How to set up as an independent contractor in Chile

If you want to start making a living as an independent contractor, then Chile is an ideal spot to go it alone. Whether you want to set up shop in the bustling capital Santiago, the colorful coastal city of Valparaiso, or the rolling vineyards of the Elqui Valley, this stunning South American country is the perfect place to mix work and lifestyle.

But before you can start your self-employment journey, you’ll need to know how to:

• Register your business in Chile

• Avoid misclassification as an employee

• Create compliant contracts that protect you

• Invoice and collect payments from around the world

In this article, we’ll cover how to become a freelancer and help you navigate your tax responsibilities as a self-employed worker in Chile. We’ll also discuss some of the other risks and liabilities you should be aware of.

First, it’s important to clarify how Chile defines independent contractors.

What is an independent contractor according to Chilean law?

Independent contractors are workers who provide paid services (or products) to another party. However, they are classified differently from employees and are usually not entitled to the same benefits, such as paid leave, sick days, and minimum wage. On the flip side, contractors have more freedom and flexibility in the way they work.

See also: Why businesses hire contractors vs. international employees

As in most countries, Chile does not explicitly define the difference between employees and independent contractors in law. Instead, the distinction is made based on the nature of the working relationship and the degree of control exercised by the client/employer.

Based on these guidelines and the definitions of employment in the Chilean Labor Code, you are generally considered to be an independent contractor if you:

• Determine your own work schedule and working hours

• Perform work for other companies

• Set your own rates and scope of work

• Provide your own tools or equipment

• Are not integrated into one specific company and its operations (i.e., you don’t have an internal email address)

• Are able to delegate or subcontract work

• Work without direction or supervision

When you work with clients, it’s important to be correctly classified to avoid penalties and fines and to ensure you pay the right taxes.

Business registration in Chile

Before you can begin working as an independent contractor in Chile, you’ll first need to choose a formal structure for your business. This will determine what your liabilities are and how you will pay taxes.

Categories for independent contractors

As an independent contractor, you can be hired directly by an organization or through a staffing agency. The hiring process can vary depending on factors like the role and the number of applicants applying. You may also be asked to sign a non-disclosure agreement (NDA) before you can start working.

In Chile, you can operate under one of the following categories:

• Individual Limited Liability Company (Empresa Individual de Responsabilidad or EIRL): A legal entity that allows you to work as a sole proprietor and protect your personal assets from any liabilities.

• Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL): A business structure that doesn’t require any capital investments. However, you must have at least two shareholders and appoint one director.

• Corporation (Sociedad Anónima or SA): A type of business entity where the company is owned by shareholders. The shareholders have limited liability.

• Joint Stock Company (SpA): A “simplified” version of a corporation where a company’s capital is divided into shares, each forming a unit of ownership.

Another option is to operate as an individual entrepreneur (empresario individual). This is the simplest and most basic type of business you can start in Chile. Under this structure, you have full control of your enterprise. The downside is there’s no legal separation between you (the owner) and the business; you’re personally responsible for all its debts and liabilities. That means creditors can go after your personal assets if you default on a loan.

If you want more legal protection, you’re working with other partners, or you anticipate generating a large amount of revenue, you can also incorporate a limited liability sole proprietorship (EIRL) or enter into a partnership to limit your liability. Speak with a registered solicitor or accountant if you’re unsure which structure is most suitable for your business.

If you do opt for the individual entrepreneur model, all you need to do is inform the Internal Revenue Service (SII) and fill out form F4415 to obtain a Rol Único Tributario (RUT) number, which translates to “Single Tax Registration.” Think of this as a social security number that a country uses to track an individual’s taxes. You may also need a RUT for things like opening a bank account, renting an apartment, and getting a driver’s license.

If your business activity is regulated (i.e., you practice a protected profession such as medicine or law, or you’re handling food), you may also need to acquire additional business permits or licenses from your local issuing authority.

Visa requirements for independent contractors in Chile

Foreign nationals typically aren’t allowed to work on tourist visas, as they’re specifically designed for travel and leisure purposes. These laws also exist to protect local jobs. Working while on a tourist visa could result in heavy fines and even deportation. It’s important that you obtain the type of visa you need to legally stay and work in Chile.

