Tax Residency in Chile
1. Criteria for Determining Tax Residency in Chile
According to Article 41 of the Chilean Tax Code, an individual is considered a tax resident in Chile if they meet any of the following criteria:
- Domicile in Chile: An individual is considered domiciled in Chile if they have their habitual residence in the country.
- Residence in Chile for more than 183 days: An individual is considered a resident if they reside in Chile for more than 183 days in a calendar year.
- Economic interests in Chile: An individual is considered a resident if they have significant economic interests in Chile, such as owning a business or property.
2. Impact of International Tax Treaties on Tax Residency
Chile has entered into numerous tax treaties with other countries to prevent double taxation and promote cross-border trade and investment. These treaties may modify or provide exceptions to the standard criteria for tax residency as defined in domestic law.
For example, under the Chile-United States tax treaty, an individual is considered a resident of Chile if they meet the following criteria:
- They have a permanent home in Chile.
- They are present in Chile for more than 183 days in a calendar year.
- Their center of vital interests is in Chile.
The treaty also provides a tie-breaker rule for individuals who are considered residents of both Chile and the United States under each country's domestic law. In such cases, the individual is considered a resident of the country where they have their permanent home.
These treaty-specific modifications aim to provide clarity and prevent double taxation by establishing clear rules for determining tax residency in cases involving cross-border activities. They reflect the mutual agreement between Chile and the United States to facilitate tax compliance and enhance economic cooperation between the two countries.
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