Chile Tax Guide for US Expats 2023

Chile Tax Guide for US Expats 2023

Living as an Expat in Chile

Chile is known for its gorgeous landscapes and booming economy. Add in a culture that welcomes outsiders, and it’s no wonder many US expats choose Chile as their new home. But what about Chilean tax policy? In this guide, we’re going to look at what taxes US expats can expect when they move to Chile.

Chilean Taxes at a Glance

  • Tax Year: January 1–December 31
  • Tax Deadline: April 30
  • Currency: Chilean peso (CLP)
  • Population: 18.4 million
  • Number of US Expats: Estimated 12,000
  • Capital City: Santiago
  • Primary Language: Spanish
  • Tax Treaty: No
  • Totalization Agreement: Yes

What Are Expat Taxes like for Americans Living in Chile?

When discussing expat taxes, it’s important to remember that every US citizen is required to file a US tax return regardless of where they live. In addition, most expats living in Chile will also have to file a Chilean tax return.

Fortunately, Chile has favorable tax policies in place to attract outsiders. With a low tax rate and plenty of tax benefits, Chile can be an expat’s paradise.

Who Has to File Taxes in Chile?

Chile taxes foreigners under different rules depending on whether they qualify as residents or nonresidents.

  • Residents are taxed on their worldwide income.
  • Nonresidents are taxed on only Chile-source income.

However, even after you become a resident, Chile will continue to tax you as a nonresident for the first three years of your residency. Once those three years have passed, you can request an additional three years of nonresident taxation. All told, expats can reside in Chile for up to six years before being required to pay taxes on their non-Chilean income.

Pro Tip

Foreign pension and social security income you receive while residing in Chile are not subject to Chilean tax, no matter what your residency status is.

Who Qualifies as a Tax Resident in Chile?

To become a resident of Chile, you must meet one of the two following standards:

  • Live in Chile for 180 consecutive days in one year
  • Live in Chile for 180 nonconsecutive days per year for two years

Once you pass either milestone, you will be considered a resident for tax purposes. Otherwise, you will remain a non-resident. (As noted above, even after qualifying for residency, you will be taxed as a nonresident for up to six more years.)

What Types of Taxation Does Chile Have?

Income Tax

Chile taxes residents on their worldwide income at progressive rates. These rates range from 0% to 40%. The exact rates are based on the value of the Chilean peso (CLP), which is revalued every month.

For a sample, here are the rates applied to February 2021. (All amounts given in CLP).

Income (CLP)Tax RateTax Rebate
0 – 690,268.500%0
690,268.51 – 1,533,9304%27,610.74
1,533,930.01 – 2,556,5508%88,967.94
2,556,660.01 – 33,579,17013.5%229,578.19
3,579,170.01 – 4,601,79023%569,599.34
4,601,790.01 – 66,135,72030.4%910,131.80
66,135,720.01 – 15,850,61035%1,192,374.92
15,850,610.01 and over40%1,984,905.42

Nonresidents are taxed at a flat rate of 15% for any income that results from “professional or technical services.” For all other forms of income, nonresidents are taxed at a flat rate of 35%. Regardless of the rate, nonresidents are only taxed on income that comes from a Chilean source.

There are no local income taxes in Chile, only the national income tax.

Social Security Tax

The Chilean social security system is a private pension plan funded by mandatory and voluntary contributions. Employees can expect to contribute 10%–20% of their monthly wages to social security. If you are self-employed, you may pay into the system voluntarily, but there are no mandatory contributions.

Because the US has a totalization agreement with Chile, expats won’t have to worry about paying into multiple social security systems.

Property Tax

Chilean property taxes are levied at the local level. The rate of this tax is calculated based on the cadastral value of the property.

Corporate Tax

Chile taxes corporate income at progressive rates ranging between 0%–40%. There are different tax categories for business income, each of which has its own rules.

Capital Duty

In Chile, incorporating a company does not result in any taxes. However, all business entities must pay a local license fee. This fee ranges from 0.25% to 0.5% on tax equity.

Value-Added Tax

Chile imposes a value-added tax (VAT). The standard rate for this tax is 19%.

Stamp Duty

The Chilean stamp tax applies to specific financial documents, such as provisory notes or bills of exchange. The rate for this tax varies, but it usually ranges between 0.033% and 0.4% of the amount represented by this document.

Inheritance Tax

Chile taxes inheritances at rates ranging from 1% to 25% of the amount bequeathed. (There are deductions available if you meet certain conditions.)

The IRS tax code is 7,000 pages. Want the cliff notes version for expats? Let us help.

When Are Taxes Due in Chile?

Just like in the US, the Chilean tax year is aligned with the calendar year. That means the tax year begins on January 1 and ends on December 31. Annual tax returns are due on April 30 of the following year.

Does the US Have a Tax Treaty with Chile?

No. While the US and Chile did sign a tax treaty in 2014, it has never been ratified by the US Senate. Thus, it currently has no force. This means that Americans living abroad in Chile are at risk of double taxation on their income. Fortunately, the IRS offers several tax credits that expats can use to avoid double taxation. (More on those tax credits below.)

Does the US Have a Totalization Agreement with Chile?

Yes. The US has a totalization agreement with Chile to clarify which country’s social security system an American expat may be obligated to contribute to. This agreement is designed to ward off double taxation.

What If I’m Behind on Filing My US Expat Taxes?

As we’ve discussed, all US citizens must file a US tax return. This is true no matter where you live. However, because most Americans are unaware of this requirement, many expats fall behind in their obligations after moving overseas.

Fortunately, the IRS provides an amnesty program to help expats come into compliance without facing any penalties. It’s known as the Streamlined Filing Compliance Procedures.

To use this program, all you have to do is:

  • Self-certify that your failure to file was an accident, not a willful refusal
  • File the last three delinquent income tax returns and pay any delinquent taxes you owed during that time (with interest)
  • File Foreign Bank Account Reports (FBARs) for the last six years

This will bring you into compliance with IRS regulations.

Pro Tip

If you’re behind in your expat taxes, don’t wait to use the Streamlined Filing Compliance Procedures. If the IRS contacts you about your delinquency first, you may lose the privilege of amnesty.

Get Help with Your Expat Taxes

Still have questions? We have answers. In fact, we can even prepare and file your expat tax return on your behalf.

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