Opening a business in Chile: what do I need to know?

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tiagoabner
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Opening a business in Chile: what do I need to know?

Post by tiagoabner » Sun Feb 23, 2020 8:51 am

Hello, fellow forumites.

I'm currently planning on moving my business that's currently based in Estonia to Chile. I have been reading a lot on Chile's tax system and I think I have a good grasp of the costs involved, but I'll also visit an accountant this week to clarify some points.

Do any of you have any experiences to share, or any must-ask questions that I should add to the list I'll bring in to the meeting with my accountant?

Thanks in advance.

[EDIT]: I sell management and training services, and I won't have Chilean employees, at least to begin with.
I'm NOT your lawyer, accountant or financial planner. All information at this post should be considered for your entertainment only. Consult a professional before making a decision regarding whatever topic was mentioned in this post.

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admin
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Re: Opening a business in Chile: what do I need to know?

Post by admin » Sun Feb 23, 2020 9:25 am

Don't believe anyone that tells you opening a bank account will be easy, even the bank, until it is open and fully functioning (like you have sent wires and they did not close it).

Don't mention Estonia, or anything else foriegn. their heads will explode with all sorts of stupid crap.

form a company, open a bank account. Don't try to import the foriegn company or do any complicated corporate structures. The only reason to go there, is if you have absolutely no choice.

The morons in the banking system hardly know how their own bank works, let alone international banks or businesses.

keep it simple.

most accountants are little more than book keepers / tax paperwork filers. Make sure they grasp the legal implications of what they are doing; because if they get it wrong or get creative, you are the one that will pay for it.
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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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Re: Opening a business in Chile: what do I need to know?

Post by admin » Sun Feb 23, 2020 9:33 am

FYI, if you are selling professional services, in most cases stick to that and avoid the whole corporate song and dance as long as you do not need to bill IVA for some sort of product, etc.

you will pay less tax, and a lot less hassel in terms of just tax paperwork, flexibility, etc.
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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tiagoabner
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Re: Opening a business in Chile: what do I need to know?

Post by tiagoabner » Sun Feb 23, 2020 9:46 am

admin wrote:
Sun Feb 23, 2020 9:25 am
Don't mention Estonia, or anything else foriegn. their heads will explode with all sorts of stupid crap.

form a company, open a bank account. Don't try to import the foriegn company or do any complicated corporate structures. The only reason to go there, is if you have absolutely no choice.

most accountants are little more than book keepers / tax paperwork filers. Make sure they grasp the legal implications of what they are doing; because if they get it wrong or get creative, you are the one that will pay for it.
I won't mention Estonia to them at all. I wouldn't try to confuse the poor Chilean bureaucrat. :-)

Yes, my plan is to form the company, open a bank account and go from there.

Regarding accountants, my understanding is that they're needed, in the sense as someone needs to fill your taxes. I also intend to see a lawyer to get more info.
I'm NOT your lawyer, accountant or financial planner. All information at this post should be considered for your entertainment only. Consult a professional before making a decision regarding whatever topic was mentioned in this post.

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tiagoabner
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Re: Opening a business in Chile: what do I need to know?

Post by tiagoabner » Sun Feb 23, 2020 9:48 am

admin wrote:
Sun Feb 23, 2020 9:33 am
FYI, if you are selling professional services, in most cases stick to that and avoid the whole corporate song and dance as long as you do not need to bill IVA for some sort of product, etc.

you will pay less tax, and a lot less hassle in terms of just tax paperwork, flexibility, etc.
I mean, strictly speaking I can "iniciar actividades" as a professional and sell my services to my company in Estonia. I knew that opening a company would involve some hassle, but I was hoping it would be under reasonable amounts of hassle.

BTW, does anyone have any article, link or reference to the IVA exemption when selling professional services to abroad?
I'm NOT your lawyer, accountant or financial planner. All information at this post should be considered for your entertainment only. Consult a professional before making a decision regarding whatever topic was mentioned in this post.

GAminer
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Re: Opening a business in Chile: what do I need to know?

Post by GAminer » Sun Feb 23, 2020 10:30 am

tiagoabner wrote:
Sun Feb 23, 2020 9:48 am
admin wrote:
Sun Feb 23, 2020 9:33 am
FYI, if you are selling professional services, in most cases stick to that and avoid the whole corporate song and dance as long as you do not need to bill IVA for some sort of product, etc.

you will pay less tax, and a lot less hassle in terms of just tax paperwork, flexibility, etc.
I mean, strictly speaking I can "iniciar actividades" as a professional and sell my services to my company in Estonia. I knew that opening a company would involve some hassle, but I was hoping it would be under reasonable amounts of hassle.

BTW, does anyone have any article, link or reference to the IVA exemption when selling professional services to abroad?
The iniciar actividades is only for income that you earn in Chile. For income earned over seas you just declare it when you file your taxes in April, however, as a foreigner you have a 3 year grace period. Also, check and see if Estonia and Chile have some sort of tax agreement like Chile has with the US. From my understanding, if you pay income taxes in another country you do not pay have to pay them in Chile. When you filling out the declaración de renta you put how much income you made from foreign sources and then how much you paid in taxes.

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Re: Opening a business in Chile: what do I need to know?

Post by fraggle092 » Sun Feb 23, 2020 11:21 am

You will never get a straight answer or advice from SII, they expect you to already know and follow the law, no matter how complicated it is. Not helpful. Quick to pick up on infractions, though, once you are in the system.

Somewhere to start:

http://www.sii.cl/preguntas_frecuentes/ ... 0_1174.htm
Un servicio prestado en Chile a un cliente extranjero, está afecto al pago del Impuesto al Valor Agregado (IVA)?

