The Republic of Chile is a state in South America occupying a long, narrow strip between the coast of the Pacific Ocean and the Andes. It borders Peru to the north, Bolivia to the northeast, Argentina to the east, the Pacific Ocean to the west and the Drake Passage to the south. It has a population of more than 17 million inhabitants. Its capital and the most populated city is Santiago. Its official language is Spanish and its official currency is the Chilean Peso (CLP).
In the past few years, Chile has become quite popular for expats, since it provides an easy and cheap residency option.
After five years of residency in Chile, you can apply for naturalization and obtain a passport. This passport is one of the most valuable in the world! With Chilean passport, you’ll be able to access 157 countries visa-free including Canada, USA, and EU.
Chile is a very safe county, it’s very modern with lots of opportunities. There are lots of options for business, so it doesn’t shock why many business people seek for residency in this country.
There are few different ways to obtain residency in Chile.
Here are the few most common residency options:
a) Individuals with passive income
This option is amazing if you have foreign income and want to get your residency in Chile. There is no clear amount you must prove, nor there are any acceptable sources of income listed.
Since there is no clear guideline, candidates have lots of flexibility. You might have some property that you rent abroad and you generate income from it, or you maybe have dividends in a foreign company that guarantees a certain amount of income monthly or yearly. You might receive interest form bonds or other securities… There are many options here. The government only requires you to provide documentation which indicates you’re obtaining periodic economic resources.
On the other hand, this income cannot be from a job, however, dividends are fine. So, if you own a company you will need to consider this.
You will need to prove your streams of passive income when applying for temporary as well as permanent residency.
Even though they don’t list any amount of passive income an individual should have in order to qualify, it is advisable to make at least $1500 USD per month for a single applicant and at least $500 USD for each additional dependent.
b) Retired individuals
This option is for those individuals of retirement age, 55 years old and above. Candidate will need to demonstrate financial independence, through a lump sum of liquid assets.
For a lump sum, it’s advisable to prove at least $125 000 USD for a single applicant, and an additional $25 000 USD for each dependent. Funds can be held anywhere in the world.
Candidate will need to prove this sum when applying for both temporary and permanent residency, so it’s important to keep this amount for at least year and a half.
c) Investors who want to open a company in Chile
This option is for people who want to start a business in Chile.
Financial requirement is $60 000 USD, but within three months of approving temporary residency, an investor needs to start their company in order to proceed with permanent residency.
When it comes to setting a permanent residency, the government will check if your company met certain criteria during the first year.
This option is definitely more complicated than the first two and it also comes with more additional costs.
Temporary and permanent residency permit
It is important to note that once dependents get temporary residency, they are not able to seek for work in the country in any of cases listed above.
Once you have all the documentation ready you will need to apply for temporary residency in Chile. It will take anywhere from 4-6 months after applying to get an approval from the government.
Once temporary residency has been approved it’s important to come back to Chile within two months of approval. Your passport will be stamped with a temporary residency at this point.
Your temporary residence is valid for one year.
In order to qualify for permanent residency, you will need to spend at least 6 months of that first year in Chile. These six months don’t need to be in a single stay, you can split your time between Chile and other countries you want to spend your time in.
It is very important not to be outside of Chile for longer than 180 days, otherwise, you will not be able to get your permanent residency.
The process of permanent residency application is almost exactly the same as a temporary one. Most of the documents you used for temporary residency you will need here as well.
Once you obtain your permanent residency, there are no more requirements of physical presence in the country. This means that you can leave if you want.
In order to keep your permanent residency, it’s required that you spend at least one day a year in Chile.
However, it is possible to get around that requirement. You can fill a form in a Chilean consulate abroad, no less than 60 days before each year expires. It’s important to note that in this case, you will need to prove a legit explanation of why you could not return to Chile. This process can be waived up to four years in a row.
After five years of residency (including temporary residency), you will be able to apply for naturalization and a Chilean passport.
Tax residency and benefits
One of the biggest benefits of Chilean residency is their favorable tax system. Needless to say, this is exactly the reason why many of our clients decided to get their residency in this country.
To be a tax resident in Chile you must spend 6 consecutive months in the country in a year, or 6 non-consecutive months per year for 2 years.
Tax residents are subject to personal income tax on their worldwide income, and non-residents are taxed on their Chilean-source income.
However, non-Chilean nationals are taxed only in their Chilean-source income during its first three years of residency, and a three-year extension of foreign-source income exemption may be requested.
In Chile income is taxed separately depending on its nature. Employment income tax is paid monthly at progressive tax rates up to 40% on income exceeding CLP 6,934,350.01 per month. Investment income, capital gains, and business profits are subject to the Global Complementary Tax, which is also progressive up to 35%.
Controlled foreign companies (CFC) rules in Chile requires resident taxpayers to include in their taxable income certain types of passive income earned by foreign companies, which holds 50% or more of capital, profits or voting rights, whether income is distributed or not.
Real property tax is levied on rural and non-rural properties at 1% and 1.2%, respectively. There is an inheritance tax. There are no taxes levied on net worth and on the transfer of assets.
V.A.T. standard rate is 19%. Certain goods and services may be exempted or taxed at lower rates.
Regarding corporate taxation, resident entities are subject to tax on their worldwide income at a 25.5% rate (27% in 2018).
if you want to know more about Chile Golden Visa Residency by Investment Program contact us now.
