Chile updates

Competition & Antitrust

Competition Agency blocks Ideal's acquisition of Nutrabien
  • Chile
  • 09 August 2018

The Competition Agency (FNE) recently gave a clear sign to the market by blocking a concentration transaction for the first time since the new merger control system entered into force. The FNE dismissed the efficiencies and mitigation measures raised by the parties, as the risks to competition were too great according to its guidelines.


Corporate Tax

Nothing is certain but death and taxes: Tax Department considers taxation of cryptocurrencies
  • Chile
  • 22 June 2018

A taxpayer recently requested a ruling from the Tax Department on the treatment of gains from cryptocurrency transactions for income and value added tax purposes, as cryptocurrencies are not specifically regulated in Chile or recognised as legal tender or foreign currency. The department's analysis reflected the broad definition of 'income' in the Income Tax Act and the fact that there is no specific exemption or favourable treatment given to these specific gains.

Tax implications for foreign mergers
  • Chile
  • 06 April 2018

A business group recently requested an advance ruling from the Internal Revenue Service regarding the merger of a Chilean subsidiary with a company resident in a low-tax jurisdiction. The service stated that pursuant to Article 64 of the Tax Code, it will not exercise its assessment authority where it has been effectively proven that the legal effects of a merger in another country will be carried out in accordance with Chilean legislation and that the operation will be carried out under the terms of tax neutrality.

Defining permanent establishments for tax purposes
  • Chile
  • 02 February 2018

The Tax Department recently issued Circular 57, which provides a definition of a 'permanent establishment' for domestic law purposes and underlines that such fixed places of business require a tax registration number. Although the circular has been issued with a limited scope, it may have additional benefits, including identifying whether a foreign entity or individual has a permanent establishment operating in Chile.


Employment & Benefits

Contributed by Porzio Rios Garcia
Civil court declares nullity of 16 inter-company unions
  • Chile
  • 14 August 2019

The 24th Civil Court of Santiago recently found that 16 inter-company unions had been created with the sole purpose of granting union privileges to their leaders and ordered the unions to be removed from the Labour Authority's register. The ruling is of great relevance as it is the first time that a civil court has dissolved a union for illicit activity contrary to the spirit of the law that regulates labour organisations.

Change of Supreme Court doctrine regarding limitation periods in employment actions
  • Chile
  • 13 March 2019

The Supreme Court recently decided a variation on limitation periods for employment actions – the so-called 'content doctrine' – which stresses the nature of relief sought by plaintiffs. However, the doctrine is problematic, as it implicitly extends limitation periods by calculating them from the date of termination of employment and not from the date on which any wrongdoing was committed.

Santiago court holds state agencies liable for negligent protection of trapped miners' occupational safety
  • Chile
  • 14 November 2018

The Ninth Civil Court of Santiago recently held that three state agencies had been negligent in protecting the occupational safety of 31 trapped miners and ordered the Treasury to pay approximately €101,523 to each miner. In its defence, the state argued that the significant amount spent in rescuing and compensating the miners (approximately €8.63 million) had protected their moral suffering.

Companies may continue to offer historical benefits to non-union employees without union consent
  • Chile
  • 29 August 2018

Following a recent opinion rendered by the Labour Board, companies may continue to extend to non-union employees benefits which they received before they were added to a collective bargaining agreement, because such benefits are not an attribute of the collective bargaining agreement for non-union employees. This new position impedes union interference in the granting of benefits to employees who are not involved in union activity.

Employment liability cannot be avoided by hiring staff through affiliates or related entities
  • Chile
  • 20 June 2018

When structuring their businesses, companies must keep in mind that employment liability cannot be avoided by hiring personnel through their company affiliates or related entities. Fines may apply if the existence of multiple companies under a common employment management is found to be a scheme to avoid compliance with employment rights (eg, allocating profits in one company but hiring employees in another).


Energy & Natural Resources

Surface landowners versus mining concession holder rights
  • Chile
  • 12 November 2018

The relationship between surface landowners and mining concession holders in Chile is governed by law, which grants preferential rights to the latter. Mining concession holders may exercise their rights to search for minerals and impose mining easements on landowners. However, in the case of state property, such matters are regulated by a ministerial order.

Legal framework for lithium gets recharged
  • Chile
  • 21 May 2018

Until 1979, the Mining Code 1932 defined the legal regime for lithium. During that period, lithium was treated like any other mineral and could be privately owned without special restrictions. This situation has changed with the enactment of a number of laws. Most recently, the Ministry of Mining's Supreme Decree 64 established special operation contract requirements and conditions for the exploration, exploitation and processing of lithium deposits in the Atacama region.

Lights on – El Pelicano solar park opened
  • Chile
  • 29 January 2018

The El Pelicano solar park, a photovoltaic power plant located north of Santiago, was recently opened. The plant, which represents an investment of $250 million, has a capacity of 110 megawatts (MW) and will provide approximately 42% of the energy required by the Santiago subway system. In 2014 solar power in Chile had an installed capacity of 11 MW. With the launch of the El Pelicano project, this capacity has risen to 2,100 MW.


Environment & Climate Change

Pampa Camarones mining project penalised for damage to archaeological site
  • Chile
  • 25 June 2018

The government recently filed a compensation claim for environmental damage against mining company Pampa Camarones. The claim was based on the fact that Pampa Camarones' operations had violated a series of measures that the regional evaluation commission had stipulated to protect a nearby archaeological site. As a result, over 15 hectares of the site were destroyed without the required measures being undertaken to protect its archaeological value.

SoE orders permanent closure of Pascua Lama mine
  • Chile
  • 26 March 2018

The Superintendence of the Environment (SoE) recently issued an environmental resolution ordering the permanent cessation of Compañía Minera Nevada (CMN) SpA's Pascua Lama mining project. After having considered the background and evidence provided during the investigative process, the SoE ordered the permanent closure of the mining site based on a number of breaches and imposed a series of fines. CMN SpA has filed a complaint against the resolution.

Supreme Court decision on completion of title for water rights
  • Chile
  • 15 January 2018

A recent Supreme Court of Justice decision required the applicant in a proceeding initiated to complete the good and legal title of surface water rights to notify all holders of water rights in the same watershed to which the application referred. Failure to involve other rights holders in the same river basin in the respective proceedings, as required by this decision, could render subsequent proceedings obsolete and thus result in the loss of considerable time for the applicant.