Foreign companies are permitted to operate directly in Chile for extended periods as long as they obtain a RUT from the SII, but it is highly recommended that they register a branch (sucursal) or set up a subsidiary (subsidiaria).
The process for registering a branch is straightforward, and there are certain benefits of operating a branch instead of incorporating a subsidiary, the main one being that, in some cases, the tax burden is lower. If you intend to operate in Chile very briefly, it may be that opening a branch makes more economic sense – a calculation your accountant can help you with.
However, there are significant problems with branches when it comes to liability: should a local branch of a foreign company commit an offense or cause an injury, the entire company, including all its foreign assets, is liable for damages. With an incorporated subsidiary, on the other hand, only the subsidiary itself – not its parent company – is liable.
For that reason, and because the added legitimacy incorporating a subsidiary gives you in the eyes of the government, regulators, suppliers, and the public, it is generally preferable that you incorporate a subsidiary instead of opening a branch.
How to Register a Branch of a Foreign Company
To register a branch, the company must elect a representative in Chile and present the following documents to the Registro Comercial (all Chilean documents must be notarized, and all foreign documents must be legalized and, if not in Spanish, translated by a public translator within the Cancilería):
- Power of attorney for the representative,
- Proof that the company is legally incorporated abroad and that it is still in existence,
- Copy of the company’s current statutes,
- Description of the amount and form of capital assigned to the branch, as well as how and when it will be transferred to Chile.
Within 60 days of presenting these documents, a summary will be registered in the Registro Público Comericial, and the notary will send the summary to the Diario Oficial for publication.