Paying taxes for work done internationally

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chilly
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Re: Paying taxes for work done internationally

Post by chilly » Mon Feb 24, 2020 9:57 pm

admin wrote:
Mon Feb 24, 2020 6:28 pm
you have to incorporate if you are doing anything related to IVA.
Does “incorporate” include LLCs like EIRL, so an EIRL can run a small business and charge IVA?

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Re: Paying taxes for work done internationally

Post by admin » Tue Feb 25, 2020 7:58 am

chilly wrote:
Mon Feb 24, 2020 9:57 pm
admin wrote:
Mon Feb 24, 2020 6:28 pm
you have to incorporate if you are doing anything related to IVA.
Does “incorporate” include LLCs like EIRL, so an EIRL can run a small business and charge IVA?
yes, there really is no such thing as an unincorporated sole proprietorship status in Chile, except as professional offering services.

once you cross the line in to selling a product that is IVA taxed, you have to incorporate. IERL would be the closes thing to a sole proprietorship say in the states, but it is just a single shareholder company.

FYI, watch out for some of the more exotic corporate structures in Chile, because other countries may not recognize them. for instance there are problems with the U.S. IRS recognizing an IERL (because, well, it is kind of a stupid illogical structure), but they do recognize like LLC, etc.
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Re: Paying taxes for work done internationally

Post by admin » Tue Feb 25, 2020 8:09 am

tiagoabner wrote:
Mon Feb 24, 2020 6:47 pm
admin wrote:
Mon Feb 24, 2020 6:28 pm
tiagoabner wrote:
Sun Feb 23, 2020 2:43 pm
Space Cat wrote:
Thu Jan 03, 2019 5:09 pm
You just issue your boletas to a universal RUT for these purposes.

In "My SII":
  1. "Emitir boleta de honorarios electrónica", click "Por contribuyente" (as usual, I suppose).
  2. Select the second option "El contribuyente emisor será quien se encargue del pago provisional mensual correspondiente al 10%." because you'll be paying the 10% retention.
  3. Enter the universal RUT: 44.444.446-0 (note that it's specifically for boletas, facturas to foreign clients require another universal RUT).
  4. Enter the name and address of your client, including the country (I just use "EE.UU." for the US).
  5. Set the "Región" to "Metropolitana de Santiago" and "Comuna" to "Santiago".
  6. Enter the amount in CLP, I just use today's exchange rate even if I don't plan to convert the money from USD to CLP.
These are the instructions I got from an accountant who has experience with freelancers, and then I double-checked the RUT by calling to SII's hotline.
Reviving this topic due to it's relevance to my current situation.

@Space Cat: how did it work regarding IVA/VAT? Were you able to get an exemption due to you exporting services to clients abroad, or did you need to charge and pay IVA/VAT on your invoices?
you have to incorporate if you are doing anything related to IVA.

services are not taxed with IVA

now, there is a big of grey zone here, and we run in to it with various clients in the IT industry and similar.

Here is an example.

If you are providing services to a company, say programming a piece of code on software they own, that would be an exported service. No iva

however, if you say programmed your own video game, and sold that over seas, that would be exporting a product. IVA applies.

Now, in practice, the SII does not generally slice the bread that thin, but they are fully able to if they wanted.
I'm sorry, Admin, but I think I may be missing your point here regarding incorporating. Do you mean that services sold to abroad would only be able to get the Iva exemption if I'm incorporated as a company (as opposed to an independent worker)?

I'm looking to keep things simple and compliant with Chilean tax law, and my understanding is that it's possible to export services as an independent. Also, do your company provide consultancy on these topics? I'm a bit concerned that the guys I'm going to see tomorrow may be little more than tax-fillers, and I would rather get some real professional answers if possible. Let me know if that's the case and I'll email you.
yea, send me an email.

but, the short free answer is you can still sell professional services out of the country to foriegn clients and companies as an an independent professional in Chile.

we would have to have a look at what you are specifically planning to do vs. expense you expect, etc. You might really need a company.
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Re: Paying taxes for work done internationally

Post by admin » Tue Feb 25, 2020 8:35 am

For everyone's future reference, this is the procedure for how we handle this sort of stuff for our clients.

You hire us, we take a look at your overall general business plan / objectives. If it is something we have handled before, like it is similar to something our other clients have done or it fairly straight forward, we put together the incorporation, initiation of activities, etc; or whatever is needed.

If is something a bit more complex, or unique, we have outside tax firm we work with, that we send the info / description to. The guy we work with is / was a professor of tax law and accounting. They put together a tax plan / report with pros and cons of different structures and how to implement them. We then draft the articles of incorporation to match those recommendations. The tax plan, then in most cases can be implemented on a day to day basis by most any competent "bookkeeper" account, which is much cheaper than say having a full blown international accounting firm handle it (some clients need that for various reasons, but most don't).

About 70 to 80% of the time we have dealt with a similar type buisness plan before, but we still get plenty of unique situations where the outside tax expert is needed. We also have a bunch of things we have to take in to consideration for our foreign clients such as immigration status, partners, foreign companies and tax laws, banking issues, etc.

because what often happens is an attorney does one thing, and an account does another thing, and at some point everyone needs to get on the same page. so, best to do it early, rather than say a few years down the line.

But, the point of doing it this way, among other reasons, is to make sure the conflicts of interest are kept to a minimum; and to limit early errors, so you get off to the right start and don't have to spend a bunch money later say modifying articles of incorporation more than needed. The other, is running in to a bunch of problems later with the IRS, and having to either pay a bunch of tax or worse penalties.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

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