Establishing and maintaining payroll in Chile
The South American country of Chile has developed rapidly in recent decades, and it is an increasingly attractive site for foreign investment.
If you are planning a Chilean expansion, one of your first steps will be hiring a local workforce. To do this you will generally need a legal entity in the country and will need to establish an in-country payroll and employment infrastructure. This can be a long and difficult process in many cases, taking several months to complete and causing delays.
At Horizons, we specialize in helping organizations spanning all industries expand internationally, including into Chile. We can handle your payroll setup and management, even if you don’t have a legal entity in Chile.
Why choose the Horizons payroll solution?
If you have an entity
If your organization has already registered an official entity in Chile, then you can outsource your payroll setup and management to us to get expert support and to fast-track your operations.
This level of outsourcing is perfect for larger organizations that are looking to expand into Chile long term.
If you don’t have an entity
If you don’t have a registered entity in Chile, you can use our full payroll outsourcing service. Our Chilean subsidiary will act as employer of record for your employees, and our team will handle the HR, administration, and complex legal compliance work.
Choose this service for a low-risk, flexible, and scalable solution for your Chilean payroll setup and management, with all the benefits of hiring locally and none of the usual complications.
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Chile payroll guide
What withholdings and taxes are required in Chile?
Chile has a number of mandatory social security contributions for both employers and employees. The employee contributions are generally withheld by the employer. Employees usually need to pay the following:
- 10% of salary toward pension
- Between 2.84% and 3.4% to life insurance
- 7% to health insurance
- 0.6% to unemployment insurance
Employers generally need to contribute between 0.9% and 4.4% of salaries to workplace accident insurance and unemployment insurance, as well as 2.4% to an unemployment fund.
Income tax in Chile is between 0% and 35.5%, depending on income level.
Corporate tax in Chile is generally 25%.
|
Unemployment
|
2.4% |
|
Occupational Accidents
|
0.95% |
|
Total Employment Cost
|
3.35% |
| Pension |
10.0%
|
| Health Insurance Plan |
7.00%
|
| Unemployment Insurance |
0.60%
|
| Total Employee Cost | 17.60% |
0- 11.368.06 CLP | 0.00% |
11,368.06- 25,262.37 CLP | 4.00% |
25,262.37- 42,103.94 CLP | 8.00% |
42,103.94- 58,945.52 CLP | 13.50% |
58,945.52- 75,787.10 CLP | 23.00% |
75,787.10- 101,049.46 CLP | 30.40% |
101,049.46 CLP and above | 35.00% |
Entitlements and terminations
In general, employees in Chile are entitled to one month of notice prior to termination. They are usually also entitled to a severance payment of one month of salary, plus extra depending on their length of service with the employer.
How to establish a Chile payroll
For many businesses, setting up a payroll and hiring in Chile is likely to involve establishing a local entity, registering with the authorities, opening a bank account, and more. This can be complex and slow expansion progress significantly.
Another option is to outsource your payroll setup and management to Horizons. We can offer the use of our Chilean subsidiary to act as employer of record for your employees in Chile, so you can avoid the complex setup and management process, and can benefit from our solutions even if you don’t have a legal entity in Chile. Additionally, we can set up and run your payroll, HR, compliance, and any other associated work, allowing you to work on successfully expanding your businesses in Chile.
Manage payroll in Chile
Whether it’s EOR service or just payroll management, Horizons’ employment experts can help you get started in 24h.
