The Netherlands is an important trade partner for Chile, with direct investments of USD 20.5 million in 2020, a figure which represents 7.5% of the overall foreign investment in Chile for last year, meaning the Netherlands is the country with the fourth-largest disbursement. In turn, Chilean investment in the Netherlands was a total of USD 1.825 million at the end of 2019, mainly in the industrial sector. This figure represents 1.33% of all foreign Chilean investment.
The agreement between Chile and the Netherlands, signed on January 25, 2021, will remove double taxation and will help to increase control over tax avoidance and evasion between the two countries by enhancing the exchange of tax information and strengthening the Chilean tax system. The agreement also includes financial cooperation to remove tax barriers and to facilitate investment, service exports, and technology transfers. Additionally, it will promote better legal guidelines to enable tax entities from both countries to prevent international tax evasion and resolve any disputes that may arise.
What taxes are included in the agreement?
The agreement signed between Chile and the Netherlands will apply to the income tax and wealth tax enforced in each State.
The current taxes applicable in each country are the following:
- In Chile, those taxes established in the Income Tax Law.
- In the Netherlands, income tax (De Incomstenbelasling); salary tax (De loonbelasting); corporation tax (De vennootschapsbelasting), including Government participation in net profits for the exploitation of natural resources as established in the Mining Law (Mijnbouwwet); dividend tax (De dividendbelasting); and tax withholding (De bronbelasting).
The agreement will be applied to those taxes which are identical or substantially similar, and to those wealth taxes which are established after the signing of the agreement, those added to current taxes, or replacement taxes. It is the responsibility of both States to notify of any significant changes made to their tax legislation.
The agreement with the Netherlands joins the extensive network of tax agreements that Chile now has with 33 other countries, and those commitments which have recently been signed with India and the United Arab Emirates.
You can see a current list of the double taxation agreements Chile has here.
You can see the agreement documents to remove the double taxation between Chile and the Netherlands here.