Chile – Taxation of international executives

Taxation of international executives

Taxation of international executives

  

Overview and Introduction

The taxation of international executives in Chile, will depend on the conditions of the assignment. Foreign workers who become residents or are considered domiciled for Chilean tax purposes, will be subject to taxes in Chile on their Chilean source income for the first 3 years of their stay in the country/jurisdiction. After the third year, foreign workers are subject to taxes on their worldwide income. Foreign workers who do not meet the requirements to become residents or are not considered domiciled for Chilean tax purposes will be subject to the Additional Tax (a flat tax rate of 35 percent, which can be reduced to 15 percent for employment income for professional/technical services).

The official currency in Chile is the Chilean peso (CLP).

In Chile there are 2 types of visa that can be requested by foreign individuals in Chile. One is the Temporary Visa with an extension of 1 year and the second is the Visa to subject to employment contract with an extension of 2 years in which the last one is directly linked to an employment contract with a Chilean company.

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Income Tax

Tax returns and compliance

When are tax returns due? That is, what is the tax return due date?

Annual income tax returns

The due date for filling the annual tax return will depend whether it results in a balance due or a refund of tax. If it results in a balance due the due date is 30 April, and if it result in a refund the due date is 7 May (these deadlines are subject to an annual review). It is important to note that under both scenarios the due dates are in the year following the year the income was received.

Informative income tax returns

If the taxpayer is required to report and pay taxes on the income related to investments abroad, a Sworn Statement 1929 must be filed. The due date for the Sworn Statement 1929 is 30th June (this deadline is subject to an annual review). Note that the Sworn Statement 1929 also apply to inform the investments that the Chilean national and the foreigners have abroad.

Monthly income tax returns

Non-resident Tax

In cases, where non-resident taxpayers are subject to the Additional Tax for any Chilean sourced income earned. Depending on the nature of the income, they must self-report and pay the tax related through monthly tax returns. The due date for this is the 12th day of the following month of payment of the income.

Resident

When, taxpayers that are considered residents for Chilean tax purposes, in some cases they must declare and pay the corresponding taxes by the 15th day the following month of payment of the income.

What is the tax year-end?

31 December.

What are the compliance requirements for tax returns in Chile?

Resident taxpayers are required to pay income taxes and may have an annual income tax return obligation on their worldwide income. In the case of non-Chilean nationals, they are taxable solely on Chilean source income for this first 3 years in Chile and would become taxable on worldwide income from the fourth year on. As in the case of resident taxpayers, the annual income tax return obligation will need to be analyzed on a case by case basis. For non-residents taxpayers they are taxable solely on their Chilean source income and the withholdings tax (made through payroll or monthly income tax returns) is a final tax with no further annual filing obligation.

If the individual is paid through foreign payroll, and there in no shadow payroll in place to report this income on Chilean payroll then a monthly income tax return obligation may arise. This typically occurs when the individual does not have a local Chilean contract in place or under a split payroll scenario. The monthly income tax return is a taxpayer obligation where the individual self-withholds and pays the corresponding taxes through monthly income tax returns for the income that is not reported through a Chilean payroll.

Lastly, foreign individuals assigned to Chile must obtain a Chilean National Tax ID (RUT) and a password for the Chilean IRS website (www.sii.cl) in order to be able to file their annual tax return.

Tax rates

What are the current income tax rates for residents and non-residents in Chile?

Residents

Second Category Income Tax

A resident for Chilean tax purposes will be taxable with the residents Chilean income tax rates, and subject to Second Category Tax (employment income tax) on a monthly basis, which has progressive rates ranging from 0 to 40 percent.

Current tax rates are showed in the chart below: Second Category Income Tax – February 2021*

Taxable income bracket

 

Tax Rate

Tax rebate

From CLP

To CLP

%

CLP

0

690,268.50

0

0

690,268.51

1,533,930.00

4

27,610.74

1,533,930.01

2,556,550.00

8

88,967,94

2,556,660.01

33,579,170.00

13.5

229,578.19

3,579,170.01

4,601,790.00

23

569,599.34

4,601,790.01

66,135,720.00

30.4

910,131.80

66,135,720.01

15,850,610.00

35

1,192,374.92

15,850,610.01

Onwards

40

1,984,905.42


*Please note that the monthly tax tables are updated on a monthly basis for inflation purposes.

Global Complementary Tax

Foreign workers who have been considered residents or domiciled for Chilean income tax purposes, may be obligated to file an annual income tax return. Those taxpayers obliged to file an annual income tax return and whom have received additional income apart from their salary income, are subject to the Global Complementary Tax. This tax applies if the worker has earned other income apart from employment income, has been granted with a tax benefit, or is entitled to have a tax refund.

The same monthly table shown above applies for the annual tax calculation with the tax brackets being annualized and adjusted for the corresponding inflation factors.

Both the monthly and the annual tax table values are determined based on the “Unidad Tributaria Mensual”, a monthly value given by the tax authority that varies due to inflation.

