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January 28, 2021

Chile and the Netherlands sign double tax treaty

On 25 January 2021, Chile’s Ministry of Finance announced the new double tax treaty (DTT) between Chile and the Netherlands was signed. The DTT is duly aligned with the OECD1 model and BEPS2 guidance.

The DTT will enter into force after parliamentary ratification and the exchange of ratification instruments.

No immediate effects in Chile for dividend distributions

According to Chilean domestic regulations, residents in the Netherlands will still be subject to the partially integrated regime (i.e., deemed as non-treaty investors, regardless of the signing status) because the treaty is not yet in force. As such, only 65% of the corporate income tax may be creditable against the 35% dividend withholding tax, resulting in an effective tax burden of 44.45% for dividend repatriation out of Chile to Dutch investors.

Investors resident in countries with a DTT in force, however, may fully credit the corporate income tax against the 35% dividend withholding tax, resulting in a 35% effective tax burden.

Also, due to a transitory domestic provision, the ability to fully credit the corporate income tax against the dividend withholding tax temporarily applies until 2026 to investors resident in countries with DTTs signed with Chile before 2020 that are not yet in force, including the United States (US)-Chile DTT (2010) and United Arab Emirates (UAE)-Chile DTT (2019). This special regime, however, does not extend to residents in the Netherlands.

Chile’s current DTTs network

Currently, Chile has 33 DTTs signed and in force and 4 pending ratification.

The following list includes the countries with DTTs in force with Chile:
















Czech Republic


































South Korea












New Zealand


United Kingdom



South Africa

The DTTs pending ratification and not yet enforceable are those with the US, UAE, India and the Netherlands.


1. Organisation for Economic Co-operation and Development.

2. Base Erosion and Profit Shifting.


For additional information with respect to this Alert, please contact the following:

EY Chile, Santiago
Ernst & Young LLP (United States), Latin American Business Center, New York
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Abogados, Latin American Business Center, Madrid
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific



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