Here are the different types of work permits and visas in Chile you can get:

• Visa Subject to Contract: Granted to foreign nationals with a formal job offer from a company in Chile. This visa has a maximum duration of two years, but you can request an extension if your employment contract is still valid.

• Temporary Resident Visa: Allows foreign nationals to live and work for a maximum of one year. However, only those with family ties or investments in Chile can get this visa. You can also get it if your “residence is considered useful or advantageous.” Depending on your skillset or education, you may be eligible for this visa.

• Temporary opportunity visa: A temporary residence visa that allows you to stay in Chile for up to a year while you look for work. However, one of the prerequisites is a B1-level Spanish Diploma.

You can apply for a work visa online through Chile’s National Migration Service or your local consulate. You’ll need to prepare a range of documents, including a valid passport, a police certificate, a medical certificate, an employment contract, and proof of financial means. This process can take 15 to 20 days (or even longer if you need to provide extra paperwork).

How do I get paid as an independent contractor in Chile?

As an independent contractor, it’s up to you to handle your invoices and payment collection. Unfortunately, this means billing each client individually and collecting payment through their preferred payment method — which can be inefficient and time-consuming.

Some of the most common ways to collect payments include:

• Bank transfers

• Direct deposits

• Paper checks

• Money orders

• Virtual wallets

• Digital transfer services like PayPal and Wise

These methods all have their own pros and cons. For instance, bank and digital transfers can be pretty quick but often come with hefty service fees. And if you have clients in other countries besides Chile, the payment collection process can be even more complicated.

Alternatively, you can use a trusted solution like Remote. Freelancer Hub is a simple, secure, and reliable way to get paid quickly in Chilean pesos — and with no hidden fees. You can also choose to receive payments in a different currency if you prefer. With our platform, you can even set up recurring invoices for the duration of your contract and avoid having to manually create and send out invoices each month.

And that’s not all. Our platform also enables you to onboard new clients, create localized compliant contracts, track your time, and more from a single location.

Learn more about how our platform can help.

Independent contractor taxes in Chile

As an independent contractor, you’re responsible for filing and paying your own taxes and social security contributions.

The good news is that, as an individual entrepreneur, you pay personal income tax on your business profits. This means that you don’t have to fill out extra returns or pay additional corporate taxes.

The Chilean income tax system is slightly complex, as different rates apply depending on how long you have lived in Chile. However, in general, you can expect to be taxed at a rate of anywhere between 0% and 35.5%, depending on your level of income. As an individual entrepreneur, you must make advance monthly payments throughout the year.

Anyone who lives in Chile must also pay a global complementary tax of between 0% and 35.5%, depending on your income. In addition, you must make minimum annual social security contributions to the SII. Currently, you can opt to make total or partial contributions, although partial coverage will end in 2028.

The exact deadline for filing your tax return changes each year, and the SII will inform you. Generally, though, the deadline is in April or May. You can file this return online electronically with the SII or in person.

VAT information for independent contractors in Chile

The VAT system for individual entrepreneurs is currently undergoing legislative changes in Chile. Under these changes, you may be able to defer VAT payments if your average monthly sales over three years do not exceed 2,400 UF*. You can learn more about these changes here.

* — UF is a non-circulated currency in Chile that is regularly adjusted for inflation.

Liability considerations for independent contractors in Chile

As an individual entrepreneur, you’re personally liable for finance and tax debts, which means your private assets can be forcibly used to settle your business debts. Many independent contractors purchase liability insurance to help mitigate this risk, as it protects against any claims that may stem from bodily injury or property damage during the course of any work you perform.

It’s also important to cover yourself when drafting and signing agreements with clients. Our legal experts can provide you with fully compliant contract templates for both Chilean and international clients.

Accounting requirements for independent contractors in Chile

As an individual entrepreneur, you don’t need to publish annual financial statements.

However, you should keep organized, accurate records of all your income and expenditures (including client invoices, purchase orders, bank statements, and receipts). This will help you correctly file your taxes, give you a stronger picture of your financial situation, and generally make life easier if you’re audited by the tax authorities.

You can either manage these records yourself using an accounting or bookkeeping tool or hire a professional bookkeeper or accountant.

The dangers of contractor misclassification in Chile

As we’ve mentioned, independent contractors are classified differently from employees in Chile. Many of the protections and benefits employees enjoy don’t typically apply to contractors.

