Family asset restructuring: comments on SII Circular No. 1184 of 2026

• The SII confirms that wealth and estate planning is not objectionable in itself.
• However, it requires that the structure have economic substance, legal coherence, real effects and a legitimate, demonstrable business rationale. The stated purpose must be consistent with the actions actually carried out.
• In the SII’s view, it is not sufficient merely to state legitimate purposes such as estate planning, efficient administration or asset protection. Such reasons must be consistent with the structure put in place and must produce real effects; the transaction may be reviewed under the rules on valuation, transfer pricing or the general anti-avoidance rule.

Background 

On 20 May 2026, the Internal Revenue Service issued Ordinary Letter No. 1184, in which it issued a in a non-binding capacity, on a family asset reorganisation which involved, amongst other transactions, contributions of assets to Chilean companies, subsequent contributions to foreign entities, donations of bare ownership and financing between related parties.

The case is particularly significant, as the SII does not, in the abstract, question the possibility of implementing asset or succession reorganisation structures. However, it warns that such structures must have a legitimate business rationale, real economic and legal effects, and consistency between the stated objectives and the actions actually carried out.

The SII sends an important signal to those who advise on or implement family asset reorganisations: the Internal Revenue Service does not, in itself, question asset or succession planning. What it does require is that the chosen structure be consistent with the stated purpose.

The enquiry was submitted by an individual resident and domiciled in Chile, who owns various property assets and shareholdings in operating companies within a family business group.

The proposed reorganisation comprised, in general terms, three main strands, within which the following four principal transactions could be identified:

• Centralisation of personal assets within a Chilean public limited company, the shares of which would subsequently be contributed to a foreign entity.
• Reorganisation of the shareholdings in the family group’s operating companies through the incorporation of Chilean investment companies, to which shares would be contributed at book value or tax cost.
• Donation of the bare ownership of the shares in those investment companies to family members of the next generation, with the taxpayer retaining the right of usufruct for a period of 15 years.
• Establishment of investment vehicles abroad for the management of inherited funds and the protection of the assets of other family members.

Ruling by the SII 

On the contribution of assets

The SII reiterates that Article 64 of the Tax Code empowers the Service to assess the tax base where the circumstances set out in that provision are met.

However, it also states that this power to assess the tax base does not apply to corporate reorganisations that comply with the applicable legal requirements, including:

• The existence of a legitimate business reason;
• Maintenance of the tax cost of the assets;
• No cash flows to the contributor;
• Compliance with the relevant legal formalities; and
• In the case of international reorganisations, that Chilean tax authority is not affected.

In this regard, the Official Letter states that compliance with the applicable legal requirements is a matter subject to verification by the relevant tax authority, and it is the taxpayer’s responsibility to demonstrate that these requirements have been met.

Foreign entities and international reorganisation

The SII states that, in the case of international business reorganisations other than a merger or division, the exclusion of the tax assessment power requires compliance with the requirements set out in Article 64 of the Tax Code and with the instructions provided in Circular No. 23 of 2025.

In particular, it must be demonstrated that the transaction complies with the applicable foreign legislation and that Chile does not lose its taxing rights in respect of future transfers or contributions of the assets involved.

This point is relevant, as the use of foreign vehicles in family wealth structures is not, in itself, objectionable. However, it must be justifiable from an economic, legal and functional perspective, beyond any potential tax implications.

Loans between related parties

The Circular also addresses the existence of financing arrangements between a related foreign entity and a Chilean company.

In this regard, the SII notes that, as these are cross-border transactions between related parties, the transfer pricing rules under Article 41 E of the Income Tax Act may apply, as well as the rules on excessive indebtedness under Article 41 F of the same Act.

Furthermore, the Service notes that it is not clear how the transaction would enable “cash flows in Chile to be made profitable”, an issue that could be examined during a tax audit.

Donation of bare ownership

The SII states that gift tax must be declared and paid in accordance with Act No. 16,271 in respect of the donation of bare ownership of shares to relatives of the next generation, with the taxpayer retaining the right of usufruct.

Notwithstanding the foregoing, the Service expressly states that these transactions may also be reviewed under the general anti-avoidance rules, particularly if their terms or effects enable the avoidance of taxable events.