Foreign investors and expatriates who own real estate, company shares or other assets in Chile may wish to transfer part of their wealth to their children or other family members during their lifetime. However, gift tax, legal formalities and cross-border tax obligations can make these transactions complex and costly.
Chile’s Law No. 21,850 introduces a temporary 50% reduction in gift tax for transfers that meet the statutory requirements. The special regime also removes the requirement for judicial authorization, known as insinuación, for eligible donations.
Published in Chile’s Official Gazette on October 17, 2026, the law establishes a one-year period beginning on December 1, 2026. This creates a limited planning opportunity for families considering lifetime gifts of assets located in Chile.
The benefit is not automatic. Donors must meet specific requirements concerning eligible beneficiaries, the value of the assets being transferred and the documentation that must be submitted to Chile’s Internal Revenue Service (Servicio de Impuestos Internos, or SII).
What Does the 50% Gift Tax Reduction Mean?
Chile’s gift tax is primarily governed by Law No. 16,271 on Inheritance, Assignments and Gifts. Under the new temporary regime, qualifying donations may benefit from a 50% reduction in the gift tax calculated under that law.
The reduction may be used once per donor, provided the statutory conditions are met. It is not a general exemption for all family gifts, nor does it mean that every transfer of real estate or company shares automatically qualifies.
Eligible donations are also exempt from the judicial insinuación procedure. Instead, the donor must comply with the special regime’s requirements, including executing a public deed within the statutory period and submitting the required sworn declaration to the SII.
Timing is important. The law requires both the public deed and the required declaration to be completed within the one-year period. Property registrations and other transfer formalities may be completed later where permitted by law.
When Does the Temporary Donation Period Begin?
The special regime is scheduled to apply from December 1, 2026, through November 30, 2027, subject to the applicable legal requirements.
A donation made before the commencement date should not be assumed to qualify retroactively. Families should therefore prepare in advance by confirming ownership, establishing asset values, identifying eligible beneficiaries and gathering the necessary documentation.
The SII has published information about the measure. Nevertheless, donors should review the latest administrative instructions and filing requirements before signing the deed or submitting any documents.
Who Can Benefit From the New Rules?
The law restricts eligibility according to the donor’s family and succession circumstances.
Eligible beneficiaries. In general, the benefit applies to donations to potential legitimarios—individuals entitled to protected shares of an estate under Chilean succession law—and potential beneficiaries of the cuarta de mejoras, a portion of an estate governed by specific succession rules. The donor may determine the proportions allocated among eligible beneficiaries.
As a general rule, donations to other individuals do not qualify unless the donor has no beneficiaries within those statutory categories. This circumstance must be recorded in the required sworn declaration.
Value of the donation. The total value of donations benefiting from the regime cannot exceed 50% of the donor’s total net assets. For this calculation, assets are valued under the applicable provisions of Law No. 16,271, and duly substantiated liabilities are deducted.
Evidence of sufficient assets. The donor must also declare that they own assets worth at least twice the amount they intend to donate. The existence and status of eligible beneficiaries, the respective allocations and the percentage of the donor’s estate being transferred must also be documented.
These are substantive legal requirements, not merely administrative recommendations. Donors should establish their eligibility and calculate the relevant amounts before committing to the transaction.
What Formalities Must Be Completed?
The special regime removes the need for judicial authorization through the insinuación procedure for qualifying donations, but it does not eliminate the remaining legal and tax formalities.
The principal steps include:
- Prepare the public deed. The donation must be formalized within the statutory one-year period.
- Prepare the sworn declaration. The donor must provide the information required by law, including the relevant beneficiaries, the allocation of the donated assets, the calculation of net assets and evidence of sufficient assets.
- Submit the declaration to the SII. The declaration must be filed within the same statutory period, following the SII’s applicable instructions and procedures.
- Declare and pay gift tax. The recipient must comply with the applicable tax declaration and payment obligations. Under the statutory procedure, the notary must receive the required SII certification before authorizing the deed.
- Complete the transfer formalities. Real estate donations may require registration, while transfers of shares or other ownership interests may require updates to corporate records and additional documentation.
The SII uses Form 4412 for inheritance and gift tax declarations. Before proceeding, donors should verify the forms, instructions and specific filing requirements applicable to the temporary regime.
Special Considerations for Spouses and International Families
The law establishes a specific rule for donations made to a spouse under this regime: these donations are irrevocable and remain subject to gift tax under Law No. 16,271. Couples should therefore obtain advice before transferring assets between spouses and should not assume that the transaction can subsequently be reversed.
Foreign nationality or residence outside Chile does not automatically exclude an investor from the regime or guarantee eligibility. The ownership and location of the assets, the donor’s family circumstances and the tax consequences in the relevant foreign jurisdiction must all be reviewed.
A donation made in Chile may also create tax or reporting obligations in the recipient’s country of residence. The Chilean benefit should therefore be considered as part of the family’s broader international estate plan.
What Happens if the Recipient Sells the Asset Within Three Years?
The new law establishes an important rule for assets donated under the temporary regime. If the recipient disposes of the donated asset within three years from the date of the donation deed, the asset’s tax basis will generally be the lower of the donor’s tax basis and the tax basis that would apply to the recipient under the ordinary rules.
This provision can affect the tax consequences of a subsequent sale. In other words, obtaining the 50% gift tax reduction does not necessarily make a future sale more tax-efficient.
Families considering donations of real estate or company shares should review their intended holding period and any planned sale before transferring ownership.
Plan Your Chilean Asset Transfer Before the Deadline
Chile’s temporary 50% gift tax reduction may provide a valuable opportunity for eligible families to transfer wealth during their lifetime. However, the benefit is limited to qualifying donations, may be used only once per donor and requires compliance with specific statutory conditions.
Becker Abogados can help foreign investors and expatriates assess their eligibility, review the tax and succession implications of a proposed donation and prepare a transfer strategy that complies with applicable law.
Make the most of the planning period before the temporary regime opens. Schedule a private cross-border wealth consultation with Becker Abogados to assess your eligibility, understand the potential tax impact and prepare the required documentation.
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