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Mergers, divisions and reorganizations before an exit: tax neutral routes, the SII's appraisal limits and shareholder rights

Last verified: 2026-10-26 · Status: Stable

Chilean law lets owners merge, divide or transform companies, or contribute assets, without triggering tax, as long as tax cost is kept, no cash goes to the contributor and, for reorganizations other than mergers and divisions, there is a legitimate business reason. A company absorbed in a merger does not need to file a termination of business if the surviving company assumes its taxes in the merger deed. In an S.A., mergers, divisions and transformations need two thirds of the voting shares and give dissenters a right to withdraw.

USD figures use the Central Bank exchange rate of CLP 986.58 per US dollar published in the Diario Oficial for 23 October 2026 (CNCI Chapter I, Title VII). UF and UTA values are the SII figures for October 2026 (UF 41,221.08 on 26 October; UTA CLP 865,812). Conversions are for orientation only.

Key facts

S.A. vote for merger, division or transformation	66.67 % of voting sharesLey Nº 18.046, art. 67 Nº 1, as of 2026-10-26 · in force
Deadline for the surviving company to pay the absorbed company's income taxes	2 monthsCódigo Tributario, art. 69, as of 2026-10-26 · in force

The rule

1. The SII may not use its appraisal power on mergers and divisions, domestic or international, nor on other business reorganizations such as converting an individual business or contributing assets of any kind within Chile, provided the reorganization has a legitimate business reason, the tax cost of the assets is kept in the absorbing, new or receiving company, and no cash flows go to the contributor. A legitimate business reason includes improving business conditions, competitiveness, financing, cutting costs or risks, increasing capacity or market presence or optimizing management, and must be something other than a purely tax purpose. Taxpayers may file a binding query on a planned reorganization under art. 26 bis.
Cost to do it: No tax if the conditions are met; adviser cost of an art. 26 bis query if sought.Decreto Ley Nº 830, Código Tributario, Art. 64, paragraphs on mergers, divisions and reorganizations, 1974-12-31 official text · verified 2026-10-26

2. For international reorganizations other than mergers or divisions that affect assets, shares or rights located in Chile, the appraisal power does not apply only if all of these are met: a legitimate business reason, no cash to the contributor, the tax cost of the assets is kept, the foreign legal requirements are met, and Chile keeps its taxing power over a later transfer. The protection never applies when Chilean assets move to entities in preferential tax regimes under art. 41 H, or to entities exempt from keeping accounts under general foreign rules.
Cost to do it: No tax if all conditions are met; otherwise the SII can appraise and tax the difference.Decreto Ley Nº 830, Código Tributario, Art. 64, paragraphs on international reorganizations and preferential regimes, 1974-12-31 official text · verified 2026-10-26

3. Companies may not contribute all their assets and liabilities to another or merge without filing a termination of business, unless the company that is created or survives assumes, in the merger or contribution deed, all taxes owed by the contributing or absorbed company. Even then, the changes must be reported to the SII through the electronic folder, the dissolving companies must prepare a termination balance at the date of dissolution, and the surviving or new company must pay the resulting income taxes within two months, and the other taxes within the legal deadlines.
Cost to do it: Taxes of the absorbed company assumed by the survivor; no separate termination audit.Decreto Ley Nº 830, Código Tributario, Art. 69, seventh paragraph, 1974-12-31 official text · verified 2026-10-26

4. A merger is the union of two or more companies into one that succeeds them in all rights and obligations, by creation of a new company or by absorption into an existing one, and the merged companies are not liquidated. A division distributes the company's equity between itself and one or more new companies, with shareholders keeping the same proportions. A transformation changes the company type while keeping its legal personality. No shareholder may lose that status in a merger, transformation or division without consent.
Cost to do it: Notary, registry and Diario Oficial publication costs; audited balances and expert reports for a merger.Ley Nº 18.046, Ley sobre Sociedades Anónimas, Art. 94, art. 96, art. 99 and art. 100, 1981-10-22 official text · verified 2026-10-26

