The minimum share capital required to start an LLC in Chile is only US $ 1.

Society Constitution
offshore in Chile

Country analysis: legal structures

Everything you need to know to set up an operating company with a bank account.

1. Exchange of banking information

β€’ There are prison terms for disclosing customer bank details to third parties (and possibly fines).

β€’ Banks are partially subject to strict customer due diligence regulations (old FATF recommendation 5 / new FATF recommendation 10).

β€’ Banks are largely required to maintain sufficient records of their customer and transaction data for law enforcement (old FATF recommendation 10 / new FATF recommendation 11).

β€’ Banks and / or other covered entities are required to report large transactions in currency or other monetary instruments to designated authorities.

β€’ The national administration has sufficient powers to obtain and provide bank information on request without qualifications.

β€’ There are undue notification and recourse rights against the exchange of banking information upon request, but with significant problems.

2. Legal forms

The Chilean limited liability company (SRL)

The creation of a limited liability company in Chile can be done with a minimum of 2 shareholders and 1 director, who can be of any nationality and do not need to be Chilean residents. The minimum share capital required to start an LLC in Chile is also very low, at only US $ 1.

However, company setup requirements in Chile include i) appointing an attorney as company representative when an LLC does not have a resident director and ii) allowing clients and business partners to identify companies with a single shareholder, which should include in your name, rather than SRL.

The Chilean Public Limited Company (SpA)

The constitution of a corporation in Chile requires i) US $ 1 of capital stock ii) 1 shareholder and iii) 3 directors, who do not need to be Chilean citizens. This commercial entity is ideal for entrepreneurs who wish to obtain capital in Chile, since they are allowed to issue shares after the establishment of the business.

Although the Chilean Corporations Law does not explicitly require that a corporation designate resident directors, the authorities may disapprove the registration if they consider that such a situation does not allow the Board of Directors to operate. The JSC must also submit audited annual financial statements to the Chilean tax authority.

Branch (Branch)

Our corporate clients who wish to expand their business can establish a branch in Chile. Although a branch in Chile is 100% foreign owned, a local resident representative or agent must be appointed. Also, an official government permit must be obtained prior to registration. Branches in Chile can bill local customers, sign local sales contracts, and receive income from customers.

Representative office (Agency)

Our Clients who are not ready to start a business in Chile by incorporation, but who still want to market their existing foreign company, prefer to establish a representative office. Although a representative office in Chile is 100% foreign owned, such a business entity must designate a local sponsor or agent to complete the setup procedures. This entity is also not authorized to carry out direct sales within Chile. Consequently, a representative office can only be dedicated to promoting the parent's business.

REMEMBER

Se requires a Director resident in Chile for some commercial entities. Director / fees: US $ 11.500. Holding companies are not available in Chile.

OFFICES

Foster Swiss helps our Clients secure offices or we provide an office address. Most emerging markets require our Clients to have a 12-month office lease before company registration is approved.

We help our Clients overcome this challenge in the following ways:

Virtual office service

DDepending on the country and city, the rates range from US $ 900 to US $ 2000 and the annual active virtual office services range from US $ 1500 to US $ 4000).

Shared office space

LThe one-time fee is US $ 850. Thereafter, our Client pays the monthly rent directly to the owner).

Permanent office space

D Depending on the country and the city, the rates range from US $ 5.000 to US $ 8.000).

LEGAL ACCOUNTING AND TAXES

The corporate income tax rate applies to 20% of world income. Capital gains are also taxed at the same rate (20%).

Non-residents living in Chile are subject to taxes on Chilean income for the first three years. After this period, they are subject to taxes on your worldwide income.

The standard VAT rate is 19%. All resident companies must request VAT on a monthly basis. Resident companies can carry tax losses forward or back indefinitely.

Dividends from a Chilean resident company to a non-resident company are subject to a 35% withholding. The transfer of dividends between resident companies is tax exempt.

Interest payments are subject to a 35% withholding tax, while royalties are subject to a 30% withholding tax.

Rural property is taxed at 1% per year, while urban property is taxed at 1,2%.

Tax returns must be filed before April 31 of each year.

