Updated on October 16, 2020:Mandatory “EPS" affiliation for M and R type visas
If you are a foreigner, but you reside in Colombia and you have a Cédula de Extranjería, you must keep in mind that under Law 100, and the Decree 064, you are legally responsible for contributing to social security in Colombia through the contributory system.
This regime covers all employees, independent workers, and pensioners. The family group that depends economically on the holder may also be included as beneficiaries.
Regarding independent workers, are included income associated with activities such as:
- Financial returns
- Profits from the marketing of goods and services
- Fees, commissions, and/or services provided
It is important to clarify that even if the foreigner has private international insurance or is affiliated with the health system of his or her country of origin, he or she is NOT exempt in Colombia, it is his or her duty to be affiliated with the Colombian system and make the corresponding payments to social security within the terms of the law.
To know how much you must contribute or pay, it is important to be clear about the “Ingreso Base de Cotización" (IBC) according to your specific case.
What is the IBC?
It is the minimum value on which the value of the contributions to the General System of Social Security (SGSS) must be calculated.
How do you calculate the IBC?
For those who have a permanent or indefinite work contract with a Colombian company, the company is responsible for making the corresponding affiliations at the beginning of the contract. In this case, contributions to the Social Security System are made per the following percentages taking as an IBC the total monthly salary earned:
To calculate the IBC in this case, which may vary every month, it is necessary to complete the following steps:
- Identify the type of activities you carry out.
- Include the total income you receive from all activities carried out independently, in Colombia and/or abroad.
- Identify the expenses and costs associated with the income received. In case you have them, these are subtracted from the total income to obtain the IBC. However, the contributions to the General Social Security System, in this case, are the responsibility of the independent, and must be made through the Integrated Contribution Settlement Form – PILA with the following rates:
However, the contributions to the General Social Security System, in this case, are the responsibility of the independent, and must be made through the Integrated Contribution Settlement Form – PILA with the following rates:
1. Health care contribution ………………. IBC total x 12,5%.
2. Pension contribution …………….IBC total x 16% (*Not required for foreigners).
3. Contribution to occupational risks ………….. IBC total x rate associated to the risk category (*Not required for foreigners).
Having clear the above information, the IBC will be 40% of the total net monthly income received, minus the costs and associated expenses that may be applicable. So the base of your contributions to the system, could be higher than 40% of that amount, but can never be less than this percentage.
We will give you some examples to help you understand this topic:
Example 1: Workers with permanent or indefinite contracts.
Elizabeth is a foreigner and was hired by the ABC Colombia company, she has a 2-year full-time contract, earning a monthly salary of $3,500,000.
Which should be the base of contribution to the SGSS?
The employer is responsible for enrolling the worker in the SGSS and the contribution base (IBC) should always correspond to the real salary earned by the employee. In this case, $3,500,000.
How should she contribute to the SGSS?
Monthly salary earned: $3,500,000
Base to contribute (IBC): $3,500,000
Health rate: ABC Colombia company (8.5%) – Elizabeth (4%)
Pension rate: You are not required to contribute because you are a foreign employee
Occupational risk rate: company ABC Colombia (0.5%)
Rate of compensation fund: company ABC Colombia (4%).
ABC Colombia company health contribution: $3,500,000 x 8.5% = $297,500
Elizabeth Health Contribution: $3,500,000 x 4% = $140,000
ABC Colombia's contribution to labor risks: $3,500,000 x 0.5%= $17,500
Contribution to the ABC Colombia company compensation fund: $3,500,000 x 4% = $140,000.
Total contributions by ABC Colombia Company: $455,000.
Total contributions by Elizabeth: $140,000.
Note: Total contributions are automatically deducted by the company, that is, Elizabeth's contribution: $140,000, is deducted directly from her paycheck.
Example 2: Workers with a service contract.
Amelia is a foreigner currently living in Colombia. She is an expert in digital marketing and has a service contract with the company XYZ in Colombia. This month, she had a total income of $2,800,000 for the contract mentioned.
Does she have the obligation to contribute to healthcare in Colombia?
Yes, even if she is a foreigner, she lives in Colombia and has an income that exceeds the Colombian minimum wage. Therefore, she is compelled to contribute to the SGSS with an IBC corresponding to the total monthly income, that is, $2,800,000.