Global Complementary Tax Year 2020

Taxable income bracket

 

Tax Rate

Tax rebate

From CLP

To CLP

%

CLP

0

8.266.698,00

0

0

8.266.698,01

18.370.440,00

4

330.667,92

18.370.440,01

30.617.400,00

8

1.065.485,52

30.617.400,01

42.864.360,00

13.5

2.749.442,52

42.864.360,01

55.111.320,00

23

6.821.556,72

55.111.320,01

73.481.760,00

30.4

10.899.794,40

73.481.760,01

189.827.880,00

35

14.279.955,36

189.827.880,01

Onwards

40

23.771.349,36

Non-residents

If an executive is considered nonresident and not domiciled in Chile for tax purposes, they will be subject to nonresidents income tax (Additional Tax), which is levied at a flat rate of 15 percent on the gross employment income, if the activities can be qualified as technical or professional services that an individual renders through a report, advice or plan development, rendered in Chile or abroad. If the activity performed, does not qualify as technical or professional work, the tax rate applicable is 35 percent.

Residence rules

For tax purposes, the resident status is acquired once an individual has been in Chile more than 183 days within any 12-month period. According to article 49 of Chilean Civil Code the accounting of a fact that must be analyzed “within” a certain period, will be accomplished if it is met by midnight of the day before.

Chilean income tax law does not provide for a domicile definition, but according the article 59 of the Chilean Civil Code, domicile requires residency in a place and the intention to remain in it. In accordance, the Chilean Internal Revenue Service (hereinafter “Chilean IRS”) has understood that an executive may acquire tax domicile in Chile, when they have moved to Chile with their family group, the individual has purchased or rented a house in Chile; their children attend a school in Chile and the person came to the country/jurisdiction under a Chilean employment contract.

Accordingly, a person will acquire Chilean domicile if the aforementioned requirements are met.

On the other hand, if domicile is not acquired as the person enters the country/jurisdiction, residency test (i.e. 183-day test) should be analyzed to determine the executive’s tax treatment in Chile.

To summarize, an individual would be considered a tax resident in Chile should they meet the 183-day test or if they acquire Chilean domicile.

Is there a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country/jurisdiction for more than 10 days after their assignment is over and they repatriate.

With regards to the 183-day test, any day (or part day) of physical presence in Chilean territory will have to be considered for this purpose.

What if the assignee enters the country/jurisdiction before their assignment begins?

For the purpose of determining whether an assignee acquires tax residency or not, the 183- day test mentioned above would start from the day the assignee arrives in Chile regardless of whether they are performing working activities in the country/jurisdiction or not. On the other hand, the domicile test is not affected by the fact that the assignee arrives in Chile prior to the start of their international assignment in the country/jurisdiction.

It is a common practice for assignees to start to work in Chile before they sign a local contract, and to receive their salary from abroad. According to the Chilean income tax law, this income is considered as Chilean source income, as it is a professional service performed on Chilean territory. In this case, as there is no a local employer to withhold the employment tax, it is the assignee who has the obligation to withhold the employment tax through a monthly tax return.

Termination of residence

Are there any tax compliance requirements when leaving the country/jurisdiction?

There are no formal tax compliance requirements to be fulfilled when leaving Chile.

What if the assignee comes back for a trip after residency has terminated?

Any day spent in Chile after the assignment has terminated will have to be taken into account to compute the 183-day test. If the absence is deemed temporary, the period stayed outside of Chile will be also computed as period of residence. Unless the loss of residence or domicile for Chilean tax purposes can be proven.

Communication between immigration and taxation authorities

Do the immigration authorities in Chile provide information to the local taxation authorities regarding when a person enters or leaves Chile?

There is no formal procedure in place however, the tax authorities could request information for the immigration authorities. This is commonly seen during tax audit requests by the Chilean IRS.

Filing requirements

Will an assignee have a filing requirement in the host country/jurisdiction after they leave the country/jurisdiction and repatriate?

There could be a filing obligation in Chile after an assignee leaves the country/jurisdiction. It will depend on the residence status and if the assignee maintains investments within the country/jurisdiction (real estate, shares or interest could have generated income during the year of departure). However, there is no specific exit tax return requirement in Chile.

Furthermore, as some assignees will have the chance to obtain a refund of employment taxes paid during the year. As such, it is advisable to maintain a Chilean bank account open until the year after departure or after all tax return obligations are met.

Economic employer approach

Do the taxation authorities in Chile adopt the economic employer approach to interpreting Article 15 of the Organisation for Economic Co-operation and Development (OECD) treaty? If no, are the taxation authorities in Chile considering the adoption of this interpretation of economic employer in the future?

The Chilean Tax Authorities have not established a clear defined position in this regard. OECD criteria might however, have to be taken into consideration.

De minimus number of days

Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?

There is no de minimus number of days.

Types of taxable compensation

What categories are subject to income tax in general situations?

  • Base salary
  • Benefits-in-kind
    • Cola
    • Housing
    • Education
    • Home leave
    • Other expat allowances
  • The payment of local or personal income taxes by the employer on the employee’s behalf is considered taxable income.

Intra-group statutory directors

Will a non-resident of Chile who, as part of their employment within a group company, is also appointed as a statutory director (i.e. member of the Board of Directors in a group company situated in Chile trigger a personal tax liability in Chile, even though no separate director's fee/remuneration is paid for their duties as a board member).

