Chile’s Internal Revenue Service (SII) issued Ruling No. 2670 on 23 December 2025, providing important clarification on who may request refunds of excess dividend withholding tax in structures that use foreign custodians. The SII concluded that foreign custodians acting as agents may not directly request refunds for excess dividend withholding tax paid by nonresident shareholders. Instead, only the nonresident beneficial owner (BO) of the dividends (or its “responsible agent”) may request the refund (provided the requisite documentation is submitted).
The SII states that, for purposes of determining whether a refund should be available, only the circumstances of the BO should be considered. The foreign custodian’s situation is relevant only if it acts on its own behalf. Accordingly, if a BO resident in a tax treaty jurisdiction fails to timely provide proof of tax residence and the 35% credit refund was incorrectly applied, a refund of the excess tax withheld is appropriate as long as the BO can show that it was entitled to treaty benefits at the time of withholding.
However, the SII specifies that the foreign custodian cannot independently request a refund, as it cannot act as a responsible agent in Chile. The request must be submitted by the BO, represented in Chile by an authorised agent. The SII also rejects the issuance of withholding certificates broken down by BO, stating that withholding must be substantiated by other appropriate evidence, which will be evaluated on a case-by-case basis.
To support a request for a refund of excess withholding tax, the responsible agent must have and make available to the SII at least the following information:
The SII ruling is important for multinational groups and foreign investors in Chile. The key practical effects of the ruling are as follows:
Cristian Vargas
BDO in Chile
The SII states that, for purposes of determining whether a refund should be available, only the circumstances of the BO should be considered. The foreign custodian’s situation is relevant only if it acts on its own behalf. Accordingly, if a BO resident in a tax treaty jurisdiction fails to timely provide proof of tax residence and the 35% credit refund was incorrectly applied, a refund of the excess tax withheld is appropriate as long as the BO can show that it was entitled to treaty benefits at the time of withholding.
However, the SII specifies that the foreign custodian cannot independently request a refund, as it cannot act as a responsible agent in Chile. The request must be submitted by the BO, represented in Chile by an authorised agent. The SII also rejects the issuance of withholding certificates broken down by BO, stating that withholding must be substantiated by other appropriate evidence, which will be evaluated on a case-by-case basis.
Documentation Required to Request a Refund
To support a request for a refund of excess withholding tax, the responsible agent must have and make available to the SII at least the following information:
- Power of attorney proving that the agent is acting validly on behalf of the BO;
- The BO’s certificate of tax residence issued by the competent authority of the relevant country, proving their residence in a country with an applicable tax treaty at the time the tax was withheld; and
- Evidence proving that tax was actually withheld, such as:
- Payment receipts;
- Dividend records;
- Available corporate and accounting information; and
- Any other suitable means of proof.
BDO Perspective
The SII ruling is important for multinational groups and foreign investors in Chile. The key practical effects of the ruling are as follows:
- Foreign custodians cannot request refunds as they cannot function as responsible agents in Chile.
- The BO of the dividends, as the withholding tax taxpayer, is the party entitled to request a refund of excess withholding.
- For nonresident investors, the refund request must be submitted by a responsible agent in Chile acting on behalf of the BO.
Cristian Vargas
BDO in Chile