Chile: second run

All things related to Moving to Chile, tips, tricks, FAQS. Here is where to exchange information between those that have already moved and those planning to move to Chile so you do not need to learn the hard way. Please also check Living in Chile forum for related information.
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Space Cat
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Re: Chile: second run

Post by Space Cat » Thu Mar 14, 2019 11:56 am

tiagoabner wrote:
Thu Mar 14, 2019 11:39 am
This is the most useful information I've ever read on this topic. I'll do more research to rerun my numbers, but that should skewer things even more in favor of Chile.
Thanks, I just checked Numbeo.com and Portugal turned out to be much more expensive than I thought. Food is cheaper because of the EU but according to your numbers above, the self-employed income after taxes will be 26% higher in Chile.

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tiagoabner
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Re: Chile: second run

Post by tiagoabner » Thu Mar 14, 2019 12:13 pm

Numbeo's prices haven't really caught up with the massive cost of living increase that has happened in the last few years. Real estate in Portugal is crazy and the Portuguese are taking a massive hit at their purchasing power due to that. Rent has increased by 20-50% in the city I live in since we arrived, and it has increased as much as 100% in some areas. It's unbelievable.

Check this article: https://www.nomeracapital.pt/2018/08/25 ... n-the-way/

IMF has stated that sales prices are about 50% higher than what was expected given the country's economic state. It's basic supply & demand: there isn't enough good real estate, so the ones available are getting more expensive.

at46
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Re: Chile: second run

Post by at46 » Thu Mar 14, 2019 3:03 pm

tiagoabner wrote:
Thu Mar 14, 2019 12:13 pm
Numbeo's prices haven't really caught up with the massive cost of living increase that has happened in the last few years. Real estate in Portugal is crazy and the Portuguese are taking a massive hit at their purchasing power due to that. Rent has increased by 20-50% in the city I live in since we arrived, and it has increased as much as 100% in some areas. It's unbelievable.

Check this article: https://www.nomeracapital.pt/2018/08/25 ... n-the-way/

IMF has stated that sales prices are about 50% higher than what was expected given the country's economic state. It's basic supply & demand: there isn't enough good real estate, so the ones available are getting more expensive.
The article says prices increased 71% since 2012 in the city center. Santiago has actually appreciated more over the same time, where I am.

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tiagoabner
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Re: Chile: second run

Post by tiagoabner » Thu Mar 14, 2019 5:05 pm

Here's the IMF data: https://www.imf.org/external/research/housing/

I've been looking for articles in English about this, but they're really hard to find. However, the data is clear: the price growth in Portugal doesn't match with the state of the economy. We could actually pay the prices that are being asked here, but we would rather not buy at peak-bubble prices.

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Space Cat
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Re: Chile: second run

Post by Space Cat » Wed Apr 03, 2019 5:41 pm

tiagoabner wrote:
Thu Mar 14, 2019 11:50 am
Space Cat wrote:
Thu Mar 14, 2019 11:21 am
And then the 10% AFP isn't a social security contribution but a "forced investment" into a private fund which you or your inheritors will withdraw in the future.
Strictly speaking, yes. But I've considered it to be a tax in the sense of it being deducted in a mandatory manner from my gross income.

I was aware of the upper limit for the AFP calculation, so that really didn't change my numbers, but the "gastos presuntos" is something I'll really need to read more about. It made the tax become ~3% lower over my gross income over the year on a quick calculation, so it has a lot of potential.
I've just started filling the annual tax declaration (F22) and SII automatically cut off 30% of my total income, putting it into the field #8 called "Rentas recibidas de los Arts. 42 N° 2 (Honorarios)". So it really works, yay!

Now if only I can understand how to get back the taxes that were paid in the US... Digging into it myself because it looks like the local SII isn't well-versed in the international taxation.

Hint for the future readers: it's probably the field #39 [1018], "Crédito al IUSC por impuestos pagados o retenidos en el exterior, según Art. 41A Letra D y Art. 41 C N°3". But also may be #43 [1107] or #14 [159], still learning.
Here's an internal document about this process: http://www.sii.cl/normativa_legislacion ... ircu44.pdf

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Space Cat
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Re: Chile: second run

Post by Space Cat » Wed Apr 03, 2019 6:24 pm

So, my annual income tax is 1.59% and I'm in the slightly-upper middle class, according to the ABC ranking that Chilean marketers use.

No, really, 1.59%!! 😀

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tiagoabner
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Re: Chile: second run

Post by tiagoabner » Wed Apr 03, 2019 6:31 pm

Thank you for sharing that the 30% deduction actually works on SII's side. Yeah, the 30% deduction really makes a difference on the effective rates. I reran my numbers and income tax would be 2.29% of my income, which is laughable when I compare to what I've paid here in Portugal. I still consider AFP to be a tax, though, the same I would consider SS contributions in the US or here in Portugal. The disability insurance-y benefit it provides is quite laughable, and I won't have access to that money for 30+ years, and I can't even get it as a lump sum, as far as I know.

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Space Cat
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Re: Chile: second run

Post by Space Cat » Wed Apr 03, 2019 6:41 pm

Yep, but it is still less than 10% because of the 80% salary base, and the percentage gets progressively smaller with income growth because of the 2.1mln top used in the calculations. So you have high chances of staying under 10-11% of income contributed to SII+AFP+SIS.

at46
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Re: Chile: second run

Post by at46 » Wed Apr 03, 2019 8:01 pm

tiagoabner wrote:
Wed Apr 03, 2019 6:31 pm
Thank you for sharing that the 30% deduction actually works on SII's side. Yeah, the 30% deduction really makes a difference on the effective rates. I reran my numbers and income tax would be 2.29% of my income, which is laughable when I compare to what I've paid here in Portugal. I still consider AFP to be a tax, though, the same I would consider SS contributions in the US or here in Portugal. The disability insurance-y benefit it provides is quite laughable, and I won't have access to that money for 30+ years, and I can't even get it as a lump sum, as far as I know.
You can actually get back your AFP contributions in a lump sum when you move away. I'll give you the name of the guy who helps people with it.

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tiagoabner
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Re: Chile: second run

Post by tiagoabner » Wed Apr 03, 2019 8:16 pm

That makes it way better, thanks!

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41southchile
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Re: Chile: second run

Post by 41southchile » Wed Apr 03, 2019 8:36 pm

Space Cat wrote:
Wed Apr 03, 2019 6:24 pm
So, my annual income tax is 1.59% and I'm in the slightly-upper middle class, according to the ABC ranking that Chilean marketers use.

No, really, 1.59%!! 😀
That's because it's a broad based tax system, when you tax more things you an afford to offer your citizens a lower income tax . Don't forget you are paying 19 percent on every single thing you consume every day, also If you have bank accounts, mortgages etc etc any credit, you are paying a tax there, you also have cap gains tax, vehicle transfers etc the list goes on and on . Dont get me wrong I think income taxes should be low, but just because you pay 1.59 percent income tax, does not mean they aren't sucking it up from somewhere else from you, dont worry about that they will get their pound of flesh.
Comuna Loncotoro Lakes Region Chile

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tiagoabner
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Re: Chile: second run

Post by tiagoabner » Wed Apr 03, 2019 8:38 pm

I'm currently paying 23% VAT in Portugal AND high income tax & social security tax. I'm OK with trading that for low income tax & lower VAT. :-)

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