How to Create a Company in Chile while Being a Foreigner [En 6 Pasos]

Publicado el
30/1/2024
Autores
Clemente Hernández Gemigniani
Corporativo | Tributario | Internacional
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Follow these steps to create a company and invest in Chile Being a Foreigner and Investing in Chile

About Us


New Society Solutions SpA is a law firm that specializes in providing legal services and advice efficiently and with fixed prices to entrepreneurs and companies both domestic and foreign providing comprehensive advice throughout the process of investing and raising capital in Chile. We have experience creating foreign companies from 4 continents and more than 15 countries.

Our firm has vast experience in its area, specializing in the incorporation and legal representation of foreign companies, carrying out all the necessary procedures for their expeditious operation in the country.

We invite you to invest in Chile with our guide updated to June 2020 that we make available to you.

Chile as a Business Place

No matter the size or line of business, investing in Chile offers a stable environment in terms of innovation and economy, with broad projections of economic growth and controlled inflation. This makes it attractive for foreign investment.

In our country there is a legal environment for the protection of foreign investments, protected by international treaties, independently of the process of change of Constitution that currently faces the country.

With a reduced corporate tax rate for the years 2020, 2021 and 2022 to 10% of the profits generated by the company, among other important tax benefits.

This allows foreign capital to operate as any national company would, without discrimination.

Naturally, the structure of each business will depend on its unique characteristics, which must be analyzed on a case-by-case basis.

This manual seeks to provide practical guidance on key legal issues when investing in Chile.

If you wish to incorporate your company in Chile, and designate us as your representatives, we will support you throughout the process, without the need to travel to Chile, send an email explaining your project to our partner, expert in foreign investment and international tax law, Esteban Sáez: esaez@nss.cl, or send him a Whastapp at +569 9010 2490, we will be happy to help you.

Supporting companies in their internationalization processes is our passion.

We also invite you to visit our international services page

How to Create a Company in Chile while Being a Foreigner:

1.- Obtaining RUT as a Foreign Investor

All persons seeking to invest in Chile will be subject to tax payment, so it is necessary to assign a Single Tax Role (RUT) also known internationally as TAX ID.

To obtain a RUT as a foreigner - person or company - it is a requirement to grant a power of attorney to a Chilean person.

This power of attorney is specifically to represent the Investor before the Internal Revenue Service.

This power of attorney can be signed abroad or in Chile. If you subscribe abroad you must be apostilled and physically sent to Chile.

In case it is a company that is going to invest in Chile, it is also necessary to present

  • The company's statutes
  • A certificate of good standing or existence of the company
  • Information on:
  • Who are the current shareholders of the company.
  • Percentages of participation in the company.
  • Shareholders' tax identification number.
  • Country of residence Taxation.

It is very important that all documentation must be submitted duly apostilled or legalized, not older than 60 days.

Documents issued in a language other than Spanish or English, must be translated by a competent authority and apostilled.

With these documents, the investor's representative must file Form 4415.1 with the SII, with which he obtains
 
obtaining a RUT for foreign investor

.

Which Visa can I use to become a Legal Representative?

As a general rule, to be a legal representative you must have a Definitive visa.

However, it is also possible to appoint a legal representative who has Temporary Visa.

It is normal that this representative has certain limitations, the most common being the limitation to open current bank accounts with local banks.

Our recommendation when investing in Chile is to appoint someone of absolute confidence or expert lawyers in the legal representation of companies who act on the instructions of the client (the investor in this case) when signing acts and contracts.

2.- Constitution of a Company or Beginning of Activities as a Permanent Establishment

There are many ways in which companies can organize themselves in the country to start activities.

From nonprofit organizations to corporations with a stock market presence. Local legislation seeks to recognize different structures for different needs that may arise.

2.1 Incorporation and types of companies

Once we have RUT as a foreign investor and we are in the SII database, we can proceed with the incorporation of a company.

This is done by signing a public deed of incorporation. The bylaws regulate the way in which the company is managed and the capital contributed by the shareholders, among others.

/g: If you are looking to do the procedure without traveling to Chile, the power of attorney must grant the power to incorporate a company in Chile. In this way your representative will sign the constitution of the company in your name and on your behalf.

PRO TIP: It is also possible to acquire all the shares of a company already incorporated in the country. Consult esaez@nss.cl for the possibility of acquiring a company ready to operate, with a bank account.

Generally a foreign company can choose within one of the following types of organization:

  • Public Limited Company
  • Stock Company (Recommended)
  • Limited Liability Company
  • Others

As a general rule, it is not mandatory to choose any of these particular structures to do business in the country.

The above, except for certain business areas, such as the banking industry, investment funds, among others.

It is important to take into account aspects such as management and corporate governance, transferability of shares, among others. These Criteria will help us to choose the right corporate structure.