If there is no payment (in Chile or abroad) regarding the participation of an individual in board of directors, in rigor there is no tax filing in Chile.

a) Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Chile?

If there is a payment to the individual regarding the participation in board of directors, there is a tax obligation in Chile for the individual.

b) Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Chile (i.e. as a general management fee where the duties rendered as a board member is included)?

The tax obligation will continuing.

c) In the case that a tax liability is triggered, how will the taxable income be determined?

If the individual is considered a non- resident in Chile, the tax rate applicable for this type of income is 35 percent flat.

Tax-exempt income

Are there any areas of income that are exempt from taxation in your country/jurisdiction? If so, please provide a general definition of these areas.

  • Food Allowances
  • Transportation Allowances
  • Other allowances deemed necessary for the assignee to be able to perform their working activities (i.e. language training courses, immigration/visa expenses, trip to host country/jurisdiction at the beginning of the assignment, etc.)

Expatriate concessions

Are there any concessions made for expatriates in your country/jurisdiction?

As a general rule, any person domiciled or resident in Chile is subject to income taxes on a worldwide basis. Individuals who are neither resident nor domiciled in Chile pay taxes only on their Chilean source income.

Foreigners with residence or domicile in Chile will pay taxes only on their Chilean source income during the first 3 years since their arrival to Chile. After this period has elapsed, foreigners will be subject to income taxes on their worldwide income. Chilean legislation establishes that this period might be extended in qualified circumstances, but in practice, this extension is unusual.

Salary earned from working abroad

Is salary earned from working abroad taxed in Chile? If so, how?

Salary earned from working abroad would be taxable in Chile depending on the residence status of the taxpayer. If a non-Chilean national professional starts to work in Chile, and they have been in the country/jurisdiction less than 3 years, they are only taxable on their Chilean source Income. Therefore, any salary earned by non-Chilean national taxpayers working abroad is not taxable in Chile for the first 3 years of the assignment. After that time lapses, salary earned abroad is subject to taxes on a worldwide basis.

Chilean nationals residing in Chile are taxed on their worldwide income from day one.

Taxation of investment income and capital gains

Are investment income and capital gains taxed in your country/jurisdiction? If so, how?

Dividends, interest, and rental income

Dividends, interest and other income from financial instruments is reported by the financial institutions to the Chilean IRS, therefore taxable.

Rental income from real estate must be self-reported by the taxpayer in the annual tax return.

The expenses related to such income, such as interest paid on loans linked to the acquisition of the property, local taxes, depreciation, and so on, are deductible within certain limits

As a general rule, investment income, such as dividends and interest arising from bank deposits, any gains on sales of shares, and so on, is subject to the Global Complementary Tax, and the tax rate applicable will depend on the total income earned during the calendar year.

Gains from employee stock option exercises

Depending on the characteristics of the stock exercise and the resident status of the assignee, employee stock option exercises could trigger a tax liability. In this line, the Chilean income tax law has established two criteria regarding the taxation of stock option and this depends if the SOP is incorporate in the employment contract.

Stock Option income taxation can be deferred in cases in which the plan has been agreed upon a Chilean employment contract. Based on this, the taxation point is deferred from exercise to sale. Further advice on this possibility can be provided if required.

Otherwise, if the SOP is not agreed in the employment contract, the taxation is at exercise point.

Foreign exchange gains and losses

Foreign exchange gains that are recurring in nature are subject to a withholding tax rate of 10 percent. Then this tax withheld can be used as a credit against the Global Complementary Tax in the annual income tax return.

Principal residence gains and losses

Gains are taxable if the property was held less than 1 year. In addition, the authorities have established an exempt profit threshold of 8.000 UF (approximately 300.000 USD). Such threshold is for the taxpayer lifetime and once it is surpassed, any gain on the sale of property will become taxable.

Capital losses

Capital losses can be used as deductions from the same type of income in the annual tax return (Global Complementary Tax).

Gifts

Gifts are subject to inheritance tax.

Foreign property reporting

Non-Chilean nationals would have to report income related to property they have abroad, only if they surpass 3 years of residence in the country/jurisdiction. This income has to be declared through the Sworn Statement 1929 and then included in the annual income tax return.

General deductions from income

What are the general deductions from income allowed in your country/jurisdiction?

There are a few deductions from income allowed by the Chilean income tax law, many of them are related to savings and voluntary contributions made to social security. Furthermore, the interests paid related to mortgage loans can be used as deductions if some conditions are met and if the income cap is not exceeded.

Calculation of estimates/prepayments/withholding

How are estimates/prepayments/withholding of tax handled in your country/jurisdiction? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.

Tax withholdings are due on a monthly basis for both, resident and nonresident taxpayers.

Relief for foreign taxes

Is there any Relief for Foreign Taxes in your country/jurisdiction? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?

Chile has Double Taxation Treaties with a number of different countries/jurisdictions. Thus when a treaty is currently in force between Chile and another country/jurisdiction, a foreign tax credit may be applicable.

