Entity Setup
Entity Setup Case Study: Choosing the Right Structure in Colombia Post-Decreto 898/2026
After Colombia's Decreto 898/2026 changed the rules on presumed interest, setting up an entity requires a fresh look at company loans between shareholders or owners.
By NomadicTax Research Team • 5-8 min read • September 2, 2026
## What Changed Under Decreto 898 de 2026
Enacted on **30 July 2026**, **Decreto 898 de 2026** regulates several articles of Colombia’s Estatuto Tributario and replaces certain regulatory articles related to **interés presunto** (presumed interest) and the inflationary component. It establishes that any loan in money between a company and its partners (or vice versa) will presume an annual yield of **9.09%** for the tax year 2026.([normograma.dian.gov.co](https://normograma.dian.gov.co/dian/compilacion/docs/decreto_0898_2026.htm?utm_source=openai))
Also, for natural persons or undivided inheritances who are not obliged to keep accounting books, **28.35%** of interest and financial expenses incurred during 2025—including gains/losses from currency exchange differences on foreign-currency debt—are **not deductible**.([normograma.dian.gov.co](https://normograma.dian.gov.co/dian/compilacion/docs/decreto_0898_2026.htm?utm_source=openai))
## Implications for Entity Formation and Capital Structure
Here’s how this impacts entity setup and financing decisions:
- **Shareholder loans to the company**: If you plan to provide capital via loan, not equity, the tax authority will impute presumed interest (9.09%) regardless of whether you charge interest. This interest is taxable income to the lender—or possibly deemed a dividend/constructive distribution.
- **Debt financing in foreign currency**: For individuals not keeping books, foreign currency loans (or obligations) incur foreign exchange components. Under the décret, portions of interest and these components are **not deductible** for 2025. This limits tax benefits from foreign borrowing.
- **Equity vs debt decision**: Where feasible, raising capital via equity may be more tax efficient in 2026 than via debt to avoid presumptions and deduction limitations.
## Example Setup
Suppose you are an entrepreneur founding a **sociedad limitada** (SL) in Bogotá in 2026. You have two capital sources:
1. \$100,000 contributed as **equity** by two partners equally.
2. \$50,000 you lend to the company personally with no interest charge.
Thanks to Decreto 898:
- That \$50,000 will be treated by DIAN for tax purposes as generating \$4,545 annually of presumed interest income (9.09%) whether or not you charge it.
- If you choose to charge less (e.g. 5%), you’ll be taxed as if it were 9.09%.
- Meanwhile, interest expenses might be non-deductible if you are a person not keeping books—and part of foreign exchange difference or inflation component may be disallowed from deduction for 2025, affecting tax base.
## Recommended Entity Structure & Financing Strategies
- Use **equity contributions** instead of loans among shareholders where possible in 2026.
- If loans are unavoidable, ensure **formal loan agreements** are in place, ideally with rates equal to or above presumed interest (9.09%), to mitigate imputed income/tax risk.
- Maintain full accounting books if you expect to incur financial expenses or exchange gains/losses—you’ll need them to prove deductibility.
- Monitor changes: Decree applies for 2026; future rates or residual inflation components might shift in subsequent years.
## Takeaways
Entity setup in Colombia now carries new tax presumption risks under Decreto 898. For founders and partners, adjusting the mix of equity vs debt, formalizing agreements, and maintaining proper records become not just exercises in good practice—but essential for minimizing unexpected tax liabilities.