Investment companies are entities whose principal activity consists of investing in other entities, holding assets or securities, and, in general, carrying out purely passive income-generating activities. Given the nature of their business, these entities do not usually have physical operations or presence, which in the past led to the view that they were not subject to municipal license fees (according to opinions of the Comptroller General of the Republic and judgments of the Honorable Supreme Court).
With the 2020 reform introduced by Law No. 21,210, investment companies became definitively subject to the payment of municipal license fees. The law imposed on the Chilean Internal Revenue Service (SII) the obligation to inform the respective municipalities about the existence, address, and equity of these companies so that the tax could be assessed and issued. Because of this, many investment and real estate companies that previously did not pay a license fee have had to register and begin paying it. The business license amounts to 0.5% of the investment company’s taxable equity.
License Reduction
The Municipal Revenue Law allows municipalities to reduce the amount of the municipal license by up to 50%. We help our clients analyze the options for reducing their license in the case of investment companies, taking advantage of the reduced rate offered by certain municipalities.
To do so:
- We analyze the feasibility and amount of the benefit.
- Propose the municipalities that grant the benefit and the manner of obtaining it.
- Carry out the procedures for changing the company’s registration to the new municipality.
Our advisory services are based on years of experience, enabling clients to evaluate the benefits and costs involved and make informed decisions. Contact us at patentes@sck.cl to schedule an initial informational meeting (this email does not respond to inquiries).
License Litigation and Statute of Limitations
We have broad experience in disputes related to municipal business licenses, such as:
- Regularizing unpaid or unregistered licenses.
- Obtaining declarations that license fees exceeding the legal collection period are time-barred.
- Obtaining reductions for investments in other companies so that payment is aligned with the law.
- Recalculating license fees assessed by the municipality.