In order to obtain a relief for taxes paid abroad, the taxpayer must report the income, and the taxes effectively paid abroad through the Sworn Statement 1929 and then include this in the annual tax return.

Furthermore, according to the Chilean tax law, individuals considered tax residents in Chile that are subject to taxes abroad, can claim a FTC (of employment income) regardless that Chile does not have a double tax treaty with other country. 

General tax credits

What are the general tax credits that may be claimed in your country/jurisdiction? Please list below.

There is a list of credits that may be claimed against the taxpayer’s tax liability, as follows:

  • Donations
  • Educational expenses
  • Foreign income tax credits

Sample tax calculation

This calculation assumes a foreign taxpayer resident in Chile whose 3-year assignment begins 1 January 2017 and ends 31 December 2019. The taxpayer’s base salary is 100,000 US dollars (USD).

 

2018

USD

2019

USD

2020

USD

Salary

100,000

100,000

100,000

Bonus

20,000

20,000

20,000

Cost-of-living allowance

10,000

10,000

10,000

Housing allowance

12,000

12,000

12,000

Company car

6,000

6,000

6,000

Moving expense reimbursement

8,000

0

8,000

Home leave

5,000

5,000

5,000

Educational allowance

3,000

3,000

3,000

Exchange rate used for calculation: USD1.00 = CLP800.

Other assumptions

Non-Chilean National

Calculation of taxable income

Year-ended

2018* USD

2019* USD

2020* USD

Days in Chile during year

365

365

365

Earned income subject to income tax

 

 

 

Salary

100,000

100,000

100,000

Bonus

20,000

20,000

20,000

Cost-of-living allowance

10,000

10,000

10,000

Housing allowance

12,000

12,000

12,000

Company car

6,000

6,000

6,000

Moving expense reimbursement

8,000

0

8,000

Home leave

5,000

5,000

5,000

Education allowance

3,000

3,000

3,000

Total earned income

164,000

156,000

164,000

Investment income

6,000

6,000

6,000

Total income

170,000

162,000

170,000

Deductions

0

0

0

Total taxable income

170,000

162,000

170,000


Calculation of tax liability

 

2018

2019

2020

Taxable income as above

170,000

162,000

170,000

Income tax

59.500

56.700

59.500

Less:

16.914

17.358

17.849

Total income tax

42,528

39.342

41.651

 

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Special considerations for short-term assignments

Residency rules

Payroll considerations

Taxable income

Additional considerations

For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year.

Residency rules

Are there special residency considerations for short-term assignments?

As a general rule, if as a consequence of the short-term assignment the individual remains in Chile for less than 183 days during the calendar year, they will be regarded as a non-resident in Chile. If they remain more than 183 days in Chile during the calendar year, they will be regarded as a tax resident. Also, Chile currently has Agreements in force for the Avoidance of Double Taxation with a number of different countries/jurisdictions.

Payroll considerations

Are there special payroll considerations for short-term assignments?

In case there was a tax liability resulting for the short-term assignee, potential withholding tax obligations might apply.

Taxable income

What income will be taxed during short-term assignments?

Taxation of income received during a short term assignment by a taxpayer with non-resident status will be limited to Chilean source income obtained during the assignment (the eventual applicability of Tax Treaty provisions will have to be taken into consideration).

Additional considerations

Are there any additional considerations that should be considered before initiating a short-term assignment in your country/jurisdiction?

The charge of the cost of the assignee to the local company needs to be considered and also the eventual applicability of Tax Treaty provisions. The taxability of an assignee in Chile is independent from their immigration status. That is, taxpayers are assessable on their income regardless of their migratory status.

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Other taxes and levies

Social security tax

Are there social security/social insurance taxes in your country/jurisdiction? If so, what are the rates for employers and employees?

Type of insurance

Paid by employer

Paid by employee

Total

Pension Plan

0%

10%

10%

Unemployment Insurance

2.4%

0.6%

3%

Health Plan

0%

7%

7%

Occupational accidents

0.93%

0%

0.95%

Total

3.35%

17.6%

20.95%

Pension Plan

Pension

In the case that the assignee does not meet the requisites of Law 18.156 or there is no totalization agreement in place, the assignee will have to contribute to the Chilean social security system. As a general rule employees working in Chile are subject to the payment of social security contributions, which are deducted from their gross salary with certain caps.

These contributions must be withheld by the employer and are paid as follows:

Pension fund administrator:

  • 10 percent + management fee from 0.69 percent to 1.45 percent.

Public Health Institution:

  • 7 percent.

All of these percentages are calculated over the gross salary with a cap of 81,7 Development

Units per month (approximately CLP2,400,000). Such mentioned cap of 81,7 UF is adjusted annually considering the variation of the real wage rate determined by the National Institute of Statistics.

In certain circumstances, a foreigner who decides to leave the country/jurisdiction may seek reimbursement of funds provided under point i), except management fees.

It should also be noted that AFP may request the respective new or different background information in order to comply with Law No. 18.156, authorizing the waiver or refund of the funds provided.

Finally, it is important to consider that the withdrawal of the compulsory contributions and agreed deposits is affected to the Second Category Tax (Art. 42 No.1 and 43 No. 1 of the Income Tax Law), and the return of the Voluntary Pension Funds Savings Account B is subject to the taxation of Article 42 of the Income Tax Law, so the AFP must withhold the corresponding withholding income tax.

