As far as I know, the town doesn't have neither a flag nor any coat of arms. My first inspiration was the famous city's gate, but it can be too generic, maybe. So my next attemp was this:
Blue and white are the Uruguayan colors, and, at the time of city's foundation, both Portugal and Spain used flags with white background. The blue shape is like a fort, a reference to the historic quarter of the city. The sunny white disc is a common representation to the sacramental bread, as the colony was named after the Eucharist, "the most holy sacrament". Again, the sun remembers the Uruguayan national symbols.
Comments are welcome. Please, leave a comment.
If you can locate any Colonia del Sacramento symbol, please cite it on comments.