How To Register a Company or Incorporate in Chile, and other considerations.
- How To Register a Company or Incorporate in Chile, and other considerations.
- Visit our new 2023 Doing Business in Chile Guide 🌎
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- 1. Obtain Tax ID as a Foreign Investor
- 2. Company Formation in Chile or Starting Activities as a Permanent Establishment
- 3. Define a Tax Strategy
- 4. Define a Corporate Structure and Trademark Protection
- 5. Tax Regularization and Issuing Electronic Invoices
- 6. Open a Bank Account in Chile
- 7. Keep up with Monthly and Anual Tax Payments
- Have any questions? Let us know on our contact page or in the comments, we love to talk to like-minded people.
We have helped – and work with – investors and companies from all over the world from different industries.Clemente Hernández G. — Founder and Partner of NSS Corporate & Tax
There is an infinite number of legal issues that can distract you from success. To reduce the things you need to worry about, you should find a trustworthy law firm to manage your legal needs efficiently, using transparent pricing.
Steps to Create a Company in Chile
General overview of incorporation process
1. Obtain Tax ID as a Foreign Investor
In Chile, every person or company liable to pay taxes must have a unique tax role, known as “RUT” (Rol Único Tributario)
2. Company Registration in the Commercial Registry or Digital Company Registry
There are different options for companies to organize themselves in the country
3. Obtain a Tax ID and Initiation of Activities Declaration in the Internal Revenue Service
The company representative must file both declarations to start operating
4. Register a Tax Address via a leasing agreement
Companies and entities in Chile must have a registered address for tax purposes
NSS offers this service.
5. Open a Bank Account at a Chilean Bank with USD and CLP Currency
We recommend certain banks for better performance
6. Keep up with Monthly and Anual Tax Payments
It is crucial to file your monthly tax returns on time. Ask your attorney for accountability services and delegate this task.
7. Define a Tax Strategy
It pays to work with international tax experts. Slash your tax as near to zero as possible with a smart tax planning.
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Our team will get notified if you need to discuss your business — free meetings until you are sure
1. Obtain Tax ID as a Foreign Investor
1.1 What is the Foreign Investor Tax ID?
In Chile, every person or company liable to pay taxes has a unique tax role, known as RUT (Rol Único Tributario).
1.2 How to obtain the Tax ID: Power of Attorney
To be assigned a RUT as a foreigner (person or company), it is required to grant a Power of Attorney or “PoA” to a Chilean-based resident. We recommend assigning a corporate and tax attorney.
In short, make sure all the faculties needed to fulfill the order should be provided in the PoA.
1.3 Do you need to be in Chile to subscribe this PoA?
Certainly, the answer is no.Remotely signing abroad works fine. Documentation must be apostilled and physically sent to Chile.
In short, be sure to give sufficient faculties to your attorney to be able to represent you before all authorities and parties.
1.4 Foreign Companies Investing: New Chilean Company Formation
Certainly, experience and statistics tell us that most foreign companies choose to form a Chilean company. Moreover, in most cases, they are the owners of the majority of shares and rights.
If this is the case, it is also necessary to dully apostille mail these documents to your attorney law firm in Chile:
- The statutes of the company.
- A certificate of existence of the company.
- Information on who are the current shareholders of the company, their percentages of participation in the company and their tax identification number in their country of tax residence.
- In addition, financial documentation when the client needs a Bank Account.
1.5 Language Considerations
First, documents issued in a language other than Spanish must be translated. Just ask your attorney of choice to prepare the documents for you.
Finally, with such documents, the investor’s representative must file deed number 4415.1 before the National Taxation Service. With this deed, the investor obtains a RUT for foreign investors.
2. Company Formation in Chile or Starting Activities as a Permanent Establishment
Moving on, once we have our TAX ID, we can proceed with the company formation in Chile itself. This is done by signing a Public Deed that contains the Statutes of the company.
Secondly, it is also possible to open Company Subsidiaries to organize your business.
PRO TIP: When proceeding remotely, sufficient faculties should be provieded to your attorney to register the company, too.
Let’s see both cases:
2.1 Selecting the Right Type of Company in Chile
In Chile there different forms of corporate structures. These range from Limited Liability Companies to Joint Stock Companies, all the way to Corporations.
Furthermore, we can help you select the right type of business or subsidiary to form, file the appropriate documents with the Secretary of State, and draft your governing documents.
