Non-Profit Entities of the Common Regime

Non-Profit Entities or ESAL (Entidades Sin Ánimo de Lucro) are, as their name indicates, organizations whose purpose is not to profit their members.

Types of Non-Profit Entities

They can be classified, according to their nature, into three:

• Associations: Their purpose is the benefit of their members and they are characterized by being open to any person as long as they comply with the payment of their contributions and comply with what is established by the statutes.
• Corporations: Their purpose is the benefit of their members and they are characterized by being closed for the protection of a common activity that unites their members.
• Foundations: Their purpose is the benefit of a specific sector or the community in general. Their main condition is the existence of an autonomous patrimony from their founders or related persons, solely destined to the development of the entity's purpose, according to the guidelines established by the founder(s).

Tax Benefits of Non-Profit Entities

These entities, according to article 19 of the Tax Statute, decree 624 of 1989, will be taxpayers of income tax and complementary taxes, in accordance with the rules applicable to national companies, unless they request before the tax administration their qualification as taxpayers of the Special Tax Regime, in compliance with the following requirements:

1. Be legally constituted.
2. That their corporate purpose be of general interest in one or several of these activities (according to article 359 of the Tax Statute): education, health, culture, science, technology and innovation, social development, environmental protection activities, prevention of consumption and care for people who consume alcohol, tobacco and psychoactive substances, microcredit activities, promotion and support for sports activities, entrepreneurship, administration of justice and other entities that develop these activities.
3. That contributions are not reimbursed nor surpluses distributed under any modality or name and at any time, including after their dissolution.
4. Be of general interest, that is, that it benefits a population group (sector, neighborhood or determined community).
5. That the community has access to them (with the restrictions that the law establishes and according to the capacity of the same entity) through open offer of their services and activities.

Constitution of Non-Profit Entities

They can be constituted, by agreement among their members, through:

• Constitution minutes: Product of an assembly among its members, with authenticated signature before a notary of the president and secretary of the meeting. It must include, in the same document or in an attached document, the statutes of the new entity.
• Private document: Containing the statutes of the new entity and signed by all the constituents, who must perform the procedure of recognition of content and signature before a notary.
• Public deed: At a notary's office, with all the members or founders and containing the corresponding statutes for the operation of the entity. It is only necessary if real estate is contributed.

Requirements

1. Unique name. You can check if the name is being used on the RUES – Unified Business Registry page.
2. Constitution document.
3. Completion of the RUES form for ESAL Registration.
4. Completion of other forms, depending on the municipality, which can be requested at the respective Chamber of Commerce.
5. Letter of acceptance and copy of the identification document of those designated in all legal representation positions, board of directors or administration council, including the fiscal auditor if their position was created.

You can learn more about the requirements for the constitution of these entities here:

• Associations and corporations
• Foundations

Sources

Chamber of Commerce Medellín for Antioquia (camaramedellin.com.co) Téllez, Carolina. "The ABC of Non-Profit Entities: "Types of ESAL" (Part 2)."