In an increasingly interconnected global environment, it is common for foreign investors to seek to establish operations in Chile, either through the creation of new companies or through the acquisition of stakes in existing companies. In this context, having specialized legal advice is not only advisable: it is essential to ensure a safe, efficient process that complies with local regulations.
Foreign Investor
The first essential step to investing in Chile is to register with the Internal Revenue Service (SII) in order to obtain the Unique Taxpayer Identification Number (RUT) as a foreign investor, whether as an individual or legal entity.
To complete this process, it is essential to have an apostilled power of attorney from the country of origin that designates a representative in Chile and grants the power to formalize the investment. It is also essential to provide a Chilean address.
Additionally, from the country of origin, a duly apostilled certificate of existence of the foreign company (and translated, if necessary) and a certificate of tax residency (also translated and apostilled) are required.
It is important to note that both the foreign investor and the investment vehicle implemented in Chile must be legally represented by an individual resident in Chile.
Formalizing the Investment
Next, the investment must be formalized, either through the incorporation of a new company, the purchase of corporate rights or shares, or the subscription of a capital increase.
It is important to note that there are no restrictions in Chile regarding the number and nationality of investing partners or the amount of capital in the investment vehicle (except for regulated markets such as Banks, insurance or others).
At this stage, it is critical to design an appropriate corporate structure that not only facilitates business development in Chile but also ensures efficient protection of the foreign investor’s interests. The choice of corporate type, the correct drafting of the bylaws, and the determination of whether or not it is advisable to sign a Shareholders’ Agreement are strategic decisions that must be evaluated with the appropriate legal support.
The stamping process for tax documents (invoices) must also be considered, which sometimes takes longer than expected due to the tax authority’s review of, among other things, the virtual or physical address in Chile of the investment vehicle.
Basic Labor Aspects
The relationship between employer and employee is primarily regulated by the Labor Code, which establishes the basic rules to which both parties must adhere when there is a relationship of subordination and dependency.
Basic aspects to consider include the maximum weekly workday (44 hours, progressively reduced to 40 hours), minimum wage (CLP $529,000), the obligation to make deductions and act as a withholding agent for taxes, health insurance contributions, pensions, etc.
In the case of layoffs, there is the concept of “dismissal due to company needs,” which allows for the dismissal of employees based on technical or economic circumstances, such as changes in market conditions or the rationalization or modernization of the company. In this case, severance pay must be paid for each year of service or fraction thereof greater than 6 months, with a maximum of 11 months and 90 Unidades de Fomento (approximately USD 3,600) per salary. In addition, compensation for lack of prior notice must be considered if the employee is not given 30 days’ notice of dismissal.
Accounting
Every company operating in Chile must file monthly and annual tax returns with the Internal Revenue Service. This includes properly issuing invoices, paying taxes, and maintaining accounting records. Therefore, it is essential to have an experienced accounting team from the outset of operations.
At JOMC Abogados, we assist foreign investors throughout every stage of the establishment and operation process in Chile. We have a highly specialized legal team and work hand in hand with associate accountants to provide a comprehensive, agile service focused on protecting our clients’ interests.
Our commitment is to facilitate your investment, minimize legal and tax risks, and allow you to focus on what really matters: growing your business in Chile.