What Type of Company Structure Should You Use in Chile?
|Type of Company||Capital||Administration||Taxation||Best For|
|Limited Liability Company||Divided into a %.||By one or more partners or third parties.||25% or 27%||Family Offices and Close Groups|
|Joint Stock Company (Recommended)||Divided into Shares||Flexible: Partners, Third Parties or Board of Directors||25% or 27%||Venture Capitals|
|Corporation||Divided into Shares||Board of Directors||27%||Big corporate|
|Individual Company||One Person||Title Holder or Third Party||25% or 27%||Single-Person business|
All of the above have limited responsibility.
It is Important to Consider aspects: Such as management and corporate governance, transferability of shares Among others. These criteria will help us to choose the right corporate structure.
The deeds will specify matters such as the type of company, its field of activity, its partners and their respective equity contributions, how profits will be distributed and how the partners will answer for any losses.
PRO TIP: It is possible to acquire a company already established in the country. Ask us for the the Possibility of acquiring a company ready to operate with a bank account.
2.2 Starting Activities as a Permanent Establishment
As mentioned before, this figure shows up as an alternative to a new company formation in Chile.
To clarify, a Permanent Establishment is a legal figure registered in Chile who maintains its domicile abroad, through its parent company.
Therefore, the parent company does business through its agency or branch in Chile, without creating a new company.
As a result, by the application of agreements to avoid international double taxation, it could be the most convenient structure.
This happens because it allows us to pay taxes only in the country where the company is headquartered.
3. Define a Tax Strategy
Once the TAX ID 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.
In addition, it is also crucial to determine what tax will be paid on an eventual sale of the business (shares or rights) of the company.
3.1 Income and Profit Withdrawal Tax
First, profits generated in Chile by foreign investors are generally subject to an additional 35% flat tax.
In Chile, the corporate tax amounts to 25% or 27% of the income generated in one year by the company. This depends on the chosen tax regime and company structure.
Once the partners or shareholders obtain dividends from the company (withdrawal of profits), the difference between the corporate tax and the additional tax rate is due.
It is important to determine what benefits you can apply depending on the country from which I am going to invest in Chile.
Due to the application of an international tax agreement, it may be more convenient to invest from one country than another.
3.2 Tax Aspects of Selling Your Business (Exit Strategy)
The Capital Gains generated when selling your business’ stocks or participation could be subject to taxation.
What Tax Percentage Applies over which Amounts?
In order to calculate if a Capital Gains scenario is present, we must follow this simple rule:
We must deduct from the price the company is sold the value of the contribution made at the time of company formation in Chile. As a rule of thumb, if this number is positive, we are in a typical Capital Gains or Profit case.
These Capital Gains are subject – as a general rule – to a 35% tax. We can lower this number by applying international taxation agreements between countries.
Case Study: Tax Plan for Exit Strategy or Selling Assets.
Applying agreements such as the Chile-Spain one, the rate of tax on the sale of the company’s assets is subject to a single rate of 16% (instead of 35%).
As can be seen, a 19% savings may be applied in the case the Parent Company of the Chilean Company had a residency in the country subject of international agreements.
Of course, depending on each individual case, different international agreements apply. It’s all about the know-how.
4. Define a Corporate Structure and Trademark Protection
A well-drafted statute and is strongly recommended and serves as a tool for corporate compliance and good practices. Trademark protection is also crucial.
4.1 What is Corporate Structure?
A good corporate structure refers to the organization of different company’s units. We will focus on the legal aspect of Corporate Structure.
The units we are talking about involve the shareholders, the board of directors, CEO, CFO’s, legal representatives and so on.
What we are trying to find out is which is the best option to implement on your new Chilean Company.
4.2 Recommended Structure in Chile
As we discussed earlier in this post, we recommend a Joint Stock Company, better known as SpA (Sociedad por Acciones in Spanish).
This type of company is strongly recommended as it was the spirit of the law that created them in 2007 to promote the Venture Capital Industry.
One of its benefits is the flexibility given to operate with or without a Board of Directors. This makes easy to set up a simple and efficient structure in the beginning, when we want to move fast.
SpA’s are also meant to be complemented with Venture Capital Deals, such as Stock Options.
4.3 Trademark Protection in Chile
For some businesses, Trademark Registration is a must. We need that “R” next to our brand, everywhere.
In Chile, there is a 4-to-6 months process for registering trademarks in the national institute of industrial property (INAPI).
