Tax Reform Project | Inheritance, Assignments and Donations Tax Law

You can download the document prepared by our Tax Group by clicking here.

On january 29 of this year, the Government submitted to Congress the Bill on Compliance with Tax Obligations within the Pact for Economic Growth, Social Progress and Fiscal Responsibility called “Bill on Compliance with Tax Obligations”.

The bill contemplates the amendment of several legal bodies, the most important of which are the Tax Code, the Income Tax Law and the VAT Law. In addition, it incorporates a new transitory regime for the regularization of foreign capital.

Below we explain how it will affect the Inheritance, Gift and Gift Tax Law.

Taxable events

Article 1 of the law establishes that revocable donations will be taxed. It is also clarified that the tax affects:

• Donations whose donee has domicile or residence in Chile.
• Donated goods are located/registered in Chile.
• Donated goods that have been acquired with resources coming from the country.

Finally, it is clarified that, for the application of credits for taxes paid abroad, the exchange parity corresponding to the date of payment of the tax abroad must be taken into account.

Benefits to certain donations

The possibility of making tax-free donations of up to 20% of the global net income is maintained, but it is established that this benefit will not be applicable when the donations are made to persons who are beneficiaries of the donor’s fourth improvement. Donations made to related parties (under the terms of the tax code) will not enjoy this benefit either.

Asset valuation

Article 46 is restructured and new valuation rules are provided that cover a greater number of cases in relation to:

• Shares, quotas or rights of national and international companies.
• Real estate.
• Vehicles.
• Investment portfolios.
• Bank accounts.
• Liabilities.
• Any other asset that is not expressly stated, which must be valued according to its moral market value on the date the inheritance is deferred or the donation is made.

Payment of taxes in installments and normal tax control

Article 50 is also modified, allowing one or more heirs to pay the tax in annual installments, without the application of legal surcharges (as long as it is paid in due time).

On the other hand, adjustments are incorporated to Article 63, which contains the control rule with respect to the tax, fixing its meaning and scope. In this line, it is expressly established that, for the application of this article, a summons must be issued and that the term to liquidate and remit the tax will be 6 years from the celebration of the challenged act.

You can download the complete document in our e-book section here.

For more information on these topics you can contact our Tax team:

Rodrigo Albagli | Partner | ralbagli@az.cl

Álvaro Rosenblut | Partner | arosenblut@az.cl

David Ancelovici | Director Tax Group | dancelovici@az.cl

Pablo Trucco | Senior Associate | ptrucco@az.cl

Elisabet Pinto | Associate | epinto@az.cl

Valentina Herrera | Associate | vherrera@az.cl

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