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 while enjoying lower taxes.
It allows one to travel visa-free to the USA, Canada, European Union, Russia, and many other countries. The Chilean passport ranks 38th on the Nomad Passport Index.
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 they must watch out for what planting a flag in Chile would mean for their taxes, as well as their entire financial plan.
Countries in Central and South America are often some of the easiest places to immigrate to, especially for Americans, and it’s easier than in other parts of the world to fit in with the culture and lifestyle. Another benefit of Latin American countries is that they generally allow dual citizenship, and if you plan on having children, many also offer citizenship by birth.
To learn more about going offshore, second citizenship, and international investments, become a Nomad Capitalist client today, and we will help you go where you’re treated best.
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 got a lot going for it:
- A modern country with modern cities and all of the contemporary facilities
- A stable economy with lots of opportunities, especially in mining, food production, and aquaculture
- The most transparent country in Latin America, ranked 27th on the Corruptions Perception Index (the USA is ranked 24th by comparison)
- One of the most stable currencies in the region, thanks to foreign trade
- A pro-business country. It’s the easiest and cheapest place to start a business in Latin America.
- One of the world’s biggest recipients of direct foreign investment
No wonder quite a few investors seek Chilean residency and 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 are 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:
- The first option is to apply as Rentista; the basic requirement is to have a regular monthly income of at least $1,500 in the form of pension, dividends, rental income, etc. It just can’t be income from a job. For each dependent, there is an additional $500-$750. Basically, you need to show that you can support yourself without needing to draw on social benefits.
- Second, for those over 55 years old, you can apply as a retiree. For this option, you need to demonstrate financial independence through a lump sum of at least $125,000 for a single applicant, and $25,000 for each dependent is advisable.
- Or, third, start a business, investing a minimum of $60,000, and if investing in Santiago, around $75,000, in the first year of living there. This is the most complicated visa option and the one with the biggest fees. That’s because each visa application is evaluated based on business merit, and the government will want to see that you meet certain criteria during the first year.
If you’re interested in starting or running a business in Chile, check out our tips when dealing with the locals while doing business in Chile.
Step 2: Temporary Residence
No matter which of the three options you choose, 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 85 days of the 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, you can set up a business on a temporary residence permit if you opt for that route. In fact, you’re free to do whatever you feel is valuable and convenient as long as it’s legal.
As your temporary residence permit is about to expire, you can renew it once. However, after two 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 provide 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 common language 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 a distance 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 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 representative 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 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 must also be in Spanish or English and 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.
One thing to note is that if you 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 two years.
During 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 may want to obtain a second citizenship, here are some pros of holding a Chilean passport:
- Visa-free access to 170+ countries
- Unrestricted access to the entire Mercosur area (the South American trading block)
- Access to all social benefits, education, and healthcare
- 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?
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 ways to structure your finances to lower your tax burden for that year dramatically.
But keep in mind that if you want to work towards citizenship, you’ll need to spend most of your time in Chile, which means being a tax resident for at least six years.
Even if you’re not a resident, you’ll be taxed on your Chilean-sourced income, whether 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. Getting a further three-year extension is possible, making 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.
Is your heart set on South or Central America for your second passport and ideal Plan B? The Nomad Capitalist team has helped high-net-worth clients qualify for the best residence and citizenship in this part of the world for years. We can help you too. Apply here to become a client.
FAQs: Residence by Investment in Chile
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. Afterward, you’re able to get your permanent residence.
There is no minimum sum that you’ll need to invest to gain residence through Rentista. However, you must show that you’re able to support yourself and your family and earn around $1,500. If you apply to start a business, you will need to invest around $60,000/$75,000.
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.
If you’re in Chile under a 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 a permanent residence.
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.
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.
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.
No matter your visa option, you can bring your spouse and minor children 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 copper, wood pulp, fish, and wine exporter. Chile is a magnificent country that can easily serve as your primary base in the Americas if you drop by occasionally.
The cons: high tax rates and mandatory tax residence take the wind out of the Chilean sails. Plus, its 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 specialty. Get in touch if you’d like to find out more about residence and citizenship in Chile.