Expat Community > Chile

Socium
Joined 2014
Posts: 90

Funds and taxation

7 years ago

1. Frequently most of concerns regarding bringing money into Chile is concentrated on opening a bank account and how to clear the funds.
2. However a critical issue is taxation when the investor, want to take away from Chile his funds. Through my +25 years of experience dealing with foreigners, most of local proffessionals advising foreigners, don't pay real attention to the long term consequences of bringing funds into Chile.
3. Chilean tax system charges a 35% tax over any bank wire done from Chile to any other country, that is not properly done. This is not an issue for most of people because everybody is concentrated in bringing in the money into Chile now, and not focused on something happening 5 or 10 years later. This tax may become critical for the investor, when you are sending back the product of the sale of a real estate or the funds obtained from the sale of a business. The Chilean tax system, makes responsible to withhold such tax to a any Chilean entity wiring the funds. So, we can not close our eyes when we deal with this kind of transaction, because Chilean companies and their main executives are liable for not paying the tax to the government.
4. Typical mistakes found on my experience that lead to pay such tax. A family member or a friend sent funds to another relative or a partner in Chile, to finance the purchase of an appartment or a small business or to fund an increase on the capital of a company. But the real estate, or the business or the capital registration when creating the bylaws of the company, is done on the name of WHO RECEIVES the funds. For our legislation, he is the owner of the asset or equity. Then when the asset is sold, the real owner outside of Chile is expecting to receive the funds and the profits from it. But as the seller is different from the person expecting to receive the funds, then such sum may be taxed 35% by the Chilean Treasure.
5. So, hire specialized advise on taxation, finance, and accounting related to foreigners or Chilean expats, because these mistakes arise years later when you want to return to your home country or move your savings to another nation. And as you already may know, the tax department is always waiting and not in a hurry to grab your taxes.

So, pay attention to the way you create and fund your venture in Chile, to avoid such troubles.

Kind regards,

Teo

Business Consultant for foreigners
[email protected]

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