Only certain entities are required to submit audited returns. These include banks, financial institutions, insurance companies, pension plans, and publicly traded companies.

Consolidated statements must be prepared when a subsidiary is 50 percent or more controlled by a corporate shareholder. However, when the operations of the subsidiary differ significantly from those of the parent, no consolidation is required.

Chile does not impose exchange controls on money transfers made by resident companies.

Chile has a network of 28 double taxation treaties with countries such as Australia, South Africa, the UK and the US These treaties reduce withholding taxes on payments abroad

Monthly government tax reporting obligations include i) payroll reporting and ii) federal VAT return IPI and iii) ICMS returns VAT return to the Brazilian government.

All Brazilian companies are subject to i) corporate income tax ii) value added tax and iii) social security contributions. They also have to withhold personal income tax paid by their employees.

LEGAL AND COMPLIANCE

SAccording to the Corporations Law, a Chilean company must have at least one permanent resident representative of any nationality.

Each company must file an annual statement confirming the relevant details of the company for public record, including the names and addresses of all directors, the address of the principal place of business, and the details of the shareholders and their interests. a registered office in Chile.

Chilean companies must obtain a Tax Identification Number (RUT) and register for VAT before starting their commercial activity.

There are four main taxes in Chile i) Personal and corporate income tax ii) Value added tax iii) Customs duty and iv) Stamp duty. Gathering information, completing tax return forms, and preparing separate tax ledgers can be a challenging task in some cases.

A company secretary is not required to form a company in Chile; however, we recommend that one be appointed to ensure proper compliance in accordance with company law.

When starting a business in Chile, it is important to anticipate what registrations and licenses are required. This is a complex area since the type of permits or special licenses vary according to the nature of the activity and include sanitary, environmental and municipal permits.

After setting up a company, entrepreneurs must prepare a business start-up document and submit it to the National Tax Service (SII).

Every Chilean company must obtain a work license from the municipality where it operates (for each of the company's establishments, offices, warehouses). The license fee is paid once a year for a 12-month period, from July 1 to June 30. The commission ranges from 0,25% to 0,5% of the company's share capital.

To comply with Chilean law, all employees in the country must register for professional accident insurance controlled by public authorities.

It is mandatory for every Chilean company to designate a local Legal Representative. To minimize complexity, we recommend that our Client appoint a member of the Chilean staff who is already in the country.

In November 2020, Chile increased its monthly legal minimum wage to US $ 430 per month (from US $ 388). This is the highest legal minimum wage in Latin America.

COUNTRY PROBLEMS

Chile has an inefficient bureaucracy. Consequently, entrepreneurs will face delays in applying for approval of a government business license.

Obtaining financing can be difficult for foreign entrepreneurs because i) interest is freely negotiable so bankers tend to increase it, ii) delays are common during the loan approval process, and iii) officials demand high commissions.

Chile has high electricity costs, with average rates of 20 cents per KWh. Also, power outages are common in the country.

Only up to 15% of the employees of a Chilean company can be foreigners. This can be a major impediment for multinational companies because only 10% of the local population speak English.

In November 2020, Chile increased its monthly legal minimum wage to US $ 430 per month (from US $ 388). This is the highest legal minimum wage in Latin America.

A Chilean company must have i) 1 resident director or ii) 1 representative of the resident company. Foster Swiss can provide nominee director services to support our Client for US $ 11,500 per year.

Renting an office space can be expensive in Chile, as the average annual rent is US $ 25 per square meter.

The Chilean economy is highly dependent on exports, which makes it vulnerable to external shocks. For example, in 2013, the Chilean peso depreciated 10% against the US dollar due to decreased demand for its exports.

Chile is prone to earthquakes due to its location in the ring of fire. This can disrupt daily business and commerce.

The official language for conducting business in Chile is Spanish. Also, Chileans prefer to speak Spanish to English or any other language. As a result, foreign investors have to seek mainly local suppliers to conduct business, as well as to expand their presence in the Chilean market.