Unemployment insurance

According to Law No. 19.728, on unemployment insurance, employers and employees will be obliged to make contributions for unemployment insurance, even when qualifying for the exemption under the Act discussed above 18.156.

The aforementioned unemployment insurance will be financed with the following allowances:

  • 0.6 percent of taxable wages, paid by the employee (with cap of 122,7 UF, approximately CLP3,500,000 as of February 2021
  • 2.4 percent of taxable wages (with cap of 122,7 UF), at the employer’s cost.

Contribution of the Government, whose amount is determined according to the rules established by law.

The funds corresponding to the contributions of employees and employers should be deposited in the management company within the first 10 days following the month the compensation is paid.

In case that the labor contract is terminated, and to the extent that certain requirements are met, you may be entitled to withdraw the contributions made to the unemployment insurance. It should be mentioned that a foreign employee who decides to leave the country/jurisdiction, deciding to use this insurance, will be charged in the same way that a Chilean resident.

Finally, the employer must pay certain amounts for insurance of occupational accidents and occupational diseases, which correspond to 0.93 percent calculated on the monthly salary of the executive with a cap of 81,7 UF per month, approximately CLP2,400,000. Additionally, the employer must contribute 2.3 percent for insurance of survival and disability in the worker’s AFP, calculated also upon the same cap of 81,7 UF.

Additional considerations

In certain circumstances, a foreigner who decides to leave the country/jurisdiction may seek reimbursement of part of the social security contributions made during their assignment. This reimbursement would not have any penalty associated with it, however it will need to pay applicable income taxes upon distribution.

Gift, wealth, estate, and/or inheritance tax

Are there any gift, wealth, estate, and/or inheritance taxes in your country/jurisdiction?

  • Inheritance Tax: The inheritance tax in Chile applies from 1 percent to 25 percent depending on the amount. There are deductions applicable but some conditions must be met.
  • Wealth: Not applicable.

Real estate tax

Are there real estate taxes in your country/jurisdiction?

There is a local tax levied on Chilean property charged annually by the municipality where the property is registered. The amount of the tax is calculated by reference to the cadastral value.

Sales/VAT tax

Are there sales and/or value-added taxes in Chile?

Impuesto al Valor Agregado (IVA) or Value-added Tax. This tax is the main tax for the consumption of goods and services in Chile. It has a general tax rate of 19 percent.

A new tax is created for individual taxpayers (regardless of Chilean tax residency) who own real estate property located in Chile exceeding CLP400,000,000 (approx. USD544,000). For purposes of the threshold, the value of the property is based on the tax-assessed value determined by the Chilean Internal Revenue Service (Servicio de Impuestos Internos or “IRS”). The tax will be applied based on three tax brackets that vary from:

  • 0.075 percent for those real estate properties with a tax assessed value between CLP400 million to CLP700 million (approx. USD544,000 to USD952,000);
  • 0.15 percent for real estate property with a tax assessed value between CLP700 million and CLP900 million (approx. USD952,000 to USD1,225,000); and
  • a final tax bracket of 0.275 percent for those real estate properties with a tax assessed value over CLP900 million (approx. USD1,225,000).

This tax will be added to the ordinary real estate tax that is payable on a quarterly basis and applies from 1 January 2020 on.

Unemployment tax

Are there unemployment taxes in your country/jurisdiction?

Unemployment income is paid monthly and is not subject to taxes or social security deductions. (Law 19.728).

Other taxes

Are there additional taxes in your country/jurisdiction that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.

Stamp Tax

The stamp tax applies for documents or act involved in money credit operation, for example provisory notes and bills of exchange.

The tax base is the amount granted in the document. The tax rate varies depending on the period of time between the document issue and its expiration, and it applies from 0.033 percent to 0.4 percent.

Foreign Financial Assets

Is there a requirement to declare/report offshore assets (e.g. foreign financial accounts, securities) to the country/jurisdiction’s fiscal or banking authorities?

Yes, for those foreign individuals residents in Chile with more than of 3 years of residence in the country/jurisdiction are obligated to submit the Sworn Statement 1929 in order to report foreign investments and the corresponding incomes generated abroad. This obligation includes to Chilean individuals considered residents in Chile.

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Immigration

The following is an overview of the concept of Chile’s immigration system for skilled labor.

(E.g. which steps are required, authorities involved, in-country/jurisdiction and foreign consular processes, review/draft flow chart illustrating the process)

Foreign nationals who need to work and live in Chile for an extended period are required to obtain the respective visa which allows them to reside and work in the country.

Currently, visa applications can be processed either with the Chilean Consulate of the applicant’s country/jurisdiction of residence or with the Chilean National Immigration Service. Main types of visas include: temporary residence visa and work contract visa. Eligibility for a permanent residency benefit in Chile varies depending on the type of visa and on the visa period a main holder already has. Visa eligibility will depend on the characteristics of the specific case and requirements may vary depending on the visa type. .

For short term assignments (up to 180 days) a 30-day special work permit for tourists, extendable, can be requested in country. 

