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Expat • Second Passport

Chile Residency by Investment | Read The Ultimate Guide

Dateline: Santiago, Chile

Last Updated May 6, 2021

Chile has one of the fastest-growing economies in South America. 

It’s a country that’s stable, rich in natural resources and features large swathes of untouched nature (as well as world-renowned vineyards – great for wine lovers seeking Chile permanent residency). 

In recent years, Chile has emerged as a haven for expats looking to relocate to a welcoming environment. It provides one of the cheapest, most accessible, and easiest to maintain residencies in the world.

For those who spend time skipping around South America, a Chilean permanent residency and eventually a passport can increase freedom of movement in the Americas and enjoy lower taxes. 

It allows one to travel to the USA, Canada, European Union, Russia, and many other countries visa-free. The Chilean passport is the 16th most powerful passport in the world. Why not Chile, we say?

Investors and entrepreneurs from all over the world can invest in this Spanish-speaking country and reap decent rewards, but must watch out for what planting a flag in Chile would mean for their taxes, as well as their entire financial plan.

Residence by Investment in Chile

Like many countries in Latin America, e.g. Colombia, Chile gets a bad rap. You might not know much about the world’s narrowest country, but it’s actually:

  1. The safest country in Latin America
  2. A modern country with modern cities and all of the contemporary facilities
  3. A stable economy with lots of opportunities, especially in mining, food production, and aquaculture
  4. The most transparent country in Latin America, ranked 26th on the Corruptions Perception Index (the USA is ranked 23rd, for comparison)
  5. One of the most stable currencies in the region, thanks to foreign trade
  6. A pro-business country. It’s the easiest and cheapest place to start a business in Latin America — you can do everything online for a mere $600 
  7. The world’s 17th biggest recipient of direct foreign investment

No wonder, then, that quite a few investors seek Chilean residency and an eventual citizenship. 

So, what are the steps that one needs to take to make Chilean residence a reality?

Step 1: Apply for a Chile Visa

Depending on your situation, you will need to apply for one of the following visas to acquire Chile permanent residency that will be well beyond the standard 90 days that is extended to tourists. 

You can apply at your nearest Chilean consulate or embassy. You can also apply from within the country while visiting under a tourist visa. 

You have three options: 

  1. The first option is to apply for a self-sufficient visa; the basic requirement is that you have recurring income that can support you and your family. There is no definition as to what’s an acceptable source of income, so technically, it could be anything, from a pension to your stock investments. It just can’t be income from a job. You must show that you have approximately $1,500 (plus $500 per additional family member) to support yourself without needing to draw on social benefits. You’re also able to start a business under this visa. 
  2. Second, you may apply for an entrepreneur visa. Those who wish to create a company in Chile need to invest a minimum of $75,000 (a lower amount would suffice if not investing in Santiago) in the first year of them living there. This is the most complicated visa option, as well as the one with the biggest fees. That’s because each visa application is evaluated based on business merit, e.g. how many jobs it would create, and the decisions that are passed down are subjective. 
  3. Finally, get a startup visa. Chile has opened its doors to talented entrepreneurs to arrive and grow their businesses in the country. The visa is easy to obtain with no minimum investment in your startup needed, but this visa is notoriously hard to retain after it expires in 1 year. You’ll need to prove that your business is viable and that it’s being financed sufficiently.

If you’re interested in starting or running a business in Chile, check out our tips when dealing with the locals whilst doing business in Chile. Just click on the link attached and have a read!

Step 2: Temporary Residence

No matter which of the three options you chose, you’ll be getting your temporary residence permit next.

It will be valid for one year, during which you must stay in Chile for at least 185 days of that year, which will automatically make you a taxpayer (more on this in a section below). 

The 185 days don’t have to be consecutive, so you’re still free to travel. However, don’t go over the threshold if you will later want to extend your stay in Chile. 

During this year on a temporary residence permit, you’re free to set up a business if you applied for the entrepreneur visa or to launch your startup if you opted for that route. 

In fact, you’re free to do whatever you deem useful and convenient for the country, as long as it’s legal. 

As your temporary residence permit is about to expire, you can renew it once. However, after 2 years on a temporary permit, you must either apply for Chile permanent residence or leave the country. 

Step 3: Chile Permanent Residence

Getting permanent residence in Chile isn’t all that complicated – just a little time-consuming.

Several documents are required (pretty much the same process as applying for temporary residence), and the rules are strict about requiring 185 days in the country before you can be considered for permanent residency. 

You’ll also need to open a letter, outlining why you’d like to become a permanent resident in Chile. The more realties you have with the country, the better. 

Your permanent residence permit will be valid for a period of five years and may be renewed as many times as you’d like. 

Spanish is the lingua franca in Chile, and a sufficient understanding of it will be necessary if you want to take on the residency process without the help of a translator or lawyer, in other words, without the added expense.

But the toughest part of the process could be the travel. Compared to other major capital cities in the world such as New York, Paris or Hong Kong, getting to Santiago – the capital city of Chile – is a commitment. 

It’s a long-haul flight that is distanced from major hubs (aside from Buenos Aires or Sao Paulo).

Here’s the great news, though: many countries have strict rules when it comes to maintaining a permanent residence permit, including staying in the country for at least half the year, every year. For many in today’s day and age of global travel, the idea of being stuck somewhere for that long is neither practical nor even possible.

In Chile, however, once you have permanent residency you only need to step foot on Chilean territory one day each year to maintain it. It’s as simple as that.

And if you are not able to fly down this year, you can send a letter to your nearest Chilean representation to justify your absence.

Although it sounds just as easy as skipping class, only certain reasons, such as dire illness, will be accepted and there is a limit to how many times you can ask to be relieved of the requirement before you risk losing residency.