As a result, companies may deliberately misclassify you to circumvent their legal obligations, while at other times, it may happen accidentally. Whether intentional or not, misclassification can result in penalties and fines for both you and your client.

As an independent contractor, you can work with your clients to ensure this doesn’t happen. Discuss your role and responsibilities with them, and review the working arrangement regularly.

If your working relationship changes over time and you become more integrated into a client’s company, you can ask to be converted into an employee.

Use our Contractor Compliance Checklist to avoid misclassification

Work through this checklist to help determine if a new hire should have a contractor or employee relationship.

Download

How do I ask the company I’m working with to convert me to an employee in Chile?

Chilean workers are entitled to a host of employee benefits, which include:

• 15 paid days off per year

• Health insurance

• Sick leave

• Maternity and paternity leave (30 weeks)

• Overtime (150% of regular pay)

• Pension plans

• Unemployment insurance

• Worker’s compensation

As an independent contractor, you’re not entitled to these same benefits since you’re not classified as an employee. While you have more control over and flexibility in your work, you don’t get any employer-provided benefits or labor protections.

Making the transition from independent contractor to employee is an option you can consider, as it gives you a more permanent arrangement and job security (with steady paychecks). Plus, you get legal protections that come with employment, such as protections against unfair dismissals.

Open a dialogue with your client and carefully discuss the risks and benefits of moving to an employer-employee relationship. In particular, be clear about how it can benefit both parties — not just you.

For example, employers risk incurring heavy penalties if they misclassify an employee. By asking them to convert you to an employee, they can avoid those liabilities altogether and remain compliant with classification laws.

You can also make the case that bringing you on as a full-time employee would deliver long-term cost savings since it contributes to a more stable workforce. And because you’re already familiar with your client’s company and its processes, your employer wouldn’t need to spend time onboarding you to get you up to speed.

Of course, asking employers to make this transition isn’t easy. Suggest the help of a third-party solution, such as Remote, to ease the transition. Our global employment services help both parties stay compliant by taking care of key HR functions (like payroll management and benefits administration), in line with Chilean labor law.

4 ways Remote makes life easier for contractors and their clients

As you can see, there’s a lot to take on board when setting up as an independent contractor. Remote can help you with many of these challenges, allowing you to focus on growing your business and delivering to your clients.

Here’s how.

1. International payments in countries around the world

Navigating all of your clients’ different invoicing, approvals, and payment systems can be complicated and time-consuming. And manual methods of invoicing and collecting payments can increase the risk of fees, errors, and delays.

Remote gives you access to a highly secure, streamlined dashboard that makes invoice management and international payments cost-effective and efficient. You can use our platform to get paid in Chilean pesos (or other currencies), without any hidden fees.

You can track the status of your invoice right from the dashboard and send a reminder if a client misses a payment deadline.

2. Localized in-app contracts and advice

When you draft agreements and contracts for your clients, you run the risk of non-compliance with local labor laws — especially when working with international clients. Remote offers localized contracts tailored to Chilean laws, ensuring that you stay compliant with relevant labor laws.

Our legal experts can also provide guidance on complex issues, such as local classification and intellectual property protections.

3. Invoicing automation

With Remote, you no longer need to rely on spreadsheets and other manual tools to invoice for payments; we remove many of the inaccuracies and delays caused by archaic processes and manual management. Our platform lets you create invoices, submit them for approval, and subsequently get paid in your local currency without needing to switch to any other tool or software.

4. Tax management

Tax management is notoriously complex work. Remote helps you quickly and efficiently deal with tax management by compiling data about your income based on your invoices and payments received.

Becoming an independent contractor in Chile

Having the freedom and flexibility to work on your own terms is liberating. But your administrative responsibilities can distract from what you really want to be doing: helping your clients, delivering great work, and collecting invoices.

By using a stable, trusted platform like Remote, you can manage these obligations quickly and efficiently, allowing you to focus on your business goals. Specifically, we can help you:

• Avoid intermediary fees and delays with international client payments

• Draft compliant contracts for Chilean and foreign clients

• Enhance your invoice management and avoid manual processes

• Comply with local labor laws regarding work practices

Our platform makes it quick, simple, and seamless to get started as an independent contractor in Chile and stay in compliance with labor laws. Get started here to get all the tools you need to run and manage your freelance business.