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How to Pay Contractors in Colombia: Complete 2025 Guide

For businesses paying independent contractors in Colombia

Quick Summary

Best payment methods for Colombian contractors:

  1. Wise (lowest fees, best rates)
  2. PayPal (widely accepted)
  3. Payoneer (popular alternative)
  4. Bank transfer (traditional method)

Key requirements:

  • NIT (Colombian tax ID)
  • Written service agreement
  • Currency considerations (USD preferred over COP)
  • DIAN tax compliance (contractor's responsibility)
  • Factura electrónica (electronic invoice)

Why This Guide Is Different

Colombia has a growing tech sector and is becoming a popular nearshoring destination for US companies. If you're hiring contractors in Colombia, you need to understand:

  • Payment method preferences (Wise and PayPal are most popular)
  • Currency considerations (USD preferred over COP for stability)
  • NIT requirements (Colombian tax identification)
  • DIAN compliance (Colombian tax authority)
  • Electronic invoicing system (factura electrónica)
  • Time zone advantages (COT is UTC-5, perfect overlap with US East Coast)

Payment Methods Compared

MethodCostSpeedBest For
Wise$3-$81-2 daysRegular payments, best exchange rates
PayPal$5-$12InstantWidely accepted, instant transfers
Payoneer$5-$101-3 daysPopular with Colombian freelancers
Bank Transfer$15-$353-5 daysLarge amounts, traditional method

Recommended: Wise

Why Wise is best for Colombia payments:

  • Lowest fees ($3-$8 vs $15-$35 for traditional bank transfers)
  • Real mid-market exchange rate (no markup)
  • Fast transfers (1-2 business days)
  • Transparent pricing
  • Widely accepted by Colombian contractors
  • Can send USD or COP

Currency Considerations

Most Colombian contractors prefer USD over COP for stability and international purchasing power.

USD vs COP

Pay in USD if:

  • Contractor prefers USD (most tech workers do)
  • You want to avoid COP volatility
  • Contractor has USD account or uses Wise/PayPal
  • You're paying multiple international contractors
  • Contractor works primarily with international clients

Pay in COP if:

  • Contractor specifically requests COP
  • You have COP operations in Colombia
  • Contractor prefers local currency for tax/accounting

Pro tip: Most Colombian tech contractors prefer USD for stability. Always ask your contractor which currency they prefer before setting up payments.

Tax and Compliance Requirements

NIT (Tax ID)

NIT (Número de Identificación Tributaria) is Colombia's tax identification number.

  • Required for: All contractors providing services
  • Your responsibility: Verify contractor has valid NIT
  • Contractor's responsibility: Register with DIAN and maintain NIT

Factura Electrónica (Electronic Invoice)

Colombia requires electronic invoicing for all business transactions.

  • What it is: Electronic invoice issued through DIAN system
  • Required for: All payments to Colombian contractors
  • Contractor provides: Electronic invoice for each payment
  • You keep: Invoice for your tax records

Your Responsibilities (as the client)

  • Verify NIT: Ensure contractor has valid tax ID
  • Collect invoices: Get electronic invoice for each payment
  • Written agreement: Have clear service contract
  • Payment records: Keep documentation of all payments
  • No withholding: You don't withhold Colombian taxes (contractor handles this)

Important: As a foreign company paying a Colombian contractor, you typically don't have tax withholding obligations in Colombia. The contractor handles their own DIAN tax compliance. Consult with a tax professional for your specific situation.

Nearshoring Advantages: Why Colombia?

  • Perfect time zone: COT (UTC-5) aligns perfectly with US East Coast
  • Growing tech talent: Expanding engineering and design workforce
  • Competitive rates: 30-50% lower than US while maintaining quality
  • Cultural proximity: Similar business culture to US
  • English proficiency: Growing English skills in tech sector
  • Government support: Pro-business policies and tech incentives

Tools for Managing Colombian Contractors

Kontrable is built specifically for managing international contractors:

  • Track payments across Wise, PayPal, and other methods
  • Store contracts and electronic invoices
  • Handle multiple currencies (USD, COP, EUR, etc.)
  • Generate payment reports for accounting
  • No per-contractor fees (unlike Deel at $49/month per contractor)
Join Kontrable Waitlist

Frequently Asked Questions

Q: Should I pay Colombian contractors in USD or COP?

A: Most Colombian tech contractors prefer USD for stability. Always ask your contractor which currency they prefer.

Q: Do I need an EOR platform for Colombian contractors?

A: No. EOR is for employees. Colombian contractors handle their own DIAN tax compliance. You just need a good payment method (Wise) and contractor management tool (Kontrable).

Q: What's the best payment method for Colombia?

A: Wise offers the lowest fees ($3-$8) and best exchange rates. PayPal is also popular but has higher fees ($5-$12). Avoid traditional bank transfers ($15-$35).

Q: What is factura electrónica?

A: Factura electrónica is Colombia's electronic invoicing system. Your contractor should provide an electronic invoice for each payment through the DIAN system.

Get Started

Managing Colombian contractors?

  1. Verify contractor has valid NIT
  2. Set up Wise business account
  3. Create written service agreement
  4. Ask contractor for currency preference (USD or COP)
  5. Get contractor's payment details
  6. Request electronic invoice for each payment

Want to automate this?

Kontrable launches January 2026 with contractor management tools built for international teams.

Join the Waitlist →

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