International Business Travel/Short-Term Assignments

Describe (a) which nationalities may enter Chile as non-visa national, (b) which activities they may perform and (c) the maximum length of stay.

Short-term business visitors are authorized to enter Chile with a tourist status, without the need of requesting a tourist visa. These include foreign nationals of those countries with which Chile has diplomatic relations and has signed reciprocity international agreements. These foreign nationals are authorized to remain in Chile for a maximum of 90 days (renewables), being able to perform recreational activities, sports, medical treatments, studies, business (Business Visitor), family visits or similar..

Alternatively, the following list of countries/jurisdictions currently do require a tourist visa to enter Chile:

Afghanistan

Algeria

Angola

Armenia

Autralia

Azrbaijan

Bhrain

Bangladesh

Belarus

Benin

Bhutan

Bostwana

Brunei

Burkina Faso

Burma

Burundi

Cambodia

Cameroon

Cape Verde

Central African Republic

Chad

China

Diplomatics

Comoros

Congo Brazzaville

Dem. Republic of Zaire

Cuba

Cyprus (North)

Djibouti

Dominica (Commonwealth of)

Domincan Republic

Dem. Republic of Timor-Leste

Egypt

Equatorial Guinea

Eritrea

Ethiopia

Falkland Islands

Faroes, The

Gabon

Gambia

Ghana

Greenland

Guernsey

Guinea

Guinea Bissau

Haiti

Hong Komg (SAR passports)

India

Iran

Iraq

Isle of Man

Israel (Laisse Passer)

Ivory Coast

Jersey

Jordan

Kazakhstan

Kenya

Kiribati

Korea DPR (North Korea)

Kosovo (not fully recognised)

Kuwait

Kyrgyztan

Laos

Lebanon

Lesotho

Liberia

Libya

Madagascar

Malawi

Maldives

Mali

Marshall Islands

Mauritania

Micronesia

Montserrat

Morocco

Mozambique

Namibia

Nauru

Nepal

Niger

Nigeria

Norfolk Island

Northern Mariana Islands

Oman

Pakistan

Palau

Papua New Guinea

Philippines

Henderson, Ducie & Oeno Islands

Puerto Rico

Qatar

Rwanda

Samoa

Sao Tome and Principe

Saudi Arabia

Senegal

Seychelles

Sierra Leone

Solomon Islands

Somalia

South Georgia & Sandwich Islands

South Sudan

Sri Lanka

St Helena

Sudan

Suriname

Swaziland

Syria

Tajikistan

Tanzania

Togo

Tunisia

Turkmenistan

Turks and Caicos Islands

Tuvalu

Uganda

Uzbekistan

Vanatu

Venezuela

Yemen

Zambia

Zimbabwe


Describe (a) the regulatory framework for business traveler being visa nationals (especially the applicable visa type), (b) which activities they may perform under this visa type and the (c) maximum length of stay.

For those individuals who need to travel to Chile as a Business Traveler, and who are nationals of any of those countries/jurisdictions that require to process a visa before entering the country, it is mandatory to obtain a tourist visa as a business visitor which must be processed with the Chilean Consulate of the applicant's country/jurisdiction of residence.

On the majority of cases, this visa authorizes the individual to remain in Chile for a maximum of 90 days (renewable), authorizing them to perform activities such as:

  • Meetings and negotiating.
  • Attending to seminar or a short series of seminars (as an attendee, no part in arranging the seminar).
  • Receiving short-term training or teaching within the same employer.
  • Gathering information on client preferences, target market or potential partner.

However, the tourist visa by itself does not authorize the assignee to perform remunerated activities in country. In that case, a Special Work Permit for Tourists (SWPT) should be processed upon arrival with the immigration authorities. Processing times may vary between 1 to 5 business days. The SWPT has a 30-day validity period and is renewable while the tourist status remains valid.

Outline the process for obtaining the visa type(s) named above and describe (a) the required documents (including any legalization or translation requirements), (b) process steps, (c) processing time and (d) location of application.

The business tourist visa application process should be managed with the Chilean Consulate of the applicant's country/jurisdiction of residence. Please, find the detail of the stages of the same below:

1) Document gathering stage: required documentation may vary depending on the Consulate’s jurisdiction. However, generally required documentation is the following:

  • Visa Application Form (if required).
  • Valid Passport (at least for the length of the visa).
  • Passport color photograph.
  • Support letter from a sponsor in Chile (if required).
  • Proof of economic solvency.
  • Flight reservation.
  • Hotel reservation.
  • Due to Covid-19, a valid Chilean Mobility Pass (vaccination scheme validation) will be required.

2) Filing of the application. Should be submitted through an electronic system.

3) Processing times vary depending on the Consulate. On normal situations, chilean immigration authorities may take approximately between 1 to 3 months to reach a decision.

4) Visa approval: once the visa is approved, the applicant has 90 days to stamp the visa and travel to Chile. The visa will be activated once the individual enters the country.

Are there any visa waiver programs or specific visa categories for technical support staff on short-term assignments?

No.

