Chile is one of the most open countries in Latin America when it comes to foreign investment. Its legal, economic, and political stability has been a key factor in attracting international capital for decades. But what are the rules of the game? What guarantees does the country offer to foreign investors?
In this article, we explain clearly and directly how the legal framework governing foreign investment in Chile works, based on Law No. 20.848, in force since 2016.
What Types of Investments Are Regulated by This Law?
Law No. 20.848 applies to what is known as foreign direct investment. That is, investments made by foreign individuals or companies that transfer capital or assets into Chile with the purpose of participating in a local company or project.
In simple terms, these are significant investments that involve control or meaningful participation in businesses within the country. The law defines foreign direct investment as one that meets the following criteria:
- Originates from an investor who is neither a resident nor domiciled in Chile.
- Is made for a minimum amount of five million US dollars (or its equivalent in another currency).
- Can be made in the form of money, physical goods, technology, reinvestment of profits, or capitalization of loans or credits related to the foreign investment from affiliated companies.
- Grants at least a 10% voting stake in a Chilean company.
Who Can Invest in Chile?
Any individual or legal entity established abroad, not residing or domiciled in Chile, can invest as long as the capital is transferred according to the criteria mentioned above.
In addition, the law allows investors to request a foreign investment certificate from the Foreign Investment Promotion Agency (InvestChile). This certificate grants access to the special regime regulated by the law and includes detailed information about the investment.
What Guarantees Does Chile Offer Foreign Investors?
Law No. 20.848 provides several concrete guarantees:
1. Right to Repatriate Capital and Profits
Foreign investors may repatriate the invested capital and any profits generated, once all tax obligations are fulfilled.
2. Access to the Formal Foreign Exchange Market
The law ensures access to the formal foreign exchange system for bringing foreign currency into the country and sending it abroad. The exchange rate is freely agreed upon between the parties.
3. Non-Discrimination
Foreign investors are subject to the same legal regime as domestic investors. There can be no arbitrary discrimination against them, either directly or indirectly.
4. Tax Benefits for Importing Capital Goods
The law grants a VAT exemption on the importation of capital goods for certain projects, provided specific requirements are met, in accordance with Article 12, letter B No. 10 of Decree Law No. 825.
What Role Does InvestChile Play?
The Foreign Investment Promotion Agency, known as InvestChile, is the public entity responsible for implementing the country’s foreign investment attraction strategy.
Its functions include:
- Issuing foreign investment certificates.
- Promoting Chile as an investment destination.
- Supporting investors in establishing and expanding operations.
- Coordinating actions between public and private entities.
Conclusion
Chile has a clear, modern legal framework designed to facilitate the arrival of foreign investment. Law No. 20.848 establishes rights, guarantees, and procedures that offer legal certainty to those looking to set up and operate in the country.
Need Help?
At LAT33, we support foreign companies throughout the SoftLanding process.
Contact us at lat33.services/contact-us/ and we’ll help you get established in Chile safely and without friction.