5. Transformation, division and merger of an S.A. need two thirds of the voting shares. Approving a transformation or a merger gives dissenting shareholders the right to withdraw, paid at book value in a closely held S.A. or market value in an open one; the right is suspended while the company is in liquidation proceedings until creditors are paid.
Cost to do it: Cash to pay any dissenters' shares.
Example: Dissenters holding 5 percent of a closely held S.A. with book equity of CLP 1,973,160,000 can claim CLP 98,658,000. / 5 percent of US$2,000,000 book equity is a US$100,000 withdrawal claim.Ley Nº 18.046, Ley sobre Sociedades Anónimas, Art. 67 Nº 1 and art. 69 Nº 1 and Nº 2, 1981-10-22 official text · verified 2026-10-26

6. A sale of shares of a foreign entity made abroad within a reorganization of the business group, as defined in art. 96 of Ley Nº 18.045, is not subject to the indirect transfer tax, provided it produces no income or gain for the seller computed under art. 58 Nº 3.
Cost to do it: No Chilean tax if no gain arises.Decreto Ley Nº 824, Ley sobre Impuesto a la Renta, Art. 10, final paragraph, 1974-12-31 official text · verified 2026-10-26

7. The SII may assess VAT on sales of fixed assets made by the company created or surviving a reorganization when the main purpose of the reorganization was to avoid VAT, considering the timing between operations, whether the new company is a VAT taxpayer and other circumstances.
Cost to do it: 19 percent VAT on the assets if the SII applies this rule.
Example: Fixed assets worth CLP 98,658,000 moved in a reorganization and quickly sold could bear CLP 18,745,020 of VAT. / US$100,000 of fixed assets: potential VAT of US$19,000.Decreto Ley Nº 825, Ley sobre Impuesto a las Ventas y Servicios, Art. 8 letter m), third paragraph, 1974-12-31 official text · verified 2026-10-26

Operation	Conditions	Termination of business
Domestic or international merger or division	Tax cost kept; no cash to contributor	Not needed if survivor assumes the taxes in the deed (CT art. 69)
Domestic contribution of assets or conversion of an individual business	Legitimate business reason; tax cost kept; no cash	Conversion: not needed if new company assumes taxes
International reorganization other than merger or division	Business reason; no cash; tax cost kept; foreign law met; Chile keeps taxing power	Depends on the Chilean entity involved
Any reorganization moving Chilean assets to an art. 41 H regime	Protection does not apply	General rules
Offshore group reorganization	No gain for the seller	Not applicable (DL 824 art. 10)

Conditions for tax neutral reorganizations (Código Tributario art. 64 and art. 69; DL Nº 824 art. 10).

Worked example

Before selling, a foreign group wants to combine two Chilean SpAs. SpA B is absorbed by SpA A; A keeps B's tax cost for every asset and pays no cash to B's shareholder (Código Tributario art. 64).
In the merger deed A assumes all of B's taxes, so B does not file a termination of business; B still prepares a termination balance at the merger date and A pays B's income taxes within two months (art. 69).
Later, the group sells 100 percent of A. The share sale follows the direct sale withholding rules; the earlier merger does not change the tax cost the seller can claim for its A shares beyond what the documents support.

Step by step

1. Document the business reason in board minutes and the transaction memorandum, beyond tax savings (Código Tributario art. 64).
2. Keep the tax cost of every asset in the receiving company and avoid any cash payment to the contributor.
3. Consider an art. 26 bis binding query to the SII on the planned reorganization.
4. Approve the merger, division or transformation with two thirds of voting shares in an S.A., and budget for dissenters' withdrawal (Ley Nº 18.046 art. 67 and 69).
5. Put the survivor's assumption of all taxes in the merger deed, prepare the termination balance of the absorbed company, and pay its income taxes within two months (art. 69).
6. For offshore steps, check the art. 41 H list and whether the step produces any gain under DL Nº 824 art. 10.

Common traps

Any cash paid to the contributor in a reorganization removes the protection from appraisal (Código Tributario art. 64).
Moving Chilean assets to a preferential tax regime entity is never protected (art. 64).
Forgetting the tax assumption clause in the merger deed forces a full termination of business for the absorbed company (art. 69).
Using a reorganization to step around VAT on fixed asset sales can be assessed (DL Nº 825 art. 8 letter m).
A merger gives dissenters a cash exit at book or market value (Ley Nº 18.046 art. 69).

Sources

← Selling the business instead of the shares: asset sales, VAT on fixed assets, the buyer's tax guarantee and staff continuityDissolving and liquidating a solvent Chilean company: S.A., SpA, limited liability company, EIRL and branch →