Long-Term Assignments

What are the main work permit categories for long-term assignments to Chile? In this context outline whether a local employment contract is required for the specific permit type.

The main types of visas that can be used to authorize a foreign national to develop a long-term activity in Chile are the following:

1) Temporary residence Visa: authorizes the applicant to live and work in Chile for a maximum of 1 year, renewable for one time only. This type of visa is commonly used for applicants who will maintain the employment relationship with the company in the home country/jurisdiction, from where salaries and social security contributions will be paid and for applicants of specific nationalities from the Mercosur Convention in South America (Argentina, Brazil, Uruguay, Paraguay and Bolivia). However, Mercosur visas can be applied in the destination country only. General documentation for other temporary residence visas include an assignment letter issued by the company in the home country/jurisdiction (therefore a work contract with the local company is not required).

2) Work Contract Visa: authorizes the applicant to live and work in Chile for a maximum of 2 years and requires the submission of a work contract issued by a company in Chile. This visa can be renewed as many times as required and only authorizes the applicant to work for the hiring company.. If the work relationship ends , the visa will also expire and a visa cancellation will be required.

3) Permanent residence: applicants are eligible by the end of the 1 year Temporary residence Visa or by the end of a 2 year Work Contract Visa. It authorizes the applicant to live and work in Chile for an indefinite period.

Provide a general process overview to obtain a work and residence permit for long- term assignments (including processing times and maximum validation of the permit).

The temporary visa and the work contract visa can be processed with the immigration authorities once the applicant is physically in Chile whilst with a tourist status or with the Chilean Consulate of the applicant's country/jurisdiction of residence (previous to traveling to Chile).

1) National Immigration Service (In country process):

a) The applicant must be physically in Chile with a tourist immigration status.

b) Authorities may take between 4 to 7 months after submitting the application to begin the analysis stage, issuing a proof of visa in progress certificate and a special work permit.

c) Approval may take between 7 to 10 months.

d) After approval, the applicant must complete the final registration the process: electronic visa stamp activation, visa registration with the local Immigration Police and obtaining the Chilean ID card with the Civil Registrar.

2) Chilean Consulate:

a) The applicant cannot be in Chile with a tourist status at the moment the visa is filed.

b) Authorities may take between 2 to 5 months after submitting the application to approve the request., stamp the visa and authorize the travel to Chile. .

After arrival, the individual has 30 days to complete the final registration process visa registration with the local Immigration Police and obtaining the Chilean ID card with the Civil Registrar.

Is there a minimum salary requirement to obtain a long-term work and residence permit for assignments? Can allowances be taken into account for the salary?

Yes, Chilean law determines a minimum monthly salary for all workers (currently, approximately USD 450,00). Additionally, for immigration purposes, the salary paid to the applicant should be in accordance with the average salary paid in the local market for the type of work that the applicant will perform in Chile. Allowances are not considered part of the salary.

Is there a fast-track process which could expedite the visa/ work permit?

On June 1st, 2017, the Chilean government issued a new type of visa called “Visa Tech”. Individuals and investors associated with the technology sector are eligible for this type of visa. Proof of expertise on IT related matters will be required. This visa entails an expedited application process for eligible applicants.

The aim of the Visa Tech is to attract foreign investment to develop strategic areas of the Chilean economy regarded high added value, such as solar energy, technology, and machinery for mining, food technologies, sustainable tourism, and “global technology” services only.

At what stage is the employee permitted to start working when applying for a long-term work and residence permit (assignees/ local hire)?

1) If the applicant submitted the visa application in country, with the National Immigration Service,, they will be authorized to work in Chile once the immigration authority begins the analysis stage, between 4 to 7 months after the submission date; by which time, the authorities will issue a special work permit authorizing the applicant to work while the application is in progress. Notwithstanding the above, it is common practice to simultaneously apply for a Special Work Permit for Tourists, which provides a transitory work permit valid for 30 days (renewable), thus allowing the visa applicant to work with a tourist status during the initial period while the authority issues the respective work permit with a proof of visa in progress certificate..

2) If the applicant submitted the visa application with the Chilean Consulate of their country/jurisdiction of residence, they will be authorized to work in Chile once the visa is approved and they have entered Chile with the stamped visa in the passport, even while the final registration stages of the process are pending completion. While the consular visa is under process, the applicant should not enter the country with a tourist status, as this may entail risk of rejection to visa process abroad.

Can a short-term permit/ business visa be transferred to a long term permit in Chile?

Currently, it is possible for individuals located in Chile with a tourist status to apply for a temporary residence visa or work contract visa with the National Immigration Service.. However, it is expected that a recently approved Immigration Law will come into full effect within the next months, by which time, changing immigration status in-country will no longer be possible.

Is it possible to renew work and residence permits?

The temporary residence visa can be renewed only once. At the end of the renewal period it is mandatory to apply for a permanent residence. Instead, the work contract visa can be renewed indefinitely.

Is there a quota or system or a labor market test in place?

