Chile Forum

hi all.. only 15 days till i get in .. so excited..

can anyone explain how i will be affected by tax in chile if i dont plan to do any paid work there and live of the profits from my investments here in Australia?

i read somewhere that the Chilean government will tax foreign income..

would it be better to just stay in chile under a tourist visa and keep renewing it.. what are the implications with that?..

my plans for chile are only short term.. 6months min to 18months max..

i was in Chile last year for almost 10months(4 months then a month in Europe and back for 6months) without this concern.. am i over thinking it again?

many thanks..

i read that i have 3 years before they tax foreign income.. is this true?

True, for any earning generated outside Chile, after the 3 year holliday you are subjet to taxes either you have residency or not because for the IRS residency is not related with your visa but with "the intention to stay permanently inside the country"

tombrad2 wrote:True, for any earning generated outside Chile, after the 3 year holliday you are subjet to taxes either you have residency or not because for the IRS residency is not related with your visa but with "the intention to stay permanently inside the country"

But w/o any type of residency or economic activity in Chile (read: no C.I., RUT, etc.) you are not on their tax radar and thus the three year tax holiday on foreign income effectively applies only when you are actually on their radar. For USA citizens, there is no tax treaty (yet) and the sharing of information on individuals for tax purposes is doubtful. I speak as a 6 year "tourist" to Chile.

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
3.-take a "deposito a plazo" or similar investment
As long as you spend your income in wine, woman and songs, you will never be molested by Impuestos Internos

Interesting that Chile and the US don't have any sort of tax treaties. With the retrictions on foreign currencies and "firewalled" banking system, I would have thought that the US had a hand in setting it up.
Tom, when one buys a property, one needs a RUT, that's a given. But as a property owner, is it mandatory to file a tax return every year in Chile?
I'd have thought "no income, no tax return".

No need to fill any form

When you purchase a property in Chile the IRS ask you to justify where you obtained the money. Not taxes involved in the purchase but you have to explain how you obtained the money, I just find and interesting document in the IRS website http://www.sii.cl applied to aliens:

RENTA – ACTUAL LEY SOBRE IMPUESTO A LA – ART. 3°, ART. 10°, ART. 20°, N° 3, ART. 42°, N° 2, ART. 70° – CÓDIGO DE PROCEDIMIENTO CIVIL, ART. 345° – CIRCULAR N° 8, DE 2000. (ORD. N° 689, DE 16.03.2005)

How to justify incomes earned abroad to pay expenses or investmentes in Chile

Individuals who had no domicily nor residency in Chile during -at least- 3 consecutive years, and not earned incomes from national origin, and who declares that his expenses or investment has been paid with foreighn incomes, not taxed in Chile, they may acreditate the origin with any legal proof. However in case they present public documents originated out of Chile, it will be not necesary to legalize them as art 345 of Codigo Civil requires. Those incomes are not taxable in Chile if the aplicant had not domicily nor residency in Chile, are not subjet to income tax in Chile, however their profits in Chile will be taxable

-Certificates and documents , such as work contracts and salary receipts from foreigner employers, change receipts from casas de cambio or banks, passport and certificado de extranjeria are fit to prove the origin of funds, The tax service cannot reject a priori the admisibility of those documents.

Note that they use the term "domicily or residence", this mean that if you have domicily in Chile (even not residence) after the 3 years holliday you are subject to income tax. Bottom line, you have to worry only after the 3 years holiday, if you care not to make investments such as properties, cars or depositos a plazo, you may live forever as "no income" person

Thanks Tom, that's great. I knew that my instinct was right about keeping those casas de cambio receipts. So if I understand it correctly, I have 3 years before I am subject to IRS scrutiny unless I sell the house, in which case any profits would be taxable. I was interested to know whether or not I actually need to file a tax return if I am only living there part time and all my income comes from abroad. Is this the case after 3 years?

After 3 years if you have domicily in Chile all your incomes are legally taxable, either from Chile or from the US, note that the concept of "domicily" is quite extended much more than residence and includes the "intention to stay".

The good news are:
1.-There are no way that IRS knows about your incomes, the only control mechanismo is when you take a deposito a plazo, purchase a property or a vehicle in Chile (after the 3 years holidays)
2.-If you are with tourist visa nobody mess wiith you in the IRS no matter how long is your staying here unless you made some of the above activities.

Not much to worry anyway, you are not oblied to fill a tax return as long as you stay with a tourist visa in Chile

What has to be done regarding taxes in Chile under the following circumstances:

1. permanent resident in Chile,
2. own a property,
3. have no income in Chile,
4. have stayed in Chile more than 3 years, and
5. there exists a tax treaty between Chile and the foreign country.

I assume here it is necessary to pay taxes in Chile but how is the information about income verified? Is it necessary to provide "stamped" documents with all the problems that creates? Does anybody really bother to declare the foreign income :-O?

First I dont see any need to declare foreign incomes, unless you intend to purchase a property or vehicle or take a deposito a plazo and you are asked to justify where you get the money.

As I saw in the IRS document I copied above to prove the amount of external incomes it is not necesary to seal them, and IRS cannot discard apriori those documents, anyway, the only need to declare is if you have to justify your incomes for any investment

thanks tombrad2.. your help is very valuable.... only 8days to go!

Buena suerte!