Chile offers a solid legal framework to protect foreign investors. At the international level, the country has ratified numerous treaties that guarantee protection standards. For example, since 1991, Chile has been a party to the Washington Convention (ICSID) for resolving investor-State disputes. Additionally, Chile has signed 54 bilateral investment treaties (BITs), of which 37 were in force as of the latest report. These agreements require granting foreign investments clauses such as fair and equitable treatment, national treatment, compensation in cases of expropriation with immediate payment at market value, free transfer of capital, and access to international arbitration (ICSID).
In the commercial sphere, Chile also maintains a wide “network of bilateral and multilateral international treaties” covering 29 countries (as of 2021), protecting the rights of foreign investors. In summary, the combination of free trade agreements and investment protection treaties provides foreigners with a predictable and secure legal environment.
Foreign Investment Law and National Framework
Domestically, Law 20.848 (2015) establishes the regime for Foreign Direct Investment (FDI) in Chile. Its guiding principles are economic freedom, non-discretion in procedures, and prohibition of arbitrary discrimination. This means that—except for specific exceptions—any private activity can be conducted with foreign capital (up to 100% ownership). The law also ensures that foreign investors have the same rights as nationals.
Law 20.848 establishes concrete rights for investors:
- Repatriation of capital and profits: foreign investors can freely remit abroad the invested capital and generated profits, once the corresponding tax obligations are fulfilled.
- Access to the formal exchange market: all foreign investments exceeding USD 10,000 must be channeled through authorized banks or exchange houses. Investors have the right to access the formal exchange market to convert their investment currency or obtain the foreign currency needed to remit capital and profits. The exchange rate is freely agreed upon by the parties.
- Compensation for expropriation: although the State may expropriate for public interest, the law requires immediate compensation at market value (plus interest) and prohibits discriminatory expropriations. In fact, Chile has not nationalized private companies since 1973.
- VAT exemption for capital goods: investors may request exemption from Value Added Tax (VAT) when importing capital goods for their projects, in accordance with legal requirements.
- Foreign Investor Certificate: InvestChile (the government agency for FDI promotion) can issue a certificate that formalizes foreign investor status and facilitates access to benefits under the law. To obtain it, investors must provide details of the project and investment (minimum US$5 million, via capital contribution, import of goods, reinvestment of profits, or other allowed forms). InvestChile has a maximum of 15 business days to issue the certificate. While optional, this instrument serves as public recognition of the investor’s rights before Chilean authorities.
Economic Freedom and Sectoral Restrictions
In general, foreign investors in Chile enjoy freedom to compete and participate in all economic sectors, without requiring local partners and with full foreign capital participation. However, there are exceptions for national or strategic security. For example, Chilean law reserves sectors for the State such as peaceful nuclear energy, defense and armaments, certain strategic mineral deposits (lithium, hydrocarbons, etc.), and cabotage (domestic transport of cargo and passengers, reserved for Chilean vessels). Special authorizations are required for fishing and aquaculture activities, and only Chilean-domiciled companies (majority national) can register fishing vessels. In telecommunications and broadcasting, the State requires the concessionaire to be a Chilean entity with a majority of national directors. Outside these legally defined “strategic” areas, foreigners have full freedom to invest without discrimination.
Key Rights and Benefits for Foreign Investors
In summary, foreign investors in Chile enjoy rights and benefits comparable to nationals. The most relevant include:
- Remittance of capital and profits: permission to freely transfer abroad the invested capital and profits once taxed.
- Free access to the exchange market: transactions of foreign currency (over US$10,000) are conducted through the formal exchange market, with no rate restrictions, as the exchange rate is freely agreed by the parties.
- VAT exemption for capital goods: possibility to exempt import of equipment and machinery for investment projects.
- Foreign Investor Certificate: a public document issued by InvestChile that formally recognizes foreign investor status, facilitating procedures and access to other State incentives.
- National legal treatment: all foreign investors are subject to the same legal regime as nationals, “without arbitrary discrimination.” This includes access to property (e.g., industrial and urban land, except for border and protected beach zones) and legal stability for projects.
Exchange Market and Regulatory Authorities
The Central Bank of Chile supervises the free exchange market and applies the regulations of the Compendium of International Exchange. Generally, there is currency freedom: anyone can perform international transactions without prior Central Bank authorization. However, foreign investments exceeding US$10,000 or equivalent must be registered under Chapter XIV of the Compendium. This involves notifying the Central Bank about the transfer of funds or invested capital. In practice, investors choose an authorized bank or exchange house to make deposits and currency operations.
The Financial Market Commission (CMF) supervises banks, insurers, investment companies, and other financial institutions, ensuring transparency and solvency in the financial system where foreign investors operate.
Institutional Support and Promotion
To facilitate foreign investment, Chile has InvestChile, the Foreign Investment Promotion Agency, established by Law 20.848. This agency advises investors from the prospecting stage (“pre-investment”) through installation and post-investment. Its free services include market information, facilitating contacts with authorities and local partners, assisting with establishment procedures (tax ID, visas, permits), and support in claims before public agencies. InvestChile “supports foreign companies in their prospecting, installation, and participation in the country.”
Simultaneously, the government has updated its investment attraction strategy, maintaining an open business environment and macroeconomic stability policies. Chile does not require prior approval for investments (except in the strategic sectors mentioned); InvestChile’s role is largely procedural.
Overall, the combination of national regulations and international treaties makes Chile an attractive destination for foreign investment. Foreign investors are guaranteed equitable treatment, free repatriation of profits, judicial and arbitral protection against expropriations or undue regulatory changes, and institutional support that facilitates their establishment and operation.
