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  • Employer of record
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Global Payroll Team
Written by Global Payroll Team
Last updated May 1, 2026
Expert Reviewed
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Mercans offers complete payroll, PEO and HR services in Chile

Mercans provides comprehensive payroll, PEO, and HR services in Chile to help businesses comply with local regulations and focus on their core operations. Chile remains one of Latin America’s most established business destinations, supported by a stable institutional framework, strong mining and export sectors, modern services, and growing opportunities in energy, technology, logistics and advanced manufacturing.

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Doing Business in Chile

Chile is widely regarded as a business-friendly jurisdiction in Latin America, with a mature legal framework, extensive trade ties and relatively transparent regulation. Employers and investors should still plan carefully for local labor law, tax, social security, immigration and corporate compliance requirements.

Entity Registration and Incorporation Requirements

In order to incorporate a company in Chile, the investor needs to register the business with the Companies Registry, obtain a Tax Identification Number, open a bank account and fulfill the legal and regulatory requirements. The incorporation process involves selecting the type of legal entity and filing the relevant documentation.

Banking

Banking Hours: 9:00 am to 2:00 pm from Monday to Friday

Working Week

The ordinary working week in Chile is generally 42 hours, usually distributed over 5 or 6 days.

Labor Law

Chile’s labor law regulates the relationship between employers and employees, covering topics such as minimum wage, working hours, vacations, collective bargaining, social security and termination protections.

Main Industries

Mining, copper, lithium, food processing, forestry, financial services, energy, logistics and technology

GDP Growth

2.6%

Dates & Numbers

dd/mm/yyyy

Official State Name

Republic of Chile

Population

20.2 million

Capital

Santiago

Major Languages

Spanish

Currency

Chilean peso

Internet Domain

.cl

International Dialing Code

+56

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Chile
Santiago, CL
9:24 am, May 2, 2026
9°C
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Sunrise: 7:17 am
Sunset: 6:01 pm

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Payroll

In Chile, payroll management requires compliance with labor, tax and social security rules, including employment contracts, wage payment, withholding, pension, health and unemployment insurance obligations. Outsourcing payroll to a reputable provider can help businesses remain compliant and reduce administrative risk.

It is acceptable to provide employees with online payslips.

Payslip

Payroll reports should be retained in line with applicable labor and tax recordkeeping requirements.

Reports

Employees receive paid annual leave of 15 working days after completing one year of service.

Annual Leave

Sick leave is granted through medical leave. Subsidy is generally paid from day 1 if the leave is 11 days or longer, and from day 4 if it is shorter.

Sick Leave

Employees are generally entitled to 6 weeks of prenatal leave, 12 weeks of postnatal leave, 12 weeks of parental postnatal leave, and fathers are entitled to 5 paid days for birth leave.

Maternity & Paternity Leave

Employers must generally provide 30 days’ notice of termination or payment in lieu where the legal grounds require prior notice.

Employee Termination

There are no provisions mandated by law regarding the 13th-month salary.

13th-month salary

539,000 CLP per month

Minimum Wage

Overtime payment is generally 1.5x the employee’s ordinary rate of pay.

Overtime

Employees paid monthly may be entitled to 30 days’ pay for each year of service, generally capped at 11 years, depending on the termination ground.

Severance Pay

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Tax and Social Security

In Chile, residents are generally taxed on worldwide income, subject to transitional rules for some new residents, while non-residents are taxed on Chilean-source income. Social security contributions typically cover pensions, health care, unemployment insurance and other mandatory labor-related insurance.

Tax

Chile generally applies a 27% corporate income tax rate under the main regime, a top personal income tax rate of 40%, and a standard VAT rate of 19%. Employers should assess the applicable tax regime, payroll withholding obligations and monthly compliance filings carefully.

27%

Corporate Income Tax

40%

Personal Income Tax

19%

Sales Tax

19%

VAT

Social Security

In Chile, employee social security contributions usually include 10% pension, AFP commission, 7% health and 0.6% unemployment insurance for indefinite contracts. Employer contributions commonly include unemployment insurance, the disability and survivors insurance premium, and occupational accident insurance, so the exact total varies by contract type and employer profile.

Varies

Social Security Rate

Varies

Social Security Rate for Employers

Varies

Social Security Rate for Employees

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Employment Law

Employment law in Chile regulates working time, wages, leave, termination, collective rights and health and safety obligations. Employers must also comply with mandatory contract formalities, payroll withholding and social security registration requirements.

Employment Agreement

In Chile, an employment agreement must be in writing and generally signed within 15 days from the employee’s start date, or within 5 days for contracts lasting less than 30 days. The agreement must include the key terms of employment.

Working condition

In Chile, the legal ordinary working time is generally 42 hours per week. Overtime work is allowed subject to legal conditions and must be compensated at the statutory premium rate.

Leaves

Employees are entitled to 15 working days of annual leave after one year of service. Chile also recognizes a number of statutory public holidays each year, as well as paid bereavement and family-related leave in specific cases.

Employment termination

In Chile, employers must have a valid legal ground to terminate an employment contract and must follow the applicable notice and settlement rules. Severance may be due depending on the cause of termination and the employee’s length of service.

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30 days

Minimum notice period for terminating an employee

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16

Total number of public holidays

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42

Working hours per week

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4 days

Total number of days for Compassionate & Bereavement Leave

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Immigration

Foreign nationals who wish to work in Chile generally need the appropriate immigration status through the Servicio Nacional de Migraciones. Depending on the case, work authorization may be linked to a temporary residence subcategory for remunerated activities, a job offer or a service contract.

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Residency permits

Foreign nationals may obtain temporary residence in Chile under various subcategories, including remunerated activities. Temporary residence is generally granted for a limited period and may later lead to permanent residence if the legal requirements are met.

Work Permit Validity

Up to 2 years

Required Documents

Valid passport or travel document

Proof of legal stay or residence status where applicable

Job offer, employment contract or service contract, depending on the subcategory

Criminal record certificate where required

Proof of means or supporting financial documents where required

Other supporting documents requested by the Servicio Nacional de Migraciones for the relevant application route

Compliant, reliable, error-free and touchless payroll in Chile

Build the best team and hire top talent compliantly in Chile. Get in touch with Chile payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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    FAQs

    What is an Employer of Record (EOR) in Chile and how does it support foreign companies?

    An Employer of Record (EOR) in Chile legally employs staff on behalf of foreign companies. It manages employment contracts, payroll, taxes, social security, and compliance with local labor laws, allowing companies to hire employees quickly without establishing a local legal entity.

    Why should businesses use an EOR instead of establishing a legal entity in Chile?

    Using an EOR avoids the time and costs of setting up a local company. It provides fast market entry, reduces administrative work, ensures legal and tax compliance, and is ideal for businesses testing the Chilean market or hiring a small team.

    How does payroll outsourcing in Chile ensure compliance with labor laws and tax regulations?

    Payroll outsourcing ensures accurate salary processing, tax filings, and social security contributions according to Chilean law. It reduces compliance risks, avoids penalties, and provides expertise on local labor and tax regulations.

    Can an Employer of Record in Chile hire employees and manage work permits for international companies?

    Yes, an EOR can legally hire employees for foreign companies and manage work permits. It handles HR operations, payroll, and compliance with local labor and immigration laws, enabling smooth operations without a local entity.

    What are the main benefits of using EOR and payroll services in Chile for global expansion?

    EOR and payroll services enable faster hiring, local compliance, reduced legal and financial risk, and access to market expertise. They allow companies to expand into Chile efficiently while focusing on business growth.

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