One notable requirement that has been added recently is that every Chile permanent residence applicant (and their family members over the age of 18) must present a police clearance certificate. The certificate will only be valid for 90 days after the date of issue. 

It also must be in Spanish or English, and it must have an apostille. 

Your nearest Chilean consulate should be able to help you with obtaining it. Alternatively, you could request this document directly from the relevant governmental office in your country. 

N.B. If you happen to have a child in Chile while you and your spouse are permanent residents, the child will automatically become a Chilean citizen. 

Step 4: Chilean Citizenship

After five years of being a Chile permanent resident and tax resident, you’ll become eligible to apply for a Chilean passport. 

The entire process – from lodging your application to getting approved – takes around 2 years. In that time, you’ll have a Spanish language exam, as well as a Chilean culture and history exam.

Luckily, dual citizenship is allowed in Chile, which means that you won’t have to renounce your previous nationality.

While we understand that not everyone might want to obtain a second, here are some pros of holding a Chilean passport: 

  1. Visa-free access to 170+ countries 
  2. Unrestricted access to the entire Mercosur area (the South American trading block) 
  3. Access to all social benefits, education and healthcare
  4. Visa-free access to the United States, Canada, the European Union, and Russia

Tax Implications of Chilean Residence

You’ll get looped into the Chilean tax system as soon as you apply for and obtain your temporary residence permit. 

A tax resident in Chile is someone who spends six consecutive months in the country per year, or six non-consecutive months over two years. 

So, what would you be getting yourself into?

We have to say – Chile isn’t the most favorable place in the world if you want to optimize your tax rate legally. 

It has a residential tax system and you will be taxed on both your Chilean-source and worldwide income when you’re a resident (which you automatically will be under the temporary visa).

That said, since the temporary visa is only valid for one year, after which you can swap it for a Chile permanent residence permit with no physical residence requirement, theoretically, you’d only have to pay tax for one year. 

However, there are definitely ways to structure your finances in a way to dramatically lower your tax burden for that year. 

But keep in mind that if you want to work towards citizenship, you’ll need to spend the majority of your time in Chile, which means being a tax resident for a minimum of six years. 

Even if you’re not a resident, you’ll be taxed on your Chilean-sourced income, be it a director’s salary or rental profits. 

But here’s the great news: 

Chile offers a year tax break during your first three years of residency with only your Chilean-source income taxed. It’s possible to get a further three-year extension which makes Chile a good pit stop, if not a permanent home. 

Beyond this generous tax exemption, the country does have some pretty steep progressive tax rates: up to 40% on income and up to 35% on all types of investment income.

There is an inheritance tax, the value-added tax (VAT) rate stands at 19%, and corporate entities are taxed at 27% on their worldwide income.

Frequently Asked Questions about Residence by Investment in Chile 

How can I become a Chile permanent resident?

You can either come to Chile as a self-sufficient resident, an entrepreneur, or an investor. All routes demand that you first become a temporary resident for a year, and fulfill a physical presence requirement. Afterwards, you’re able to get your permanent residence. 

What’s the minimum required sum to invest in Chile under the Investor visa? 

Chile is unique in that there is no minimum sum that you’ll need to invest to gain residence. You must simply show that you’re able to support yourself (and your family, if applicable) or that you have enough money to invest in your new Chilean business. 

Do I have to speak Spanish to become a resident of Chile?

For temporary and permanent residence, one is not required to speak the language or know the Chilean culture. There is no interview during the application process for either of these permits. 

Is there a physical residence requirement when I become a resident of Chile?

If you’re in Chile under the temporary residence permit, you will need to spend at least 185 days in the country that year. If you don’t, you won’t be able to upgrade your permit to a permanent one. However, as soon as you claim your permanent residence, there is no longer a residence requirement. You’ll have to spend just one day per year in the country to maintain permanent residence. 

How can I get a Chilean passport?

You must spend a minimum of six years in Chile to obtain citizenship. First, you’ll spend a year under the temporary permit, which you’ll then use to obtain permanent residency. After five years as a permanent resident, you become eligible to apply for Chilean citizenship, pending a Spanish exam and a culture/history exam too. 

Are there any restrictions on Chilean permanent residency based on nationality?

No. Everyone can apply to become a permanent resident of Chile. However, some nationals might be required to present more documents than others, determined on an ad hoc basis.

How much tax do I have to pay in Chile?

If you are a resident for tax purposes, you will need to pay income tax (progressive rates of up to 40%) on your worldwide income. Investment income is charged at rates of up to 35%. However, one isn’t liable to pay tax on their worldwide income for the first three years of residing in the country. 

Can I bring my family to live in Chile with me?

No matter which visa option you chose, you can bring your spouse and minor children with you to live in Chile. No additional investment needs to be made. 

Should You Become a Chilean Resident?

Here at Nomad Capitalist, we always say that you should go where you’re treated best, and Chile could be just that for some investors. 

But, as with every financial decision, you must carefully weigh the pros and the cons. 

So, how do they stack up in Chile?

The pros: it’s a stable country with high economic growth, and the safest one in the region. It’s a global exporter of copper, wood pulp, fish, and wine. 

Chile is a magnificent country that can easily serve as your primary base in the Americas, as long as you drop by once in a while.

The cons: high tax rates and mandatory tax residence take the wind out of the Chilean sails. Plus, it’s remote geographic location means that globe-trotting isn’t as easy. 

However, there are legal ways to structure your move to Chile in such a way that it wouldn’t have a huge financial effect on your worldwide assets. Have a read here if you’d like to know more about the pros and cons of setting up a company in Chile.

Creating holistic financial plans is our speciality. Get in touch if you’d like to find out more about residence and citizenship in Chile.

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