Sí, pues corresponde a un servicio prestado o utilizado en el territorio nacional, independiente de que la remuneración respectiva se pague o perciba en Chile o en el extranjero.

Se entenderá que el servicio es prestado en el territorio nacional cuando la actividad que genera el servicio es desarrollada en Chile, independientemente del lugar donde éste se utilice.
Many small businesses in this situation understandably stay "under the radar", especially as the SII aren't really interested in these types of complications, at least for the time being.
Bienvenidos a Chaqueteo City.

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tiagoabner
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Re: Opening a business in Chile: what do I need to know?

Post by tiagoabner » Sun Feb 23, 2020 12:06 pm

GAminer wrote:
Sun Feb 23, 2020 10:30 am
tiagoabner wrote:
Sun Feb 23, 2020 9:48 am
admin wrote:
Sun Feb 23, 2020 9:33 am
FYI, if you are selling professional services, in most cases stick to that and avoid the whole corporate song and dance as long as you do not need to bill IVA for some sort of product, etc.

you will pay less tax, and a lot less hassle in terms of just tax paperwork, flexibility, etc.
I mean, strictly speaking I can "iniciar actividades" as a professional and sell my services to my company in Estonia. I knew that opening a company would involve some hassle, but I was hoping it would be under reasonable amounts of hassle.

BTW, does anyone have any article, link or reference to the IVA exemption when selling professional services to abroad?
The iniciar actividades is only for income that you earn in Chile. For income earned over seas you just declare it when you file your taxes in April, however, as a foreigner you have a 3 year grace period. Also, check and see if Estonia and Chile have some sort of tax agreement like Chile has with the US. From my understanding, if you pay income taxes in another country you do not pay have to pay them in Chile. When you filling out the declaración de renta you put how much income you made from foreign sources and then how much you paid in taxes.
I'm beyond my three-year holiday already. My understanding from SII was that iniciar actividades related to any kind of self-employed paid work.
I'm NOT your lawyer, accountant or financial planner. All information at this post should be considered for your entertainment only. Consult a professional before making a decision regarding whatever topic was mentioned in this post.

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tiagoabner
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Re: Opening a business in Chile: what do I need to know?

Post by tiagoabner » Sun Feb 23, 2020 12:13 pm

fraggle092 wrote:
Sun Feb 23, 2020 11:21 am
You will never get a straight answer or advice from SII, they expect you to already know and follow the law, no matter how complicated it is. Not helpful. Quick to pick up on infractions, though, once you are in the system.

Somewhere to start:

http://www.sii.cl/preguntas_frecuentes/ ... 0_1174.htm
Un servicio prestado en Chile a un cliente extranjero, está afecto al pago del Impuesto al Valor Agregado (IVA)?

Sí, pues corresponde a un servicio prestado o utilizado en el territorio nacional, independiente de que la remuneración respectiva se pague o perciba en Chile o en el extranjero.

Se entenderá que el servicio es prestado en el territorio nacional cuando la actividad que genera el servicio es desarrollada en Chile, independientemente del lugar donde éste se utilice.
Many small businesses in this situation understandably stay "under the radar", especially as the SII isn't really interested in these types of complications, at least for the time being.
Article 12, letter E, item 16 of law 825 (Ley del IVA) states that: “Estarán exentos del impuesto establecido en este Título: E: Las siguientes remuneraciones y servicios: 16.- Los ingresos percibidos por la prestación de servicios a personas sin domicilio ni residencia en Chile, siempre que el Servicio Nacional de Aduanas califique dichos servicios como exportación. La exención procederá respecto de aquellos servicios que sean prestados total o parcialmente en Chile para ser utilizados en el extranjero;”

In a rough translation, income from services provided to customers outside of Chile is VAT exempt as long as Aduanas/Customs has them listed as an "exported service type". The latest Aduanas list I could find was this one: https://www.aduana.cl/listado-clasifica ... 04402.html

My services fall under categories 00550032, 01200011 and 00160381, so my understanding is that I would be VAT-exempt - assuming I follow all the other requisites to be categorized as such. I would appreciate it if anyone could shed some light on this. I don't intend to stay under the radar, but I also don't plan to pay a tax that I shouldn't be paying in the first place.
I'm NOT your lawyer, accountant or financial planner. All information at this post should be considered for your entertainment only. Consult a professional before making a decision regarding whatever topic was mentioned in this post.

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fraggle092
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Re: Opening a business in Chile: what do I need to know?

Post by fraggle092 » Sun Feb 23, 2020 1:06 pm

You will probably end up employing an "expert", as those quotes, (both from official sources) are somewhat contradictory. My one is quite definite in stating that tax is due on those type of activities. The sort of advice you want doesn't come free.

And I have found, in other situations that laws are often arbritarily interpreted depending on the animus of the fiscalizador, ymmv. Any feedback on your progress would probably be appreciated by other forumites considering a similar move. Good luck.
Bienvenidos a Chaqueteo City.

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Zenth
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Re: Opening a business in Chile: what do I need to know?

Post by Zenth » Sun Feb 23, 2020 7:25 pm

See a Lawyer??? Call the Admin.
Sheesh.....

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tiagoabner
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Re: Opening a business in Chile: what do I need to know?

Post by tiagoabner » Sun Feb 23, 2020 9:14 pm

Zenth wrote:
Sun Feb 23, 2020 7:25 pm
See a Lawyer??? Call the Admin.
Sheesh.....
I have a lawyer and an accountant meeting lined up for this week. What I'm looking for here are suggestions regarding the kind of question that I should be asking them among the topics that I have mentioned.
I'm NOT your lawyer, accountant or financial planner. All information at this post should be considered for your entertainment only. Consult a professional before making a decision regarding whatever topic was mentioned in this post.

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