There is a maximum quota of foreign employees that can be hired by a Chilean Company, equivalent to a 15 percent of the total work force if the number of employees working for that company is higher than 25::

a) The calculation is based on the total number of employees that provides services to the company at a national level, considering the total number of branches existing in the country/jurisdiction.

b) The following are excluded from this calculation:

  • Technical specialists.
  • Foreign national employees married with, in a common-law relation with, parents of or widowers of a Chilean national.
  • Foreign national employees residing in Chile for more than 5 uninterrupted years. The legislation makes no distinction as to the kind of visa that the employee must have.

General Immigration Related Questions

Would it be possible to bring family members to Chile?

Yes, proof of economic solvency, a sworn expenses declaration and the respective translated and apostilled/legalized valid birth/marriage/common-law relationship certificate for the following dependents is required:

  • Spouse or Common-Law Partner
  • Parents.
  • Children

Is it possible to obtain a permanent residence permit?

The permanent residence can be obtained:

1) A temporary residence visa holder can apply for a permanent residence by the end of the first year of their visa validity period and must request the permanent residence by the end of the visa renewal period,

2) A work contract visa holder can apply for a permanent residence if the visa had at least a 2 year validity period, by the end of the second year of their visa.

Notwithstanding the above, the main requirement to apply for a permanent residence is to have been physically located in Chile for at least, 185 days during the last year of the visa period.

What if circumstances change after the Work and Residence application process (e.g. change of employment or personal situation, including job title, job role or salary)?

To determine the steps to follow in an immigration process in which circumstances have changed, it is necessary to differentiate between the type of visa that is being requested or that the foreign national already holds:

1) Temporary residence visa: change of employment or personal situation, including job title, job role or salary does not result in any interruption or delay in the analysis of the application. The temporary visa grants full labor flexibility to the applicant, allowing them to change conditions both during the analysis process and during the validity of the visa.

2) Work contract visa: the application is linked with the work contract; therefore, if the contract is terminated during the visa application analysis stage or during the visa validity period, the following could occur:

a) Termination of the work contract during the analysis stage of the visa application: For the immigration authority to continue with the analysis, the applicant must provide the termination document, as well as a new document/work contract proving economic solvency in Chile despite of the end of the labor relationship. Otherwise, the visa will be rejected.

b) Termination of the work contract during the visa validity period: the visa expires with the termination date. The employer has 15 days to submit the termination document with the immigration authorities and the applicant has 30 days to submit a new visa application or to leave the country/jurisdiction.

3) Approved permanent residence: there is no effect.

How long can a permit holder leave Chile without their permit becoming invalid?

If the individual is a visa holder they may depart from Chile without affecting their visa. However, if the individual is the holder of a permanent residence, they cannot remain outside the country/jurisdiction for 365 consecutive days. Alternatively, they can request a yearly extension of this period with the Chilean consulate of their place of residence. This request can be made for up to 4 consecutive periods. Otherwise, the individual will lose residence in Chile and must begin a new immigration process.

Must immigration permissions be cancelled by the end of the assignment/employment?

This requirement is mandatory only with valid work contract visas.. In the other cases, it is not required to cancel the visa with the immigration authorities.

Are there any penalties for individuals and/or companies in place for non-compliance with immigration law?

Penalties may apply for those individuals who perform work activities without authorization; for individuals who extend their stay in the country/jurisdiction after their tourist visa/residency permit has expired and for those individuals who do not carry out the stages of their processes within the established deadlines. Employers may also suffer penalties for noncompliance (hiring foreign nationals with no work authorization) The applicable penalties are as follows:

1) Formal Warning: written formal warning that applies only if the individual is not a repeat offender.

2) Fine: monetary penalty that applies to repeat offenders.

3) Expulsion from the country/jurisdiction: deportation to the individual’s home country/jurisdiction.

Other Important Items

List any other important items to note, or common obstacles faced, in Chile when it comes to the immigration processes.

The main challenges that can be faced when conducting an immigration process may be the following:

1) Extension of the process timelines: Due to a large number of applications currently under process, the changes recently introduced to the system and pandemic situation, the immigration authorities have extended their analysis timelines resulting in delays in the issuance of documents and approval of applications which directly impact the applicants. This affects their travel plans outside of Chile, causes hiring delays, etc.

2) Changes in the requirements for processing applications by the Chilean Consulates: Each Consulate has their own documents requirements; thus, different criteria for a same type of visa may apply on different jurisdictions. This implies a low level of certainty regarding the steps and management of an immigration process.

3) The ongoing pandemic crisis produces uncertainty regarding the border situation through time and the specific requirements for entry. Currently, Chilean borders are open. However, specific sanitary requirements are demanded for travelers, such as validation of the home country vaccination scheme, PCR tests, health insurances, sworn affidavits and mandatory quarantine periods post arrival, among other.

A new immigration law has been approved by the Chilean Government. The regulation that will enact this law is expected to be approved within the next months. Once the law is enacted, new immigration categories will come into effect and a change of immigration status from tourist to resident through an in-country process will no longer be possible. Although the immigration authorities are currently working on the reorganization of their administrative structure, the enactment of new regulation is expected to bring a period of uncertainty regarding the specific requirements and procedures applicable to the new immigration categories.

Disclaimer

All information contained in this publication is summarized by KPMG Chile, the Chilean member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on Chilean income tax law Decree law n° 824.