Personal Taxation in Chile and Australia

The Double Taxation Agreement (DTA) between Chile and Australia came into force as of January 1st, 2014. Accordingly, employees who wish to provide services in Chile for the employer can now do so through using an inter-company transfer. This allows the employee to maintain their employment in Australia but still provide services in Chile.

The inter company transfer clause in the DTA is useful for a number of situations. It can be used by foreign companies that have recently established entities in Chile who need to have an expat manager for the initial start up or can be used by companies to send technical staff to work on specific projects, provide training, etc.

PERSONNEL TRANSFERRED WITHIN A COMPANY

Within the category, employees transferred within a company can include: executives, managers or people with specialized knowledge used by a company, that are transferred within that company to work in its main office, in one of the branches, agencies, subsidiaries or affiliates in Chile.

The term company includes both juridical and natural person, Australian or Chilean.

Once the temporary residence visa has been granted, the employee transferred within the company is authorized to work, without the need of special authorization. The time of the stay in Chile is for up to a year, being possible to request an extension up to 90 days prior to the expiration of the authorisation as long as the conditions that motivated the visa remain the same. The extensions may be granted by the migratory authorities in Chile as many times as it is needed.

In general, and for the effects of requesting a temporary entrance to Chile, it will be understood as:

Manager: the person that mainly leads the organization, department, subdivision or in the position of the organization that supervises and controls the work of another personal supervisor, professional or manager, leads an essential function within the organization, department, subdivision and it exercises its own discretion in the daily operations on which it has authorities.

Executive: is that person that mainly lead the administration, the organization a component of it or an important function, it establishes objectives and policies it has freedom to make discretional decisions and only receives supervision or general direction on part of the executives of higher rank, board of directors or stockholders.

Specialised Knowledge: It is a special knowledge of the product, service, research, equipment, technique, administration of the organisation or of its interest and its applications in the international market; or an advanced level of knowledge or experiences and procedures of the organisation.

Requisites for people transferred within a company to obtain temporary residence in Chile:

1) Proof of Australian nationality: This can only be proven by the exhibition of a valid passport as long at his has a declaration in this sense.

2) The companies located in Chile and Australia have a clear relation such as a main office, a branch, and agency, subsidiary or affiliate.

3) Description of the purpose and position for which the entrance to Chile is requested

4) If it is the case that it is a person with specialised knowledge it must be proven that:

  • It has such a knowledge; and
  • That this knowledge is necessary for the job proposed in Chile.

The requisites mentioned in numbers 2, 3 and 4 can be proven by a letter of signed declaration of the employer either Australian or Chilean.

5) According to what has been established in the Treaty, it is possible that a confirmation is requested in terms that the business person has been an employee for a year within the last three years, immediately previous to the date of the presentation of the request.

In general, the Chilean migratory authorities will not demand the fulfilment of this requisite.

6) Not being included within any of the causal contemplated in the articles 15 and 16 of the Alien Status Office (D.L. No.1.094 of 1975) that established the causes that do not allow the entrance to the country.

Please note,  this should not be confused with the subject-to-a-contract visa that is commonly used by foreign companies to hire staff locally. The main difference between the subject-to-a-contract visa and the inter-company transfer is which country the the employee will be paid to.

  • The subject-to-a-contract visa makes sense for employees who wish to establish themselves in Chile.
  • The inter-company transfer makes sense for employees who need to perform technical or managerial duties on a project over a specific time frame.

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