Chile Forum

Ditto Tom, very helpful. I just got my ticket yesterday. More like 95 days for me.

Tom
I think I understand what you are saying about Domicily, could you answer this please.
I will buy a property in Chile on a tourist visa, will get a RUT and after the 3 year tax holiday I will be required to pay income tax in Chile on my earnings in the US even though I plan to only come for vacation for less than 90 days a year. I must be misunderstanding this ,please straighten me out.
Thanks in advance

This is a clasical example of problem dealing with Impeustos Internos in Chile, I hope I can explain it clearly in my limited english.

As Servicio de Impuestos Internos criteria you must pay taxes, because you own a property in Chile and come in "a regular basis" which denotes the "intention to stay" in the country, this is the theory.

Inspectors at Impuestos Internos are compelled to apply the criteria most favorable to fiscal interests, even if they know that they are wrong. Impuestos Internos lose a lot of sues in court, but arrange to collect money also menacing people with a sue and agreein an "extra juditial arrangement". In a court you would probably win your case demonstarting that you have not domicily in Chile and you are not subjet to taxes, but SII criteria is as I mentioned anyway.

But as I told later, this is the theory, lets go to practice: If you have no further investments in Chile as cars, other properties or depositos a plazo, after the 3 year holliday, SII people has no way to know about your incomes and they will not mess with you because they are not interested to investigate people, unless they are susspected tax criminals or such.

Even if you purchase -lets say- a property after the tax holliday you are oblied to justify ONLY the taxes who cover your investment, no more and SII has not juridiction to investigate your earnings outside Chile. The most probable scenario in this case is that you are asked to pay the "undeclared taxes" corresponding to the incomes of the purchase only, you may either pay or follow the procedure and go to the court to litigate about your domicily

If after the tax holliday you dont make any of the mentioned investments, you have nothing to worry about, because SII do not control the personal expenses here in Chile

Tom,
Thank you for your invaluable insite. It would seem that this idea of how SII applies the criteria for domicilly would limit foreign investment and add many thousands of dollars to any purchace. Then I presume that each year SII may want income tax for each tax year while owning property or as you had said they have no jurisdiction outside Chile to investigate income unless you purchase more property. Does the tax holiday start again for any new property? Really Thanks for help.

The tax holliday is just once, no repeats. Maybe I cannot explain clear this point: income tax in Chile is not high and if you have not a salary in Chile is very dificult for Impuestos Internos to determine your real incomes because they control only the big investments that you make.

The most advisable if you receive an income from abroad is make all big investments in the 3 years tax holiday, after that your earnings are not taxables because there are not control on your normal expenses.

Anyway if you make an investment after the tax holiday you are requested to pay income tax for an estimated earnings that seldom are too high, based in the amount of your investment plus an estimated of your current expenses to live.

All this matters are in the "grey zone", subject to criteria interpretation and arguable, both in Impuestos Internos and court. Residence is not a clear matter and is a clear example of the issues subject to litigation with SII

tombrad2 wrote:Well, tax "radar" in Chile is very weak unless you have a paid job under contract. Both for chileans and people from overseas IRS do not mess you unless you:
1.- Buy a property
2.-Buy a car/vehicle

Tombrad2
Firstly may I say that I find your posts very helpfull, so thanks .
Secondly, my wife & I live in USA. My wife is a Chillean citizen and we travel there each winter sometimes for two or more months at a time so two years ago we purchased a car ( using my wife's rut) to avoid renting one for $2000- $3000 each time we go there. So my question is should we be concerned about a irs "radar"?
Finally if I move to Chile and have investments that are already being taxed in the USA. will I be taxed on that income again in Chile?

Thanks in advance.................Murf

Dont worry about "radar" if you are not living in Chile, no problem.
At http://www.pwc.com/extweb/ncpressreleas ... A80047C5C9
there are a very interesting article explaining the same as we discussed above, I suppose that there are "convenio por doble tributacion" between Chile and USA in the framework of the free trade agreement, Chile has signed many of those aggrements to avoid double taxacion with many countries, surely USA must be in the list.

Anyway your investments in USA are NOT taxables nor traceables by chilean IRS, bcs they are out of their jurisdiction, the only taxable n Chile are the investments in Chile, not in any country abroad

Again thanks for the info.
I felt that double taxation would not happen, but you never know .
I have one more question and that is will the IRS not wonder where your income comes from ?

Thanks again ..............murf

There is no tax treaty YET between the USA and Chile.

http://www.irs.gov/businesses/internati ... 39,00.html

Theoretically, you can be double taxed.

eeuunikkeiexpat wrote:
Theoretically, you can be double taxed.

Thanks for the info. If I understand it correct you can indeed be double taxed which may be problematic .

eeuunikkeiexpat stated well: "theoretically", despite there not exist a double tax treaty, it would be very odd to be efectively asked for tax, because if you do not earn a salary in Chile, Servicio de Impuestos Internos do not investigate your incomes. Only your investments or savings in depositos a plazo are in their scope. That is why the "radar" is pretty limited, they prefer concentrate to control VAT and Income tax for people receiving salary, other controls are too expensive and doesnt make sense for goverment.

This article from the UK Telegraph made me think http://www.telegraph.co.uk/money/main.j ... road23.xml
so I thought I'd ask, what's the position in Chile regarding death duties etc? My dad in the UK is 80 and we're not looking forward to forking over 40% of his assets over 250k.

As long as I know there are not such thing as inheritance taxes in Chile, or may be very low if any, I inherited a small property from my mother and dont remember had paid a single peso in taxes when I transfered to my name

MikieO wrote:This article from the UK Telegraph

Wow !!!!!!!!!!!!!
Interesting article...makes you think.

Can anybody give me any idea of the tax levels in a small company? I am led to believe that the personal income tax level in Chile is 10%. As a rough guide what would the tax levels be for a company who earned all of its income from investing in the markets overseas. This may also be a burning question for Tony from Oz