How must she contribute?
Total income for the month: $2,800,000
Minimum contribution base: 40%
Health rate: 12.5%
IBC: total revenue x minimum contribution base
IBC: $2,800,000 x 40%: $1,120,000
Contribution to healthcare: $1,120,000 x 12.5% = $140,000.
Example 3: Freelance workers.
James is a foreigner, residing in the country and has a monthly income from independent activities (abroad and/or Colombia) equivalent to a total of approximately USD 1200, and has expenses associated with those activities of approximately USD 500.
He has been in Colombia for more than 6 months and has not made any contributions to the General Social Security System.
Does he have an obligation to contribute to health care in Colombia?
Yes, as a resident of Colombia, and having an income above 1SMLMV ($877,803).
How must he contribute?
Total income for the month: $1200 USD ($4,560,000 approximately).
Costs: $500 USD ($ 1,900,000 approximately).
Minimum contribution base: 40%
Health rate: 12.5%
IBC: (total revenue – costs) x minimum contribution base.
IBC: ($4,560,000- $1,900,000) x 40%=$1,064,000
Contribution to health: $1,064,000 x 12.5% = $133,000
Note: A freelancer is a person who meets at least one of the following conditions:
- He performs an economic activity on his own.
- Has a contract other than a service contract, meaning contracts for civil works, supplies, commodities, leases, among others.
- Develops activities that generate profits, dividends, financial returns, among others.
- Generates income by providing personal services that are related to the functions of the contracting company.
Example 4: Pensioners.
TAKE IN MIND: There is no clear law that determines the exact IBC for those who have a retirement income from abroad; However, currently according to the Ministry of Foreign Affairs of Colombia the IBC must correspond to 40% of the total monthly income received by the foreigner.
Edward is a foreigner and is retired by the Social Security Administration in his home country. The pension he receives monthly is equivalent to USD 3000. He is currently living in Colombia and has a Cédula de Extranjería, but he is not affiliated with the SGSS.
Does he have the obligation to contribute to health care in Colombia?
Yes, since he is a resident in Colombia and earns more than 1SMLMV from a pension abroad.
How should he contribute?
Total income for the month: $3000 USD ($11,400,000 approximately).
Minimum contribution base: 40%
Health rate: 12.5%
IBC: (total income) x minimum contribution base.
IBC: ($11,400, 000) x 40%=$4,560,000
Contribution to health: $4,560,000 x 12.5% = $570,000
Example 5: Foreigner married to Colombian.
Pablo is a Colombian, he is affiliated with the SGSS contributive regime as an employee, and is currently married to Nathalie who is a foreign citizen. Nathalie has a marriage Visa and a Cédula de Extranjería, she lives in Colombia with Pablo, but she does not perform any kind of economic activity in the country and she also has no personal income abroad.
How could Nathalie be affiliated with the SGSS?
Even if Nathalie does not perform any economic activity, she is required to be affiliated with the Colombian SGSS. In this case, because she has a Colombian husband who is already in the contributory regime, Nathalie can be considered a beneficiary within the family group.
The procedure to be followed would be to register the status as a beneficiary in the system, by presenting the Marriage Certificate where the relationship with the holder is stated. This affiliation of Nathalie as a beneficiary does not have any additional cost and will be covered by the fee previously contributed by Pablo to the SGSS.
PLEASE NOTE: If you quote with an IBC lower than the real income you receive, you will be considered an EVADER before the Colombian law and the Ministry of Health.
Also, remember that if you are a foreigner, you are not obliged to contribute to a pension or occupational risk. You are only obliged to contribute to the HEALTH.
How are contributions to the SGSS related to the Colombian visa application?
Well, to fulfill the current social security regulations in Colombia, the Ministry of Foreign Affairs within the process of visa application, ensures that the following items are verified by the foreigners who meet the criteria to belong to the contributive system:
● Registration of the foreigner through the portal https://miseguridadsocial.gov.co/
● Current certificate of enrollment in the health care institution.
● Certificates of the last paid periods from social security contributions.
● IBC of contributions that coincide with the income supports that the foreigner has either in Colombia or abroad.
If these criteria are not met, the Ministry of Foreign Affairs may require the adjustment of the irregularity in the SGSS, and may even reject or deny the visa application.