Furthermore, we can invoke priority in registrations of trademarks that have been already registered in foreign countries.
5. Tax Regularization and Issuing Electronic Invoices
5.1 Presentation of Documents to Internal Revenue Service
Once the public deed has been obtained, the publication in the official gazzette 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 the TAX ID 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 Registry.
- Certificate of validity, statutes and Apostilled 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, it is necessary to file Form 4415 for the start of activities. This form informs the economic activities that the company will carry out in the country.
5.2 Electronic Invoice and Tax Residence
Having performed all the previous steps, the company must, through a lease or sublease contract, prove its domicile in the country.
PRO TIP: In all our services packs we include a sub-lease contract for our clients to have tax residence in our office in Las Condes, Santiago.
Once this is done, the company is qualified to issue invoices and other tax documents in Chile.
The important thing now is to make the monthly tax returns in time and form. Taking importance of the advice of an accountant who makes such presentations in accordance with local legislation.
6. Open a Bank Account in Chile
Safely and Securely Open Your Chile Business Bank Account Remotely WITHOUT Visiting Chile.
6.1 With your Chile Bank Account You Will be Able to
- Accept dollar and Chilean pesos payments from worldwide clients
- Deposit and wire transfer money
- Avoid overpriced multiple currency exchange fees
- Full access to view and monitor your account online and on your mobile phone
- Open Paypal account.
6.2 What we’re offering is completely SAFE and LEGAL for everyone involved.
Chilean banking regulations over the past several years have significantly become more strict.
As a result, it’s become increasingly more difficult for non-residents to open Chilean bank account without visiting the country.
Work very closely with our Chilean affiliate banks to make sure what we’re offering is completely SAFE and LEGAL for everyone involved.
Save money and time by working with a reputable company with past experience in Chile to open your bank account remotely, safely, and securely.
6.3 What is the process like?
The account opening process takes approximately one month. It consists of two stages: a legal evaluation from the bank and the documents needed to start the process.
Therefore it is critical delivering them with the highest possible level of order and explaining the operation of the company incorporated and its financial strength.
6.4 What documents do I need to get started?
Let’s analyze the legal and financial documentation needed for opening a bank account in Chile.
- Deed of Incorporation (and Amendments if any)
- A deed stating the powers granted to the persons representing the company. –
- Extract, Protocolization and Publication in the Official Gazette (of the deed of incorporation and its modifications if any)
- Registry System: Copy of Registration of the Extract of the Constitution in the Commercial Registry (CBR) with marginal annotations in force to date.
- Registry System: Certificate of Validity (in case the deed is more than one year old)
- Representative status in the case of partners who are corporations.
- Copy of Tax ID of Company.
- Copy of ID of the legal representative(s) or partners, or in its defect copy of passport with dully apostilled.
- Tax File for credits Certificate of existence of a Current Account and good banking behaviour issued by the account executive of the parent company.
- Balance sheets for the last two years
- Corporate network
- Works or contract table (if applicable)
- Details of the business carried out by the company, its main Clients and Suppliers and how they pay 2 Last Tax Declarations Partners abroad
- State of Financial Situation Partners (Attached format)
- Parent Company Accounting Balance Sheet and Print Income Statements accepted by the IRS
7. Keep up with Monthly and Anual Tax Payments
Now that the Company Formation in Chile process is complete, it is crucial to have a good accountant service.
This is because we want to take advantage of any tax deductions available, and of course, keep the books fresh and in order.
We work with partner accountants to make sure quality accountability complies at all times.
The constitution of a foreign company in Chile has become a simple procedure.
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, United States, Mexico, Colombia, Argentina, among many others.
Have any questions? Let us know on our contact page or in the comments, we love to talk to like-minded people.
Not feeling like talking? Check out our FAQ:
Yes, as a Foreigner you can remotely assign a legal representative to register a company in your representation.
Straight up: we charge USD $1.000 and the Notary/Registry costs are $100 USD. No hidden fees.
Once we receive the required documents duly apostilled, we take 5 days to have the company up and running.
Yes, it is, as we can have a faster process in the Bank if there is a subsidiary of it in Chile.
Hi, We are a well established company in USA and we would like to register our company in Chile. Can you please help us to get registered.
You can reach me on my US cell phone number +1 503 789 9340
We can definetely help you establish your compaany in Chile.
I will contact you right away.