2.2.- Permanent Agency.

A permanent agency is one that is incorporated in Chile but maintains its domicile abroad, through its parent company. Doing business through an agency or branch in Chile, without forming a new company.

In certain cases, due to the application of double taxation agreements, this may be the most convenient structure.

This is because it allows you to pay taxes only in the country where the company has its Parent Company.

3.- Tax Strategy

Once the RUT has been obtained, and the most convenient corporate structure has been chosen, it is recommended that a report be requested on how the future profits generated by the company will be taxed.

It is also important to determine what tax will be paid upon the eventual sale of the property (shares or rights) of the company.

3.1 Company Withdrawal Tax.

Profits generated in Chile by foreign persons are generally subject to an additional 35% flat tax.

The company when making a distribution of dividends or profits to its foreign shareholders, is obliged to withhold 35% of such dividend through the Form 50 available on the Internal Revenue Service website.

3.2 Corporate Tax

In Chile, corporate tax amounts to 25% of the income generated in a year by the company. This is in case you are a "Small and Medium Business" with an annual turnover of less than approximately USD 2.7 million per year.

Currently, in September 2020, under a government-driven economic recovery plan enacted by Congress, Chile's corporate income tax of jobs in the country will be reduced from to by and order promote investment employment country.> This makes us the best time to invest in Chile.

Once the partners obtain dividends from the company (withdrawal of profits), the company is obliged to withhold the difference between the corporate tax and the additional tax rate of 35%.

It is important to determine what benefits I can apply depending on the country from which I am going to invest in Chile, applying the agreements to avoid double taxation that Chile has signed with a large number of countries.

Because of the application of an international tax convention, it may be more convenient to come from one country than from another.

3.3 Tax on the sale of company property (capital gains)

The sale of the company's shares can also generate a profit for the practitioner.

To calculate the profit generated, the value of the contribution made at the time the company was incorporated must be deducted from the amount of the sale of the company.

The highest value generated is subject to 35% tax.

Planning case study: If we apply agreements such as the one signed between Chile and Spain, the tax rate for the sale of company property is subject to a single rate of 16%.

That is, for the same operation, depending on the country of residence of the parent company, I will pay 19% less tax.

As long as you are aware of this benefit and how to apply it.

This makes Spain one of the most convenient countries to invest in Chile.

4. Publications in the public records

Once the corporate structure and tax strategy are defined, the investor's representatives will sign a company's charter.

This deed defines the form of administration, capital, domicile and business activity of the parent company, among other things.

The company's certificate of incorporation must be notarized for registration.

In the case of the establishment of a permanent establishment, they must also expressly state that

  1. The agency is aware that Chilean law governs its business and contracts in the country.
  2. You will maintain sufficient liquidity to meet your obligations and taxes.

A summary (extract) of the public deed must be published in the Official Gazette and registered in the Commercial Registry within 60 days.

It is also necessary for the legal representation of the Foreign Agency and any other action they wish to take.

5.- Tax regularization of the company.

Once the public deed has been obtained, the publication in the official newspaper and its registration in the Commercial Registry, it is necessary for the legal representative of the company to appear before the Internal Revenue Service.

In order to obtain RUT and start activities for such purposes, the following documentation must be presented:

  • Public deed of incorporation of the Permanent Establishment, publication in the official gazette and registration in the commercial register.
  • Certificate of good standing, by-laws and Power of Attorney granted by the parent company abroad.
  • Rental Contract, Certificate of ownership or transfer of use regarding a property in Chile.

With these documents, the Form 4415 for the commencement of activities must be submitted. This form informs about the economic activities that the company will carry out in the country.

6. Electronic Invoicing and Monthly Taxes.

Having performed all the previous steps, the company must through a lease or sublease contract prove its domicile in the country.

Once this is done, the company is authorized to issue invoices and other tax documents in Chile.

The important thing now is to file your monthly tax returns on time. It is important to have an accountant who makes such presentations in accordance with local legislation.

Conclusions.

The constitution of a foreign company in Chile has become a simple procedure. If we add to this the tax benefits such as the corporate tax reduced to a rate of 10%, Chile is presented as an excellent option for investing within Latin America.

The key is to have quality representatives and advisors in the country, with experience in using all the benefits, both tax and corporate, that can be accessed.

In New Society Solutions we specialize in representing foreign companies that seek to expand their business horizons in our country. We have represented companies from all corners of the world, such as Iceland, the United States, Mexico, Colombia, Argentina, among many others.

You are invited to

If you have any doubts, queries or require advice on setting up your company in Chile, please do not hesitate to send an email to esaez@nss.cl or speak to Whatsapp on +56990102490.

Invest in Chile with one of our plans

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