The redomiciliation of companies (ie, movement of a company incorporated in one jurisdiction to another, retaining its legal character) is not recognised under Chilean law. This means that in order to move to Chile, a foreign company must establish a branch or create a subsidiary there. It cannot move its entire operations to Chile.

The question arises of what happens when a company incorporated in one foreign jurisdiction moves to another foreign jurisdiction and whether this change is recognised under Chilean law.


This question has been addressed in a recent ruling by the tax department.(1) The ruling was issued at the request of a taxpayer based on the fact that, according to the September 2014 tax reform (Law 20,780), residents in a country with a double tax treaty with Chile receive more beneficial treatment than those in countries without: the total tax burden for residents of treaty countries is 35%; but for residents of a non-treaty countries it is 44.45%. In case of redomiciliation, the question is what happens in Chile if a change of jurisdiction takes place from a non-treaty country to a treaty country.

The tax administration took a pragmatic stance and left the matter in the hands of the treaty partner rather than analysing the legality of the change of jurisdiction under Chilean law. The ruling argued that, in principle, Chile must accept the qualification of residence made by a treaty country, even if a party has previously been resident in a country with which Chile has no double tax agreement. In this line of reasoning, a significant number of countries qualify as 'tax residents' (ie, legal entities incorporated abroad, but whose place of effective management is situated in the territory of the country). In the event that the Chilean authorities do not agree with the qualification of residence made by a treaty partner, they may reject it using the mutual agreement procedure regulated in the treaty.

The ruling also stated that as foreign taxpayers investing in Chile must provide details of residency to obtain a tax number, they must report any change of residency to the tax department.


According to the ruling, moving from one foreign jurisdiction to another can be accepted by the tax department, provided that the new jurisdiction accepts the entity as being tax resident.

For further information on this topic please contact Omar Morales at Montt y Cia SA by telephone (+56 22 233 8266) or email ( The Montt y Cia SA website can be accessed at


(1) Oficio 1,985, August 3 2015.

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