A very common topic, that we have to explain to our customers is the taxation of vehicles in Chile.
In Chile, unlike in Europe, a company cannot buy any car. Vehicles recognized as company cars are trucks, pickups, and jeeps unless the company’s object is car rental.
Therefore, if a company buys a vehicle which does not fall under the aforementioned list, the Chilean IRS will not recognize it as a company’s vehicle and it will be seen as a company’s investment, which can be depreciated within 7 years.
The VAT paid for that car cannot be recovered as well as the expenses related to the car.
If this car is assigned to some CEO and he uses it beyond the business, hours it will be seen as part of the CEO’s income and must be taxed accordingly.
We, therefore, advise our clients to buy those vehicles recognized as company cars by the Chilean IRS.