The concept of corporate legal migration, i.e. the change of
domicile of any legal entity, is not included in the Chilean
tax law. Thus, its effects depend on the concept of legal
residency given by the country from which the company migrates,
as well as by the country to which the company moves to.
Under the extent that the country from and to which the
company legally migrates recognise the legal migration, no tax
effects are expected to be triggered in Chile. Otherwise, the
operation could be deemed as a direct or indirect taxable
disposal of assets located in Chile, and be subject to capital
gains tax in Chile.
For the aforementioned to work, both countries must ensure
the company's continuance. They cannot consider that the legal
migration implies an alienation of assets or a termination of
the migrated entity, but more likely both countries need to see
the operation as a deregistration and reregistration. As a
consequence of the above, the migrating entity should also have
moved its fiscal residence.
Regarding the latter, the legal migration is not the only
way to move the fiscal residence.
The concept of fiscal migration is not recognised by the
Chilean tax law either. Its effects would also depend on the
concept of fiscal residence given by each country.
Entities may also migrate their fiscal residence by means of
changing the location of where management is conducted.
Nevertheless, it is key that moving the effective place of
management is not seen as an extinction of the legal personae,
broadly speaking, in the country from which the company is
The Chilean IRS has analysed this topic in the past few
years as a consequence of migrations carried out abroad. The
IRS has mainly been motivated by the increase in the tax burden
that entities face when they are not a tax resident in a
country that has a double taxation agreement (DTA) in force
with Chile, but then migrate to a country that has a DTA in
force with Chile, by means of recognising the new tax
Consequently, in principle, the fiscal migration occurring
abroad should have no tax effects in Chile, and the migrated
company should be entitled to claim the benefits set forth
therein, as a consequence of being a tax resident such a treaty
country. However, the Chilean authorities may always refute the
said tax resident qualification if they do not agree with
In this regard, have in mind that one of the main purposes
of a DTA is to avoid the double taxation. Nevertheless, a DTA
also purports to prevent tax elusion and evasion. As a
consequence, the corporate migration should be supported by
other reasons than only tax reasons.
In consequence, to the extent that either the corporate
legal or fiscal migration is not seen as a disposal of assets
located in Chile and that the operation is not only supported
by tax reasons, no material Chilean tax implications are
expected to rise in Chile as a result of acquiring tax
residency in a new country.
German Campos (email@example.com)
and Gabriela Varas (Gabriela.firstname.lastname@example.org)
Tel: +56 22 940 0098