Chile: Corporate migration

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Chile: Corporate migration

intl-updates-small.jpg

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 migrated.

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 residence.

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 it.

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.

campos.jpg
varas.jpg

German Campos (german.campos@cl.pwc.com) and Gabriela Varas (Gabriela.varas@cl.pwc.com)

PwC

Tel: +56 22 940 0098

Website: www.pwc.com/cl

more across site & shared bottom lb ros

More from across our site

‘KPMG Workbench’ has a network of 50 AI assistants and chatbots that will assist clients; in other news, Baker McKenzie hired a former US deputy attorney general and tax disputes expert
The UK tax agency reported that the total estimated tax gap for the 2023/24 tax year is £46.8 billion
The case shows that legal relationships between parties bear significance and should be given sufficient weight in TP analyses, one local adviser says
Burford Capital said it hopes that the US Congress will not ‘set back’ business growth and innovation by introducing a tax on litigation funding profits
The new framework simplifies the process of relocating eligible employees to Luxembourg and offers a ‘clear and streamlined benefit’, says Alexandra Clouté of Ashurst
The Portuguese firm’s managing partner tells ITR about his love of Sporting Lisbon, the stress of his '24-hour role', and why tax is never boring
The reduction would still ‘leave room’ for pillar two and further reductions would be possible, one expert tells ITR
Funding from private equity house EQT will propel WTS Germany to compete with the ‘big four’, the firm’s leaders told ITR in an extensive interview
New Zealand is bucking the trend of its international counterparts with its investment-friendly visa approach. Here’s what high-net-worth investors need to know
However, nearly 10% of reports only disclosed activities in tax havens, according to the Fair Tax Foundation; in other news, Plante Moran sealed a US east coast merger
Gift this article