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March 1, 2021

Peru establishes gains from indirect transfer of Peruvian shares will be taxed only in Chile under Peru-Chile DTT

The ruling clarifies where capital gains derived from the indirect transfer of Peruvian shares through a transfer of Chilean shares by a Chilean resident will be taxed. The ruling is good news for Chilean residents that own Peruvian shares, as their capital gains will be taxed only in Chile if they indirectly transfer the Peruvian shares.

In guidance (Ruling No. 001-2021-SUNAT/7T0000), the Peruvian tax authorities established that capital gains obtained by a Chilean resident from the indirect transfer of Peruvian shares through the transfer of Chilean shares will be taxed only in Chile under the Peru-Chile double tax treaty (DTT).


Peruvian income tax law sources the indirect transfer of Peruvian shares to Peru. The income tax law defines an indirect transfer as the transfer of shares of a foreign company that owns, directly or indirectly, shares issued by an entity incorporated within Peru, provided certain conditions are met.


The Peruvian tax authorities concluded that capital gains obtained by a Chilean resident from an indirect transfer of Peruvian shares through a transfer of Chilean shares are taxed only in Chile.

According to Article 13(4) of the Peru-Chile DTT, capital gains obtained by a resident of a member country from the transfer of shares issued in the other member country could be taxed in the other member country (source country). Article 13(5) establishes that capital gains from the transfer of other goods will be taxed only in the transferor's country of residence.

In the indirect transfer of Peruvian shares, the shares transferred are shares issued in Chile, not in Peru. Therefore, the Peruvian tax authorities determined Article 13(4) does not apply. Article 13(5) applies to this situation, so capital gains will be taxed only in Chile.


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

Ernst & Young Asesores S.C.R.L, Lima

Ernst & Young LLP (United States), Latin American Business Center, New York

Ernst & Young Abogados, Latin America Business Center, Madrid

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific


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