Practical Advice: Incorporating a Company in Chile
This was originally published online by Harris Gómez Group.
Incorporating a company is an important step for those looking to secure business in Chile. From a tax perspective, it allows you to take advantage of the many double taxation agreements that Chile has in place. From a commercial perspective, local companies tend to take foreign companies with a local branch much more seriously. In fact, beyond the legal and tax reasons for having a local entity, this is probably the most important. Over the years we have seen many foreign companies try to do everything from their home country but never really accomplish much because they do not have a local office. Local companies who you are selling want to know they have someone to call for support and they often prefer to be invoiced locally.
A quick search of the internet and you will find many resources that outline the incorporation process in Chile. The issue is that they often do not outline the practical steps and timelines. They often lack clarity on all the steps needed or do not provide accurate timeframes. In other cases, clients do a quick search and see that you can open a company in one day. This online portal was introduced in 2013. It allows individuals/companies to incorporate an entity in 1 day. The issue with this system is that it is made for very small businesses. Think your local corner store or one person consultant. The reason is that all corporate changes need to be made through an online system and it is not really practical for foreign companies who have a more robust corporate structure.
To incorporate a company in Chile in which the shareholder is a foreign entity, we first need to obtain for this foreign entity a tax number as a foreign investor. To obtain the tax number we need to file the list of documents I have mentioned below,
Documents needed to obtain Tax number of the foreign investor who will be the shareholder of the new entity in Chile
Power of attorney (POA) signed by a Director, Principal, Proxy or legal representative of the company (foreign investor). This document needs to be signed before a public notary and apostilled/legalize (whichever is applicable in your country)
Certificate of good standing, validity or certificate that indicates that the company is valid and currently existing from their home country. This document also needs to indicate who the shareholders of the company are.
Certificate of tax residency, granted by the tax office, duly apostilled. (Certificate cannot be older than 3 months)
The company’s incorporation deed or bylaws. This document needs to be certified by a public notary and then apostilled.
Incorporating the company in Chile (stages and timeframes)
Stage 1 – Obtain the tax number of the foreign investor(s) who will be the shareholder(s)
Documents needed (above listed);
Translation of documents (above listed) into Spanish (1- 2 days);
Take documents and respective translation to a public notary who will legalize the documents (2-3 days); and
Complete the tax office forms and take all legalized documents to the tax office to obtain the tax number of the foreign company. (1 day)
Stage 2 – Incorporate the company
Once we have the foreign company tax number, we can complete the incorporation deed and proceed with the completion of the formalities that need to be met. To do so we need to have the following information on the company that will be incorporated:
Name and type of company (SpA, S.A., Limited)
Name of shareholders
Initial Capital of the company and number of shares.
A decision on how the company will be administrated – This can either be by a Board of Directors or an Administrator. The names of such individuals.
A legal representative of the company, this person must have Chilean residency.
Actions to be taken
Incorporation deed drafted and completed (1 day)
Send deed to public notary so that the company is created via a public deed. (1-2 days)
Proceed with drafting the company extract (1 day)
Take extract to Commercial Registry for registration (2-5 days)
Once it has been registered, proceed with the publication of the extract (1 day)
Take all the above documents back to notary so that they are compiled and protocolized.
Tax number of the new entity
Once the above has been completed we can then obtain the tax number for this new Chilean entity. We would need to know if the company needs to initiate activities immediately or delay the initiation of its activities. This will have an impact on accountancy and business license matters.
Complete tax office form and file documents before the tax office to obtain the new tax number of the company. (1 day)
If the company wishes to initiate activities immediately, we need to them proceed to obtain the company´s business license before the Municipality.
Compile all documents and go to the Municipality with documentation. (1-2 days).
Regarding the “initiation of activities” it is important to note that once you initiate activities of the company you will need to hire an accountant since tax declarations are done monthly in Chile, even if you have no movement whatsoever. (You would have to file a no movement declaration). In addition, by initiating activities you would need to obtain the business license before the Municipality to operate. The license is directly related to the capital of the company, therefore if we start with an initial CLP$1.000.000 the license will be around $30.000 every 6 months.
Finally, if you need to open a bank account, we need to file all the necessary documents before the bank. It is important to note that this is the most frustrating part of the whole process since the banks in Chile are very conservative. They often only open the accounts based on the Legal Representative´s relationship with the bank.
Compile all the necessary documents and file. (2 – 4 weeks and can be easily extended if the bank requests further documentation or takes their time processing).
Here is a link to another blog.
The timelines above are references. It can take time to get the documents from your home country. Some countries are easier than others. It can take time to get approval on the drafted bylaws for the new entity. It is also not uncommon to show up at the tax office with the documentation that you have brought the last 5 you completed only for someone to ask for something different which means you need to return again another day. All of the above will effect the overall time frame.
Harris Gomez Group is a Common Law firm, with offices in Santiago, Bogotá, and Sydney. We also have legal teams in Mexico, Bolivia, Ecuador, Peru, Brazil, and Argentina. Over the last 18 years, we have been supporting foreign companies with their growth in Latin America. Many of our clients are technology companies, service providers and engineering companies that focus on the mining, energy and infrastructure markets.
To better understand how we can support your management team in the Region, please contact Cody Mcfarlane at firstname.lastname@example.org.