Banking, Money and Taxes in Chile

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Chilean money - Banking, Money and Taxes in ChileAlthough there are many good reasons for expats to relocate to Chile, ease of banking and convenient financial services are certainly not going to feature on that list.

Expats are warned that banking in Chile is a complicated and frustrating proposition at the best of times, and an absolutely nightmarish one at the worst.

Chilean currency

The currency used in Chile is the Chilean Peso (CLP), which is subdivided into 100 centavos. However, centavo coins are no longer in circulation, and, when necessary, prices are rounded up to the nearest peso.
  • Notes are in denominations of 1,000, 2,000, 5,000, 10,000 and 20,000 pesos
  • Coins are in denominations of 1, 5, 10, 50, 100 and 500 pesos

Banking in Chile

Along with the Central Bank (Banco Central de Chile), major Chilean banks include Banco de Chile, Banco Santander Chile, Banco Estado, and Banco Santiago. Of the foreign commercial banks, HSBC and Scotiabank have the largest presence in Chile, and it is possible – in theory, although hardly ever in practice – to open an account with them before leaving home, and then to open a (linked) local account after arriving in Chile.
Chilean banks are generally open from 9am to 2pm, on weekdays only.

Opening a bank account in Chile

Opening a bank account in Chile is extremely difficult. Most banks will only let expats open an account with them if they have had Chilean residency for two years – but even then, it is not a straightforward process.
First of all, expats must have a RUT (Rol Único Tributario) number, which will function as their tax identification number and their national ID number while in Chile. It helps to have stable employment and confirmed residency in Chile before applying for an RUT number.
However, even if expats are fortunate enough to have obtained their RUT number, it does not necessarily follow that they will be able to open a bank account in Chile. Most Chilean banks will insist on proof of two years' residency in the country, proof of Chilean income, and a substantial amount of credit (as much as USD 30,000) before issuing a bank account to a foreigner – and even then, it will take an inordinate amount of paperwork and legwork to accomplish.
It is therefore unsurprising that many expats do not even bother with opening a 'proper' bank account in Chile and, instead, opt for one of the following alternatives:
It is possible (although still a far cry from 'easy') for expats to open a Fondos Mutuos (Mutual Funds) account at a Chilean bank using their RUT number. These are basically savings accounts set up on a fixed-term, fixed-rate basis. Account holders will earn interest on their money, but they will not be allowed immediate access to it – and if requesting a withdrawal before the investment term is up, will forfeit the interest earned, and incur penalty fees.
Expats can also try to set up a Cuenta RUT account through Banco Estado. This is basically a very simple savings account that comes with an ATM card. There are restrictions on the amount of money allowed in this account, and how much one is allowed to deposit into it each month.
Expats can have their salaries paid into their overseas bank accounts (or be paid in cash, which they can then send home themselves) – and then access their money using foreign debit or credit cards. Note that if planning on this approach, expats must ensure that they inform their bank of their intention to travel before leaving home, and that they take at least two or three working ATM cards with them to Chile. 

ATMs and credit cards

ATMs are widely available, even in the smallest Chilean towns – which is just as well, as expats might be forced to use money from an overseas account for the duration of their stay in Chile. ATMs typically operate on a 24-hour basis, and accept Visa, MasterCard, Cirrus, Switch and Solo cards. 
Credit cards are widely accepted in Chile.

Taxes in Chile

Expats will not be taxed on their worldwide income for the first three years they live in Chile. However, they will be taxed on the income they earn from Chilean sources, on a progressive scale ranging from five to 40 percent.
After three years, expats will have officially made Chile their 'tax home', and will be taxed on their worldwide income. However, as Chile has double taxation avoidance agreements in place with many countries, expats who hail from a country with such an agreement in place will not be taxed on the same income twice.
Expats looking to retire in Chile will be relieved to know that foreign pensions, of any amount, are not taxed.
Tax regulations could change at short notice and expats are advised to seek the assistance and advice of a professional tax consultant.

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