According to the submission, a foreign individual acquired domicile and residence in Chile between 2016 and 2021, applying the provisions of the second paragraph of Article 3 of the Income Tax Law (LIR), being taxed during the first 3 years from their entry into the country only on Chilean-source income, and for the remainder of the period in which they had domicile and residence in Chile, on their worldwide income.
It is stated that during 2021 the individual decided to definitively leave the country but is evaluating returning to settle and establish domicile in Chile once 6 years of domicile and residence abroad have been completed.
The main question is whether, under Article 3 of the LIR and previous administrative criteria, a foreign individual who re-establishes domicile or residence in Chile after having lost such status may again apply the rule that allows taxation only on Chilean-source income during the first three years from re-entry.
The tax authority states that, based on the wording of the exception contained in Article 3 of the LIR, a foreign individual who has lost domicile and residence in Chile and subsequently re-establishes them is covered by said rule.
Therefore, provided that the individual effectively lost domicile and residence in Chile, the criteria allowing taxation only on Chilean-source income for the first three years from re-entry are confirmed.
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