de Tributación (SIMPLE), is tailored to small entrepreneurs, independent professionals, and freelancers. Registration and compliance are managed through DIAN (Dirección de Impuestos y Aduanas Nacionales), Colombia’s central tax authority.
Key Features of the SIMPLE Regime (2025)
- Available to individuals (natural persons) without forming a separate company
- Designed for small entrepreneurs, freelancers, and independent contractors
- Streamlined tax obligations through a single consolidated payment
- Income tax rates are determined by the type of activity and annual gross income
2025 Simple Tax Regime Rates and Consolidation
The SIMPLE regime unites multiple tax liabilities into one payment, thereby reducing administrative complexity for individuals. Below is a summary of the consolidated tax rates for 2025 as structured by Colombian tax authorities:
| Business Activity | Annual Gross Income (COP) | Consolidated Rate (%) |
|---|---|---|
| All eligible categories | Various (thresholds apply) | 1.8% – 14.5% |
Rates are applied based on the activity type and income level. For average conversions, as of early 2025, 1,000,000 COP ≈ $255 USD (using COP 3,920/USD).
Registration and Ongoing Compliance
- Registration is required with DIAN via the official online portal (www.dian.gov.co).
- There is no need to create a corporate entity – individuals may operate and invoice directly.
- Eligibility typically covers most independent activities but is subject to certain thresholds and compliance checks by DIAN.
- The SIMPLE regime is actively used and accessible to Colombian citizens and residents engaged in small business or freelancing.
Eligibility and Main Advantages
The SIMPLE option is ideal for those seeking less administrative burden and a transparent tax structure. Eligibility is generally broad but always subject to annual DIAN updates and policy guidelines. Key advantages include:
- No corporate formation or separate legal personhood required
- Simplified tax payment and accounting
- Ability to invoice clients and contract legally as an individual
At a Glance: Summary Table
| Feature | Status (2025) |
|---|---|
| Availability | Yes (Persona Natural under SIMPLE) |
| Legal Entity Requirement | No (individual registration) |
| Tax Authority | DIAN (dian.gov.co) |
| Main Tax Rate Range | 1.8% – 14.5% |
How the SIMPLE Regime Works (Specifics for 2025)
Individuals register as a Persona Natural and opt into the SIMPLE regime at the time of tax registration or by updating their RUT (Registro Único Tributario). The regime groups several taxes (income tax, industry and commerce tax, etc.) into a single periodic payment, based on the gross annual income and activity sector. All invoicing can be done using the personal tax identification, and compliance is monitored centrally via DIAN’s online system.
Official Sources for Further Reference
Pro Tips for Registering as a Sole Proprietor in Colombia
- Prepare Your Documents Early: To streamline your registration, gather all required personal identification and documentation before accessing DIAN’s portal.
- Annually Review Tax Rates: Tax brackets and categories can change; always consult DIAN’s portal for the latest guidance on SIMPLE rates and qualifying activities each fiscal year.
- Track Your Invoiced Income: Since eligibility and tax rate are based on annual income, keep precise records using accounting software or spreadsheets.
- Stay Within SIMPLE Thresholds: Exceeding stipulated income or activity parameters may require a transition to a more complex regime – monitor your annual totals to avoid surprises.
- Use Official Channels Only: All registrations and compliance communications should be conducted via DIAN’s main website to avoid scams or misinformation.
The Colombian SIMPLE regime for sole proprietors offers a practical system for conducting business as an individual without starting a company and with simplified tax obligations. The ability to consolidate multiple taxes into one payment and invoice directly as a person gives significant operational advantages. The process remains accessible, provided business owners follow the official guidelines and periodically update their status with DIAN according to their activities and income each year.