MORE CONFIGURATION SERVICES SOLUTIONS

  • Shareholders and Agents
  • Office permits
  • Protection of trademarks and copyrights. - Market study.
  • Legal support
  • Proportion of details of temporary unions or associations
  • Fusions and acquisitions.
  • Internal control.
  • Group restructuring.
  • Financial management consulting.
  • Buy a business.
  • Valuation of companies.
  • Credit recovery
  • Job solutions
  • Due diligence search on existing companies and individuals

3. Commercial register

The national business registry includes the identity information of the legal owner.

Information on legal owners is not always available online (up to 10 EUR / GBP / USD).

4. Transparency of society

β€’ All businesses require the registration of all legal owners.

β€’ All names plus countries of residence plus addresses or NITs or dates of birth, passport or personal identifications, or incorporation numbers are always registered.

β€’ Updating of the information on the identity of the legal owners is mandatory.

5. Shareholders publications

Companies available without registered information on beneficial owners.

Real property is not always available online (up to 10 EUR / GBP / USD).

6. Publication of the company account

β€’ It is mandatory to keep accounting data.

β€’ It is not always necessary to present the annual accounts to a public authority.

7. Country-by-country financial reports

No country-by-country public reporting at all.

8. Corporate tax return

<br>β€’ OECD Legislation: The secondary mechanism is subject to the restrictions imposed by the OECD model legislation; or no secondary mechanism (only the ultimate national parent entity has to present the CbCR).

β€’ The cross-border tax rulings Unilateral (eg advance tax rulings, advance tax rulings) are available in laws or regulations, or in administrative practice. Some unilateral cross-border tax rulings are posted online for free

9. Identifier of legal entities

β€’ The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory.

β€’ The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory.

β€’ The use of an annually updated LEI for the identification of reporting financial institutions (in accordance with the Common Reporting Standard (CRS) is not mandatory.

10. Measures to avoid tax evasion

β€’ Payment of dividends: Unilateral double tax relief through a tax credit system for all three payment scenarios (beneficiaries always receive a unilateral tax credit, regardless of whether it is an independent or related legal person, or a natural person).

β€’ Interest payments: No unilateral relief for double taxation through a tax credit system

11. Tax matters judicial secrecy

None or restricted access to both criminal and civil tax procedures.

None or restricted access to criminal or civil tax judgments / verdicts

12. Opaque structures

β€’ The jurisdiction does not issue or accept the circulation of large notes / cash notes of its own currency (with a value greater than 200 EUR / GBP / USD).

β€’ Bearer shares are not available / not circulated.

β€’ Series LLC / Shielded Cell Companies are not available.

β€’ Trusts with escape clauses are not prohibited

13. Anti-money laundering legislation

Chile is not on the FATF List of countries that have been identified with strategic AML deficiencies.

The last Mutual Evaluation Report related to the implementation of the rules against money laundering and terrorist financing in Chile was carried out by the Financial Action Task Force (FATF) in 2006. According to this Evaluation, Chile was considered Compliant at 8 and Mostly Compliant with 15 of the 40 + 9 FATF Recommendations. Partially compliant or non-compliant with 2 of the 6 main recommendations.

Overall Non-Compliance Score for FATF Standards in Percentage: 47,6%. (100% = all indicators rated as not met / low level of effectiveness; 0% = all indicators rated as completed or highly effective).

14. Automatic exchange of information

You signed the MCAA and committed to sharing information on or before 2019.

Number of significant activated AEOI relationships (under the MCAA) published by the OECD as of October 2019: 95.

What type of private banking exists in Chile?

International Banking
Local banking

Central bank security ⭐⭐⭐

The international and digital banks They're available.

CRS: SI.

Real bank operations: 90%.

Type of visa: CLP $, US $, €.

Joint accounts.

Remote management account: To consult.

Asset management Depending on the rating of the company.

Rates: It depends on the type of account.

Credit / debit cards in local currency

Why with Foster Swiss?

Foster Swiss is an international company registered in Switzerland aimed at providing financial and compliance advice on a variety of topics related to company formation
and commercial banking internationally. We are specialized in the implementation of businesses in different jurisdictions, which means that we offer value-added services helping our clients in their expansion abroad.

Some of these services include:
Advice and consultancy,
visas, offices, nominated director / shareholder / secretary,
accommodation if necessary… to name a few.
Check with your assigned consultant for more information.

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