Although there are many pros of relocating to Chile, ease of banking and convenient financial services are unlikely to feature on that list. Expats are warned that banking in Chile is a complicated and often frustrating proposition. Expats may wish to seek advice from large accounting firms, tax specialists and relocation companies when starting to do business and dealing with money in Chile.
Money in Chile
The currency used in Chile is the Chilean Peso (CLP) which is subdivided into 100 centavos. That said, centavo coins are no longer in circulation and prices are often rounded up to the nearest peso. CLP 1 and CLP 5 coins, although still in circulation, are no longer in production.
- Notes: CLP 1,000, 2,000, 5,000, 10,000 and 20,000
- Coins: CLP 1, 5, 10, 50, 100 and 500
Money matters can be tricky, especially when dealing with a foreign currency. The Chilean Peso has a floating exchange rate and so the currency fluctuates daily. This can complicate currency conversions but luckily there are many ways and places to do this. Money can be exchanged at the airports, large hotels, ATMs and foreign exchange bureaux (casas de cambio). Expats should never exchange money with strangers on the street as this could lead to scams.
As Chile’s peso is not a major currency, banks are unlikely to supply it and if they do, the rate is likely to be high. Expats will probably find the best rates for getting the local currency in Chile at ATMs or casas de cambio.
Travellers’ cheques are often accepted at the casas de cambio although the exchange rate is not in favour of the person exchanging money.
Expats are advised to carry cash with them, especially in smaller denominations as change is hard to come by outside of large cities and tourist areas.
Banking in Chile
The banking system and economy of Chile are relatively stable. Many Chilean banks operate internationally and large foreign-owned international banks operate in the country. Major Chilean banks include Banco Santander-Chile, Banco de Chile, Banco del Estado de Chile and Itaú CorpBanca.
Of the foreign commercial banks, HSBC and ScotiaBank have the largest presence in Chile along with JP Morgan Chase. Expats can open an account with one of these before leaving home and then open a linked local account after arriving in Chile.
Banking hours are short as Chilean banks are generally open from 9am to 2pm on weekdays only.
Opening a bank account
Opening a local bank account in Chile is extremely difficult. Many banks will only allow expats to open a local account once they've had Chilean residency for some time and even then, it isn't a straightforward process.
What complicates opening a checking account (cuenta corriente) is all the requirements: a large income, a good credit history to prove that debts can be repaid, and a permanent contract proving that the person has worked and lived in Chile for several months.
An alternative is getting a CuentaRUT through Banco del Estado de Chile, which is a debit account allowing all basic payments and withdrawals. Setting it up is fairly simple and can be done online. That said, the account is limited by maximum deposit amounts and what expats can do with it. Expats will also need to have a valid Chilean ID card number and tax number (RUT).
Recently, ScotiaBank has brought out another banking option for foreigners. Expats will be able to get a simple checking account with a debit card provided they have proof of a minimum income. This will come in handy for making online payments, among other things.
We recommend that expats seek the help of banking relationship managers and advisors, although finding a good advisor may prove difficult. They are best acquired through networking. That said, this may be the best route, as many expats are hesitant to go through the bureaucratic nightmare of opening a local bank account alone, and the help of an experienced local advisor could ease the process considerably.
Alternatively, expats could have their salaries paid into their overseas bank accounts and access their money using foreign debit or credit cards. Expats who want to take this approach must ensure that they inform their bank before leaving home, and that they take at least two or three working ATM cards with them to Chile in case of loss or damage.
Credit cards and ATMs
ATMs are widely available with multiple language options, even in the smallest Chilean towns. These typically operate on a 24-hour basis and accept all major bank cards. Credit cards are also widely accepted throughout Chile.
Although Visa, Mastercard and American Express cards are accepted, especially in large cities, fees for card payments can be charged at high rates. Expats should contact their bank to check their rates on ATM withdrawals and card payments as there may be reduced rates available.
Taxes in Chile
When moving to Chile, expats must get a Chilean tax number, the RUT (Rol Único Tributario). They do this when registering with Chile’s internal tax service, the Servicio de Impuestos Internos (SII). The process will be challenging for expats who do not speak Spanish as the website and administration is largely in Spanish.
That said, networking and finding a suitable advisor and translator is helpful. Expats can also seek advice from large accounting firms such as KPMG for specific information.
In terms of tax, a foreigner is considered a resident if they have been living in Chile either for six consecutive months or six months over two consecutive financial years.
Expats will not usually be taxed on their worldwide income for the first three years that they are residents of Chile, but they will be taxed on the income they earn from Chilean sources on a progressive scale from zero to 35 percent.
After three years of residency in Chile, expats are taxed on their worldwide income, but Chile has double-taxation avoidance agreements in place with many countries, so expats from these places will not be taxed on the same income twice.
When leaving Chile, expats do not have any formal requirements for tax compliance and so those staying short term are unlikely to face setbacks.
*Tax regulations are subject to change at short notice and expats are advised to seek the assistance and advice of a professional tax consultant.