Chile: VAT and real estate leases

Guidance for determining whether a real estate lease is subject to value added tax

Guidance for determining whether a real estate lease is subject to value added tax

The tax authority (Servicio de Impuestos Internos—SII) provided guidance for determining whether a real estate lease is subject to value added tax (VAT).

A change made in 2020 to the VAT rules for leased property clarifies that the leasing of property is subject to VAT provided that the subject property is furnished or has facilities that allow for the exercise of a commercial or industrial activity.

The SII guidance provides examples illustrating application of these rules. For instance, one example clarifies that a lease of agricultural property that includes “furniture” for agricultural use or cultivation is not subject to VAT because it is not a commercial or industrial activity. The SII guidance also clarifies that if the lease pertains to property without furniture or facilities, it will not be subject to VAT but that if facilities are subsequently built that by their nature are owned by the lessor, they will become an integral part of the property, and therefore subject to VAT.

Read a June 2021 report (Spanish and English) [PDF 356 KB] prepared by the KPMG member firm in Chile

This report also includes information about other indirect tax developments such as guidance about:

  • VAT on the commission from the sale of online courses
  • VAT on the lease of modules located within a building
  • VAT on the sale of real estate 

 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.